Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Honshu Chemical - What WAS the Wrong Price Gets Wronger

Honshu Chemical (4115) Shareholders Perhaps One Day From a Wrong Price Takeover

Honshu Chemical (4115) - An Embarrassment of Riches

Quiddity Advisors

Event-Driven

Last November,  <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-chemicals-inc" target="_blank" data-smartkarma-citation="entities:1703:1" rel="noopener">Mitsui Chemicals (4183 JP)</a> jointly announced they would launch a Tender Offer for the 46% of shares of <a href="https://www.smartkarma.com/entities/honshu-chemical-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:9094:1" rel="noopener">Honshu Chemical Industry (4115 JP)</a> that they did not own.I wrote about it in <a href="https://www.smartkarma.com/insights/honshu-chemical-4115-an-embarrassment-of-riches" target="_blank" data-smartkarma-citation="insights:45197" rel="noopener">Honshu Chemical (4115) - An Embarrassment of Riches</a>. The deal was that after receiving all the approvals, perhaps in May 2021, they would launch a Tender Offer at ¥1830, which implied an EV//EBITDA of 2.7x.When Q3 earnings were announced in February, <a href="https://www.smartkarma.com/entities/honshu-chemical-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:9094:1" rel="noopener">Honshu Chemical Industry (4115 JP)</a> lifted its OP forecast by 24% and its Net Income forecast by 33% to ¥1.8bn. But as there was no event yet for the Tender Offer, there was no "need" to review the Board's support for the Tender Offer. I wrote about how this was WRONGER in <a href="https://www.smartkarma.com/insights/honshu-chemical-what-was-the-wrong-price-gets-wronger" target="_blank" data-smartkarma-citation="insights:48124" rel="noopener">Honshu Chemical - What WAS the Wrong Price Gets Wronger</a>.Last week I wrote about how this looked like it might get wronger still. On Friday, Honshu Chemical reported Revenues 2.4% higher than forecast for the full year (note the entire difference arrived in Q4. The OP result was more than 10% higher than the February upward revision to Guidance. The Net Profit number came in at ¥2.06bn, which was 14.4% higher than February guidance and 53% higher than guidance as of the Announcement. The extra cash added to the firm since then amounts to 3.3% of the Tender Offer Price. Conveniently, if any of this beat of forecasts on what the buyers called "high growth potential" would result in forward-looking forecasts different than the original management forecasts (note that the FY2021 OP result was the same as the FY2023 management forecast presented in November), the company is not showing FY2022 forecasts because of the takeover.

Last November,  Mitsui &amp; Co Ltd (8031 JP) and Mitsui Chemicals (4183 JP) jointly announced they would launch a Tender Offer for the 46% of shares of Honshu Chemical Industry (4115 JP) that they did not own.I wrote about it in Honshu Chemical (4115) - An Embarrassment of Riches. The deal was that after receiving all the approvals, perhaps in May 2021, they would launch a Tender Offer at ¥1830, which implied an EV//EBITDA of 2.7x.When Q3 earnings were announced in February, Honshu Chemical Industry (4115 JP) lifted its OP forecast by 24% and its Net Income forecast by 33% to ¥1.8bn. But as there was no event yet for the Tender Offer, there was no "need" to review the Board's support for the Tender Offer. I wrote about how this was WRONGER in Honshu Chemical - What WAS the Wrong Price Gets Wronger.Last week I wrote about how this looked like it might get wronger still. On Friday, Honshu Chemical reported Revenues 2.4% higher than forecast for the full year (note the entire difference arrived in Q4. The OP result was more than 10% higher than the February upward revision to Guidance. The Net Profit number came in at ¥2.06bn, which was 14.4% higher than February guidance and 53% higher than guidance as of the Announcement. The extra cash added to the firm since then amounts to 3.3% of the Tender Offer Price. Conveniently, if any of this beat of forecasts on what the buyers called "high growth potential" would result in forward-looking forecasts different than the original management forecasts (note that the FY2021 OP result was the same as the FY2023 management forecast presented in November), the company is not showing FY2022 forecasts because of the takeover. 

Honshu Chemical Shareholders Get the Short End of the Stick As The Board Is Ex-Gourd