In today’s briefing:
- SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- Merger Arb Mondays (17 Jul) – Chindata, Eoflow, JSR, IMAX, Mason, Estia, Musgrave, Origin, InvoCare
- Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors
- Lutronic Tender Offer by Hahn & Company: 2nd Round
- Pre-IPO WuXi XDC – The Beautiful Story and the Truth Behind
- Interglobe Aviation (Indigo) Lockup – Time for Another Selldown, This Time Could Touch US$900m
- Ohayo Japan|Equities Cruise on No Recession Narrative; NUGGET: JAL(9201) A Double Winner
- Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
- That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
- SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.
Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- Busy week in India with the adhoc changes to the NIFTY, NSE Nifty Next 50, S&P BSE SENSEX and Nifty Bank due to the HDFC Limited and HDFC Bank merger.
- The IDX could announce the changes to the IDX30, LQ45 and IDX80 indices in the coming week, though there is no firm schedule for announcements.
- Yet another week of inflows to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF and outflows from the Hang Seng H Share Index ETF (2828 HK).
Merger Arb Mondays (17 Jul) – Chindata, Eoflow, JSR, IMAX, Mason, Estia, Musgrave, Origin, InvoCare
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads 111 Inc (YI US), Chindata Group (CD US), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP).
Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.”
- Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
- Lots of moving parts on this one, but in the end, Retail probably decides this.
Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors
- One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
- Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
- We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.
Lutronic Tender Offer by Hahn & Company: 2nd Round
- According to local media (Seoul Economic Daily), Hahn & Company plans to make a second round of tender offer for Lutronic Corp, in order to meet the delisting requirements.
- The tender offer price is 36,700 won, the same as the first tender offer price.
- We believe that Hahn & Co is likely to successfully complete this second round of tender offer of Lutronic and it is likely to be delisted in the coming months.
Pre-IPO WuXi XDC – The Beautiful Story and the Truth Behind
- Although WuXi XDC has financing needs, we’re more inclined to view this spin-off listing as another capital operation of WuXi AppTec/WuXi Bio, who may not want to take risks alone.
- Global ADC/broader bioconjugate market is at a nascent stage of development, with high R&D risks/commercialization uncertainties. We cannot guarantee whether WuXi XDC will maintain its industry-leading position in the future.
- Although high growth can bring good stories, we’re not sure how much actual market space WuXi XDC will have in the future,which is the key to determining the valuation ceiling.
Interglobe Aviation (Indigo) Lockup – Time for Another Selldown, This Time Could Touch US$900m
- InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 29%+ stake was released from lock-up today.
- He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia.
- In this note, we will talk about the lockup dynamics and possible placement.
Ohayo Japan|Equities Cruise on No Recession Narrative; NUGGET: JAL(9201) A Double Winner
- OVERSEAS. SPX hit 52W highs as Yellen sees no US Recession; Rates fall on “inflation behind us” narrative; Global HF unwind bearish US positions; EV WARS as Ford Slashes prices.
- JAPAN. NKY Futures -0.2% vs Cash; USDJPY 138.7%; Japan Back after Marine Day Holidays to lower US rates, stronger yen, Weaker China, and Tech bid; Blackrock lifts Japan stock outlook
- NUGGET. JAL(9201) Double Winner(Margins+Emmissions) with Fleet Upgrade. Share price has run, but strong tailwinds on demand and operational efficiency. Watch for pullback to pick up.
Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023.
- The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
- We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares.
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