In today’s briefing:
- Shanghai Henlius Biotech (2696.HK) Privatization Update- Looks Like “An Agreement” Has Been Reached?
- Japan: Potential Passive Selling in February
- Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Henlius (2696 HK): Circ Out. 22nd Jan H-Class Meeting
- KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
- [Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
- EQD | Nikkei Index Options Weekly – December 16 – 20
- EQD | Hong Kong Single Stock Options Weekly December 16 – 20
- EQD | Kospi Index Options Weekly – December 16 – 20
- Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal
Shanghai Henlius Biotech (2696.HK) Privatization Update- Looks Like “An Agreement” Has Been Reached?
- Fosun has a clear plan for Henlius’ future development. This seems to hint at “an internal consensus” – Fosun seems to have persuaded major shareholders to vote for the privatization.
- The privatization of Henlius will make positive contributions to Fosun Pharma’s revenue/profit, but this impact is limited. What Fosun really wants is to obtain huge investment income from another spin-off/re-listed.
- For investors who are interested in the Share Alternative, they’re advised to figure out whether the Rollover Entities/Securities is relevant to the new entity.If not, the Share Alternative is worthless.
Japan: Potential Passive Selling in February
- Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
- Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
- Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
- Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.
Henlius (2696 HK): Circ Out. 22nd Jan H-Class Meeting
- After Shanghai Henlius Biotech (2696 HK) secured NDRC approval on the 22nd Nov; fulfilled pre-cons on the 16th December, the Circular was dispatched last night, the 22nd December.
- The EGM/H-share class meeting will take place on the 22nd January, one day past my estimate. Settlement should be on ore around the 18th Feb, a week beyond my estimate.
- Trading at a gross/annualised spread off 2.9%/20.3%. Still attractive here.
KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
- The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
- A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
- Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.
[Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
- Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
- Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December.
- I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected.
EQD | Nikkei Index Options Weekly – December 16 – 20
- All 5 trading days of the past week saw non-volatile price declines but with implied vols still ticking higher leaving historic vol and implied vol moving in opposite directions.
- Trading activity focused on Puts, 59.5% of all options trades were Puts last week
- Postions being covered into market weakness as seen from large decrease in open interest (60% of the decline was Puts).
EQD | Hong Kong Single Stock Options Weekly December 16 – 20
- Communication Services had 39% of single stock option volumes vs only 22% of the open interest highlighting short expiry / speculative nature of trading.
- Tencent and Baidu heading in opposite directions – Baidu vol on the inexpensive side vs Tencent vol.
- Xiaomi one of only 2 optionable names trading at 52-week high (Sunny optical being the other).
EQD | Kospi Index Options Weekly – December 16 – 20
- Kospi is now off 20% from its 52-week highs. Historic vols are picking up and implieds looking like good value given market dynamics.
- Hedging increased with broad based positioning in Puts across out-of-the-money strikes.
- Heavier volume in Puts with 53.2% of added open interest being Puts.
Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal
- On 17 December, Goldlion Holdings (533 HK) announced a scheme offer from Mr Tsang (Chairman/CEO) at HK$1.5232 per share, a 71.1% premium to the undisturbed price of HK$0.89 (20 November).
- The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake is a seller.
- The offer is reasonable compared to peer multiples and historical trading ranges. At the last close and for a late April payment, the gross/annualised spread is 7.3%/22.7%.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
