In today’s briefing:
- Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
- Toshiba – Good News?
- MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement
- Toshiba (6502) – Whoop! There It Is!
- TOPIX Inclusions: Who Is Ready (Feb 2023)
- KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10
- China Telcos: Send In The Clouds
- AGC (5201 JP) – A Big Buyback
- Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
- On 31 January, the expected “deadline” for a bank loan agreement with the JIP Consortium bidding for Toshiba, we got news that commitment confirmation would be extended to 3 February.
- Every other time we got a deadline extension, we got an article. On 3-6 Feb, we got no article, suggesting we were close. Today, a Bloomberg article says terms agreed.
- That gets us over the biggest hump. Now we have to look at possible next steps and timing.
Toshiba – Good News?
- So JIP appears to have finally secured funding for its tortured Toshiba bid.
- The market is reacting positively and we think this is reasonable but the real question is whether Toshiba management will be amenable to the new terms of JIP’s deal.
- In our view, there are certain quirks regarding recent news flow which point to a potential answer to that question.
MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
- The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
- Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.
DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement
- The Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) joint shareholder meeting is in two weeks and amalgamation could be completed in the next month or two.
- We forecast inflows to the NewCo from MSCI trackers while there will be no flows from FTSE All-World/All-Cap and Stock Exchange of Thailand SET 50 Index (SET50 INDEX) trackers.
- Srisawad Power 1979 (SAWAD TB) is currently comfortably in the lead to be added to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in an ad hoc rebalance.
Toshiba (6502) – Whoop! There It Is!
- As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
- The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
- Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.
TOPIX Inclusions: Who Is Ready (Feb 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Jan 2023)
- Our top pick from the last insight CELSYS (3663 JP) (previously known as Artspark) has gained ~14% in roughly a month.
KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10
- From a trading perspective, we should pay attention to the KOSPI 200 corporate actions in Hyundai Department Group’s demerger events, as both companies are KOSPI 200 constituents.
- Hyundai Green Food’s surviving company won’t beat the cutoff, resulting in a KOSPI 200 constituent change on April 10. Samyang Foods will be a new addition.
- Even the size of KOSPI 200 ETFs that will likely go into mechanical trading on April 10 will cause a significant price impact from a day trading perspective.
China Telcos: Send In The Clouds
- The rapid adoption of cloud computing has led to China boasting the world’s second-largest cloud computing market.
- This migration to the cloud is in lock-step with global customer needs: scale, greater efficiency, and availability; together with a reduction in capex and infrastructure complexity.
- The big three PRC telcos are firmly in the mix, with each announcing 100%+ growth in revenue for their cloud businesses in 1H22. Expect that trend to continue.
AGC (5201 JP) – A Big Buyback
- AGC Inc (5201 JP) today announced Q4 earnings where revenues were great, OP was slightly disappointing, and Net Profits were awful because of significant impairments.
- The company, however, announced a large buyback – its first in 5 years and equivalent to all the buybacks in the previous five years.
- The buyback should have impact on what is an interesting name with broad institutional ownership and not overwhelming liquidity.
Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
- Ihara Science (5999 JP) announced an MBO by the chairman.
- It’s at an all-time high, but it is not especially attractive. The register is also really interesting.
- This is a smallcap but i would not be surprised to see a bumpitrage effort. In fact, I’d be surprised if we didn’t.
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