This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying
- 15 shareholders are looking to sell between 73.9-85m shares (US$1.2bn-US$1.38bn) of ASICS Corp (7936 JP) in a secondary offering that will likely be priced on 23 July.
- ASICS Corp (7936 JP) has also announced a huge upward revision to its sales and profit forecasts with EPS expected to increase 61% from earlier estimates.
- Passive buying will be extremely limited in the short-term with the downward pressure offset to a large extent by the sales and earnings revisions.
2. Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48
- Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively.
- The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
- The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.
3. China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
- China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%.
- The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition.
- The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.
4. Hong Kong: Stocks Facing the Passive Boot in August
- There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
- The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
- There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.
5. Japan – Yet Another Big Round of Passive Selling Expected in August
- 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 August.
- The deletion from passive portfolios will lead to a liquidity event at the end of August 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.
6. Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex
- 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: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), A8 New Media (800 HK), Asia Cement China (743 HK).
- Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP).
7. Doosan Group: Index Implications of the Corporate Restructuring
- The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
- Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
- There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.
8. S&P/ASX Index Rebalance Preview: Potential Changes from Now to September
- With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
- There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX).
- The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.
9. MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
- Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
- The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
- The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.
10. Kokusai Electric Placement Updates – Misbehaving
- KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP).
- We have looked at the lockup expiry and deal dynamics in our earlier notes.
- In this note, we talk about share price performance since then.
