From Tokyo Metro IPO to CMCDI to Shinko Electric here's what you need to know this week.

The Smartkarma Weekly Starter is a newsletter published every Sunday and pulls together the top research notes published over the last 7-days from across our platform.

In this week's edition of the Smartkarma Weekly Starter, we get a quick rundown on the top engaged insights for the week.

Start your week off on the right foot with:

Tokyo Metro IPO Trading - Robust Demand for Quality Asset

Tokyo Metro (9023 JP)'s shareholders raised around US$2.4bn in its Japan IPO. In this note, we talk about the trading dynamics.

• Tokyo Metro (9023 JP)'s shareholders raised around US$2.4bn in its Japan IPO.?
• Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

By Sumeet Singh in Equity Capital Markets

Australia: Potential Passive Selling in November Will Be Big

There could be 2 or 3 stocks that are deleted from global passive portfolios in Nov. In each of the cases, there is a lot to sell from passives. Shorts have increased in 2 names and decreased in 1.

• There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
• One name is very high probability while the deletion of the others depends on the day of the week chosen.
• Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.

By Brian Freitas in Event-Driven

SITC International (1308 HK): Unbeatable

SITC's 3Q24 is impressive with surging revenue, solid volume, and good freight rates. Consensus forecasts upgraded, and more room to grow. The DPS of HK$1.12 YTD means a 6.5% dividend yield.

• Together with the just-announced HK$0.40 special DPS, SITC International (1308 HK) has already handed back HK$1.12/share to shareholders YTD, realising a dividend yield of 6.5%.
• Its 3Q24 performance is impressive, with revenue surging 56.6% YoY. Both volume (+13.4%) and average freight rates (+44.1%) have exhibited solid momentum.?
• While the consensus forecasts have been upgraded by 7-11% since the 1H24 result, there appears more room to go. FY24 ROE is now expected to be 32.2%.

By Osbert Tang, CFA in Equity Bottom-Up

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) - LOTS of Room Left To Run

Muirakami-san continues to accumulate Exedy. Now at 23.5%. Remaining overhang from the 36+% offering is 2%. Earnings are in a week. Excess capital abounds. This looks like a Shinmaywa situation.

• This past week, activist Murakami-san's City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?? ￥2,928/share.
• The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They've since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
• If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There's room to run here, still.?

By Travis Lundy in Event-Driven

CMCDI (133 HK): Concessions Don't Go Far Enough

If small, illiquid names, with a activism angle are your bent, get involved in this deep valued closed-end fund around here.

• On the 27th September, China Merchants China Direct Investments (133 HK) (CMCDI) teased a share buyback and a special dividend. But as of today. no firm details have been forthcoming.?
• CMCDI has also now offered to reduce management fees by 25 basis points in the new management agreement, which will be voted on? by independent shareholders in November/December.
• This concession does not go far enough. Especially when 45% of the management fees are received by founder Victor Chu.?

By David Blennerhassett in Equity Bottom-Up

Waaree Energies IPO Update- Forensic Analysis

Waaree Energies IPO comes in with fresh issue worth INR 36 bn and OFS worth INR 7.2 bn. Forensic analysis reveals ongoing concerns including related party transactions and unpaid dues.

• Waaree Energies (0656504D IN) awaited IPO is about to open on October 21. The IPO comprises of fresh issue worth INR 36 bn and OFS worth INR 7.2 bn.?
• This insight is an update to the previous note on the company Waaree Energies IPO- Forensic Analysis , on the forensics front.?
• The company still faces some of the forensic setbacks we found in the DRHP. These include capital purchases from related parties, heated receivables, bizarre lease accounting, unpaid dues, etc.

By Nitin Mangal in Equity Capital Markets

Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break

The aftermath of the China TCM deal break has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. Shinko remains a strong buy.

• At first glance, the?Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
• The aftermath of China Traditional Chinese Medicine (570 HK)?has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread.?
• Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.

By Arun George in Event-Driven

JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance

JD denies there is a run on JD Finance. Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.

• On October 18, JD denies there is a run on JD Finance.
• Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
• We believe the event will negatively impact JD and benefit Alibaba.

By Ming Lu in Equity Bottom-Up

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