In today’s briefing:
- 7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
- BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
- BYD (1211 HK) Placement: Continuing to Power Up
- Toyota’s New Shareholder Benefit Program – Either a Bribe for Retail or Odd Advertising
- Chifeng Jilong Gold Mining (6693 HK) IPO: H-Share Offering Details & Index Inclusion
- Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?
- JX Advance Metals IPO – Digestable, but Not Really Attractive
- Japan CorpGovReports: TSE “Mgmt Conscious Blah Blah” (Mar25),
Read TSE Update Doc 3 - TOPIX Index Upweights: Final Expectations For “The Big April Basket” 2025
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.
STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
- There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
- The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
- Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.
BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
- BYD (1211 HK) is looking to raise around US$5.2bn via selling 4% additional shares.
- The company has undertaken a few deals before and they have ended up performing well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
BYD (1211 HK) Placement: Continuing to Power Up
- Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
- The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
- There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.
Toyota’s New Shareholder Benefit Program – Either a Bribe for Retail or Odd Advertising
- Today, Toyota Motor (7203 JP) announced a new Shareholder Benefit Program (株主優待 or kabunushiyutai). Often these programs are designed to give small unknown companies a way to build shareholder awareness/loyalty.
- Toyota, needless to say, is not a small, unknown company building awareness. So this is a bribe or inducement to own shares or get people to use higher value product.
- This is not a great look, and not great for shareholders. It smells of Toyota trying to buy votes as crossholders sell. But below we look at the math.
Chifeng Jilong Gold Mining (6693 HK) IPO: H-Share Offering Details & Index Inclusion
- Chifeng Jilong Gold Mining (600988 CH) has launched an H-share offering that could raise up to US$554m if the offer size adjustment option and overallocation option are both exercised.
- The price range of HK$13.72-HK$15.83/share is a discount of 18.7-29.5% to the A-shares and between 17-26% of the offering will be allocated to cornerstone investors.
- The small issue size will result in the stock staying out the global indices for the foreseeable future. Inclusion in Southbound Stock Connect will take place in April.
Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?
- If brokers let shorts exceed borrow, TRS end investors risk getting caught in the legal crossfire.
- Some TRS players are setting up short-book systems and reg numbers proactively, ensuring brokers share borrow data to stay ahead of any compliance risks.
- With most illegal shorts tied to TRS, and TRS dominating the market, the FSS will likely introduce TRS-specific rules rather than granting exemptions.
JX Advance Metals IPO – Digestable, but Not Really Attractive
- JX Advanced Metals (5016 JP)’s parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.5bn via selling more than half of its stake in JXAM in its Japan IPO.
- JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
- We have covered various aspects of the deal in our previous notes. In this note, we will talk about the IPO pricing.
Japan CorpGovReports: TSE “Mgmt Conscious Blah Blah” (Mar25), Read TSE Update Doc 3
- TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
- 161 new CGRs were filed in February 2025. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
- THE BIG NEWS: The “Document 3” (linked below) of the TSE’s 20th Council Meeting 18 Feb is worth reading carefully. This will set the stage for more takeover fun.
TOPIX Index Upweights: Final Expectations For “The Big April Basket” 2025
- In the TOPIX Index, some “low liquidity” names carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
- These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will see index inflows from passive trackers of TOPIX.
- In this insight, we take a look at Quiddity’s final predictions for the names that are likely to see their Liquidity Factors removed in April 2025 and their flow implications.
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