In today’s briefing:
- 7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
- China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away
- ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week
- China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity
- HEW: Tariffs Trumped Data
- Seoul Guarantee Insurance IPO Bookbuilding Results Analysis
- Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
- Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise
- Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade
7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
- 7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
- The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
- Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
- The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
- Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.
China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away
- With the review cutoff done, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
- Cambricon Technologies, Guotai Junan Securities and China United Network could replace Inner Mongolia Yili Industrial Group, CGN Power and Luzhou Laojiao in the ETFs.
- Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.
ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week
- There could be ad hoc change for the S&P/ASX 200 (AS51 INDEX) prior to the announcement of the changes at the March rebalance.
- Arcadium Lithium (LTM AU) could stop trading next week following the acquisition by Rio Tinto Ltd (RIO AU). The Royal Court of Jersey could sanction the scheme on 5 March.
- Mesoblast (MSB AU) is a high probability inclusion to the index, followed by DigiCo Infrastructure REIT (DGT AU). The stock that misses out will be added at the regular rebalance.
China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity
- In our last insight covering China Mobile (941 HK) we said the stock was overbought. It made a sharp pullback last week that may turn into a good BUY opportunity.
- Support levels to buy range from 79.1 to 76.4, assuming this pullback is a buy-the-dip scenario, something we will discuss in this insight.
- If the stock resumes its rally, the next WEEKLY profit targets will be between 82.64 and 84.4.
HEW: Tariffs Trumped Data
- Resilience in Euro area price and wage inflation, ESI surveys, and hawkish comments in the latest meeting accounts were trumped by US events. Renewed tariff threats and soft US surveys led a dovish repricing for the Fed that also dominated for the ECB.
- Next week has more top tier releases, starting with flash EA inflation for February where we are still a tenth above consensus at 2.4%. That won’t stop the ECB cutting, but should encourage restraint for April. US payrolls and tariffs are the other highlights.
- Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to transition@smartkarma.com).
Seoul Guarantee Insurance IPO Bookbuilding Results Analysis
- The majority of the investors placed orders at 26,000 won, which is the lower end of the IPO price range (26,000 won to 31,800 won).
- SGIC held internal discussions to set the public offering price at 26,000 won. The final price (which is likely to be 26,000 won) will be revealed on 4 March.
- Our updated base case valuation of SGIC is base case target price of 28,925 won per share. Given the lack of upside, we have a negative view of this deal.
Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
- Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
- Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
- This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.
Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise
- It has been reported in the local media that EcoPro Materials (450080 KS) is seeking about 300 billion won in additional capital which represents about 5% of its market cap.
- There could be concerns about dilution associated with this capital raise which could result in share price decline. The company is currently considering on issuing RCPS for this capital raise.
- There could be additional concerns about potential dilution associated with this capital raise which could result in further share price decline for Ecopro Materials.
Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade
- On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
- For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
- While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.
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