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

Toshiba – Kioxia’s Postponed IPO Is NOT About US-China Tensions and That Means More Downside Risk

Toshiba – SK Hynix’s Acquisition of Intel’s NAND Operations Hurts Kioxia’s Value

Intel. Thoughts On The Proposed NAND Flash Sale To SK Hynix.

Toshiba TOPIX Inclusion - Jack Be Nimble, Jack Be Quick...

Toshiba: Kioxia IPO Impact & Activist Positioning

Gravity Works As WeWork Doesn't; Now Plan B

Quiddity Advisors

Event-Driven

In my initial first piece on the <a href="https://www.smartkarma.com/entities/kioxia" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia (6600 JP)</a> IPO on 28 August 2020 called <a href="https://www.smartkarma.com/insights/kioxia-ipo-the-flow-dynamics" target="_blank" data-smartkarma-citation="insights:42648" rel="noopener">Kioxia IPO - The Flow Dynamics</a> I talked about the nature of who was going to be buying (and who was going to be sold to).I also noted my initial reaction that the price might be too high at ¥3,960/share and an EV of close to ¥3.5trln.<blockquote>My initial reaction is that the price may be too high and it could be revised downward. Given the fact that 65% of the offering goes to international investors, who are more inclined to provide their pricing input in a negative way, I think it eminently possible that the offering could be priced lower. I would not be surprised to see an offering price 10-25% lower than the ¥3960 proffered.</blockquote><h3>A New IPO Price Range</h3>On Thursday 17 September it was reported that the Kioxia Holdings IPO Price Range would be set at ¥2800-3500/share making the new offering size top out at ¥334.3bn and the market cap at IPO price be ¥1.88trln - both top figures year-to-date in 2020. That is a drop of 11.6-29.3%, which is a bit more aggressive than I had expected. It means the immediate uplift to Toshiba is considerably smaller compared to their in-price. Since I wrote bearishly on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> exactly a month ago in <a href="https://www.smartkarma.com/insights/toshiba-topix-inclusion-jack-be-nimble-jack-be-quick" target="_blank" data-smartkarma-citation="insights:42235" rel="noopener">Toshiba TOPIX Inclusion - Jack Be Nimble, Jack Be Quick...</a> the shares are down 13.9%, but only down about 3% since <a href="https://www.smartkarma.com/insights/toshiba-kioxia-ipo-impact-activist-positioning" target="_blank" data-smartkarma-citation="insights:42638" rel="noopener">Toshiba: Kioxia IPO Impact &amp; Activist Positioning</a> on 30 August.If the market reacts not badly to the news of a possibly sharply reduced Kioxia IPO price and the corollary that lower price means lower proceeds (now and in future on a mark-to-market basis) will reduce the payout to Toshiba shareholders in terms of buying back stock could have a negative effect on Toshiba shares. That is worth watching for. It might be worth buying to cover the short. A bit lower down it is worth going long again. More below the fold.

In my initial first piece on the Kioxia (6600 JP) IPO on 28 August 2020 called Kioxia IPO - The Flow Dynamics I talked about the nature of who was going to be buying (and who was going to be sold to).I also noted my initial reaction that the price might be too high at ¥3,960/share and an EV of close to ¥3.5trln.My initial reaction is that the price may be too high and it could be revised downward. Given the fact that 65% of the offering goes to international investors, who are more inclined to provide their pricing input in a negative way, I think it eminently possible that the offering could be priced lower. I would not be surprised to see an offering price 10-25% lower than the ¥3960 proffered.A New IPO Price RangeOn Thursday 17 September it was reported that the Kioxia Holdings IPO Price Range would be set at ¥2800-3500/share making the new offering size top out at ¥334.3bn and the market cap at IPO price be ¥1.88trln - both top figures year-to-date in 2020. That is a drop of 11.6-29.3%, which is a bit more aggressive than I had expected. It means the immediate uplift to Toshiba is considerably smaller compared to their in-price. Since I wrote bearishly on Toshiba Corp (6502 JP) exactly a month ago in Toshiba TOPIX Inclusion - Jack Be Nimble, Jack Be Quick... the shares are down 13.9%, but only down about 3% since Toshiba: Kioxia IPO Impact &amp; Activist Positioning on 30 August.If the market reacts not badly to the news of a possibly sharply reduced Kioxia IPO price and the corollary that lower price means lower proceeds (now and in future on a mark-to-market basis) will reduce the payout to Toshiba shareholders in terms of buying back stock could have a negative effect on Toshiba shares. That is worth watching for. It might be worth buying to cover the short. A bit lower down it is worth going long again. More below the fold. 

Toshiba Corp

Toshiba Is A Range Trade. Still.