In today’s briefing:
- Shinko Electric (6967) Takeover: Changing Break/Gap Risk as Comps Gain
- Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
- Ping An A/H Premium: Blow Out Could Lead to Sharp Reversal
- TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
- CSI300 Index Rebalance Preview: A Dozen Changes for June
- ASMedia Placement – Momentum Has Been Strong, but an Overhang Exists
- T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal
- KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F
- CSI500 Index Rebalance Preview: High Turnover & Big Flow
- Amer Sports (AS US) IPO: Valuation Insights
Shinko Electric (6967) Takeover: Changing Break/Gap Risk as Comps Gain
- The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
- There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
- 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.
Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
- On 16th November 2023, Tokyo-based Industrial-use precious metal products manufacturer Furuya Metal (7826 JP) announced they would be moving from TSE Standard to TSE Prime on 6th December 2023.
- This move would trigger a TOPIX Index Inclusion event at the end of January 2024 which would require all the TOPIX-tracking passive funds to buy shares in the company.
- The company also launched an offering in conjunction with the TSE Prime announcement. In this insight, we take a look at the flow dynamics of the upcoming TOPIX Inclusion event.
Ping An A/H Premium: Blow Out Could Lead to Sharp Reversal
- Ping An Insurance (601318 CH) trades at a 40% premium to Ping An Insurance (2318 HK). The premium has blown out the last week and there could be a reversal.
- The difference in Ping An’s AH premium versus the HSAHP Index has shrunk to its narrowest level in the last 10 years.
- Shareholding in Ping An Insurance Group of (601318 CH) via Northbound Connect has dropped and shareholding in Ping An Insurance (H) (2318 HK) via Southbound Connect has increased steadily.
TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
- A few days ago, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】
- That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy.
- Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better.
CSI300 Index Rebalance Preview: A Dozen Changes for June
- With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
- There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.
ASMedia Placement – Momentum Has Been Strong, but an Overhang Exists
- WT Microelectronics (3036 TT) is looking to raise US$256m from selling half of its stake in Asmedia Technology (5269 TT).
- The deal wouldn’t be a very large one to process at just 3.4 days of ASMedia’s ADV.
- Although, the selldown doesn’t appear to be particularly well flagged. The remaining WT Microelectronics’ stake will also create an overhang on ASMedia’s share price as well.
T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal
- I expected a blandiloquent but bletcherous bump from Bain. Discussed in T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain. We got bletcherous.
- But at a mere ¥10 uplift to ¥1,410, we did not get blandiloquent. That’s insulting. But as suggested in the first piece, there was NAVF Risk. And we got it.
- NAVF agreed to sell its 24+% to Bain at ¥1,410 in return for being able to buy 15% of the bidco, fully-levered (i.e. they roll in at minimal cost).
KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F
- L&F Co Ltd (066970 KS) will move from the KOSDAQ Market to the KOSPI Market on 29 January. That means KOSDAQ 150 Index deletion at the close on 26 January.
- As the highest ranked non-constituent from the Information Technology sector at the December rebalance, Seronics Co Ltd (042600 KS) will be added to the index.
- Short interest on L&F Co (066970 KS) is 1.8m shares (KRW 364bn; 4.98% of shares outstanding; 7.24% of float; 2.4x ADV). There could be recalls from passives and forced covering.
CSI500 Index Rebalance Preview: High Turnover & Big Flow
- With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
- The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.
Amer Sports (AS US) IPO: Valuation Insights
- Amer Sports (AS US) is a global iconic sports and outdoor brand group. Amer has launched an NYSE IPO to raise US$1.6-1.8 billion at a US$16.00 to US$18.00 price range.
- We previously discussed the IPO in Amer Sports IPO: The Bull Case, Amer Sports IPO: The Bear Case and Amer Sports IPO: Valuation First-Look.
- We revise our forecasts to reflect the FY23 preliminary estimates and long-term growth targets. Our valuation analysis suggests that Amer is fairly valued at the IPO price range.
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