In today’s briefing:
- Denso’s Big Multi-Year Toyota Industries (6201) Selldown
- IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
- Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- A Review of Post IPO Price Performance of Top 13 IPOs in Korea Past 8 Months
- 18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
- HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June
- Japan – Increase in Shorts & Potential Passive Selling in May
- Today, Korean Regulators Unveiled an Electronic System Aimed at Blocking Naked Short-Selling
- Revisiting China Merchants Ports (144 HK)
- An Overlooked Passive Flow Potential for the Korea Index: Foreign Listing Materiality
Denso’s Big Multi-Year Toyota Industries (6201) Selldown
- We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
- Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
- This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then…
IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
- There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
- The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ).
- With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.
Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- Last October, activist Palliser Capital launched a campaign (presentation) on well-known “stub trade” Keisei Electric Railway Co (9009 JP) with a stake of about 1.6%.
- The proposal? Monetise a decent stake in Oriental Land (4661 JP), repurchase shares, and invest for growth. Keisei responded 6-8 weeks ago with a buyback and 1% OLC stake sale.
- I thought that was time to bail. That was it. But now, Palliser has re-engaged. Today a press release (Japanese/English) and a Letter to the Board.
A Review of Post IPO Price Performance of Top 13 IPOs in Korea Past 8 Months
- In this insight, we review the share price performances of the top 13 IPOs (in terms of market cap) in Korea in the past 8 months.
- We review the the share price performances over different time periods (1 day, 1 week, and 1 month). We also analyze the demand ratios and lock-up periods of the IPOs.
- On average, 12.7% of the IPO shares are under lockup periods for the 13 companies listed below. HD Hyundai Marine Solution IPO has 45.8% of shares under lock-up.
18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
- Shin Etsu Chemical (4063 JP), owner of a 44% stake in Mimasu Semiconductor Industry (8155 JP), has announced a Tender Offer to take out minorities in Mimasu.
- This is not surprising. They bought in 19 years ago, raised to 40+% 18yrs ago, then waited. Finally, we have a deal. But it’s too cheap.
- Shin-Etsu starts with ~45%, and crossholders and the chairman get it to 52%. Then they need a bit to get them to 67% but it should be straightforward.
HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June
- There were only 12 new listings on the Main Board of the HKEX (388 HK) in the first quarter of the year. More than half the listings were in March.
- Of those stocks, we only see Robosense Technology (2498 HK) having a chance of being added to the HSCI in June and then into Southbound Stock Connect.
- There is a big lock-up expiry for Robosense Technology (2498 HK) in July and that should keep the stock under pressure.
Japan – Increase in Shorts & Potential Passive Selling in May
- There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in May.
- The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.
- Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.
Today, Korean Regulators Unveiled an Electronic System Aimed at Blocking Naked Short-Selling
- Today’s reveal includes two main parts: first, setting up internal balance management for investors; second, building the detection system to block naked short-selling.
- FSC and FSS haven’t provided a set date for system completion but suggest it may start late this year or early next year. Uncertainty remains on overseas investor participation.
- A decision on short selling is due in June, but no confirmation was given today. However, the local market anticipates short selling resuming before this system is fully operational.
Revisiting China Merchants Ports (144 HK)
- Four years ago, almost to the day, Bloomberg ran an article, “China Merchants Group Ltd. is exploring taking China Merchants Port Holdings private“. China Merchants Ports (144 HK) popped 23%.
- CMP gave back (most) of that gain a month later. Shares are up just ~10% since.
- CMP’s implied stub is bouncing around a multi-year low; and the simple ratio (CMP/ Shanghai International Port Group (600018 CH)) is around an all-time low.
An Overlooked Passive Flow Potential for the Korea Index: Foreign Listing Materiality
- With the rise in Coupang’s market cap, it’s imperative to evaluate if the Korea Index can attain eligibility to include foreign-listed companies.
- Coupang’s 45% YTD surge nears a $41B market cap, with a 65% free-float rate equating to $27B. Yet, to meet Korea Index eligibility, an additional $23B is needed.
- Aside from Coupang, more companies are preparing for overseas listings. Also, potential stock price increases for Coupang should be considered. The combined market cap approaches the US$50B threshold.
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