In today’s briefing:
- Denso’s Big Multi-Year Toyota Industries (6201) Selldown
- S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- Japan – Increase in Shorts & Potential Passive Selling in May
- 18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
- BHP/Anglo American: A Decarbonising Solution
- Korea Value-Up Guidelines Release Date Is Set for May 2nd
- Asian Dividend Gems: Eagle Nice International Holdings
- Taiyo Pacific Overbids Brother for Roland DG (6789)
- Quiddity Leaderboard ES50 Sep 24: Engie Gets Closer to a US$1.1bn Index Inflow
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…
S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
- The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
- There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.
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.
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.
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.
BHP/Anglo American: A Decarbonising Solution
- BHP (BHP AU)‘s all-scrip unsolicited Offer for Anglo American (AAL LN), zeroes in on AAL’s copper assets as demand for the metal increases for use in EVs and renewable power.
- The proposal has been labelled highly opportunistic by some shareholders and South African politicians. And that the value of AAL’s Chilian/Peruvian copper mines are obscured by its sprawling business interests.
- The Offer remains conditional and non-binding. A transaction hinges off AAL spinning off its South African iron ore and platinum businesses. Expect AAL to reject terms, but remain engaged.
Korea Value-Up Guidelines Release Date Is Set for May 2nd
- Chosun reports Korean financial authorities advance Value-up plan guidelines to May 2nd, citing momentum decline post-election. Chosun’s credibility enhances report validity.
- Companies will commence Value-up-related disclosures in alignment with the guidelines within May. A dedicated Value-up website is set to launch in May.
- The May 2nd guideline release date is crucial for Value-up momentum trading. Anticipate heightened volatility in Value-up stocks approaching this date.
Asian Dividend Gems: Eagle Nice International Holdings
- Eagle Nice International Holdings’ dividend yield averaged 9.2% from FY 2019 to FY 2023. Its annual dividend payout averaged 72.2% in the same period.
- Eagle Nice (Intl) Hldgs is mainly engaged in the design and manufacture of sportswear for adults and children on an OEM basis. Yue Yuen Industrial Holdings is the largest shareholder.
- Eagle Nice Holdings also has attractive valuations and consistent growth in sales and profits.
Taiyo Pacific Overbids Brother for Roland DG (6789)
- Originally, Brother Industries (6448 JP) wanted to buy Roland DG Corp (6789 JP). Roland invited others to bid, didn’t tell Brother, then said Taiyo Pacific’s ¥5,035 bid won.
- That was low. Weeks later, Brother lobbed a ¥5,200 overbid. They are going through the approvals process but it isn’t clear Brother is negotiating.
- Taiyo has extended and extended and shown up in interviews. Now it has overbid at ¥5,370.
Quiddity Leaderboard ES50 Sep 24: Engie Gets Closer to a US$1.1bn Index Inflow
- The ES50 Index is one of the most highly-tracked and followed indices in Europe and the annual index review takes place in September every year.
- This annual index rebal event usually results in some of the most significant index flow events in Europe every year, typically amounting to billions of dollars of flows.
- In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.
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