Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On 2 September at 7pm Australia time, the Marvelous Milton Merger Arb ratio was fixed, and just now it was <a href="https://www.asx.com.au/asxpdf/20210903/pdf/4504qbggnhgyc0.pdf" target="_blank" rel="noopener">announced</a>. </p><p>The ratio of <a href="https://www.smartkarma.com/entities/milton-corp-ltd" target="_blank" data-smartkarma-citation="entities:29090:1" rel="noopener">Milton Corp Ltd (MLT AU)</a> shares to <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson and Co. Ltd (SOL AU)</a> shares has been decided at 0.1863. Entitlements will be rounded up or down to the nearest share.</p><p>Those who have been following on my model would have the NAV at A$5.622 on 2 Sep at the close, or A$5.702/share including the A$0.08 of dividend which went ex- on August 31. That delivered me a number of 0.1864 but they started with A$5.70 rather than A$5.702.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/227/647/original/Screenshot+2021-09-03+at+12.18.13+PM.png?1630642709" class="editor-image img-responsive" data-smartkarma-image-id="227647"></figure></section><p>As reported in the <a href="https://www.afr.com/street-talk/milton-corp-s-4b-takeover-finds-proxy-firm-support-20210901-p58ntx" target="_blank" rel="noopener">AFR</a>, both major proxy services came out in favor of the deal saying advantages outweighed disadvantages, and noting the IE's "fair value" range said pricing was appropriate; in a good quote from the article, "there were no stones thrown", which usually results in an approval at the Scheme Meeting.</p><p>The schedule reported in the filing is unchanged from the schedule in the Scheme Booklet.</p><div>
<p>Today's announcement means the merger trade is "fixed" rather than floating and now the remaining "risks" are...</p>
<ul>
<li>a small and eminently arb-able risk arb spread (which is 3.56% less comms and borrow fees as I type (excluding any franking credit benefit)</li>
<li>the risk of whether this gets voted through at the Scheme Meeting on the 13th, and</li>
<li>the index impacts</li>
</ul>
<p>There is, as always, more below the fold.</p>
</div><hr><div><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 539pt;"><h2>History of Insights on the Situation</h2></td></tr>
<tr>
<td><strong>Date</strong></td>
<td><strong>Title</strong></td>
</tr>
<tr>
<td>22 Jun 21</td>
<td><a href="https://www.smartkarma.com/insights/milton-merger-is-a-most-marvelous-arb" target="_blank" rel="noopener">Milton Merger Is A Most Marvelous Arb</a></td>
</tr>
<tr>
<td>24 Jun 21</td>
<td><a href="https://www.smartkarma.com/insights/milton-whsp-merger-index-implications-and-the-marvelous-arb" target="_blank" rel="noopener">Milton-WHSP Merger Index Implications and the Marvelous Arb</a></td>
</tr>
<tr>
<td>21 Jul 21</td>
<td><a href="https://www.smartkarma.com/insights/milton-s-marvelous-arm-meanders-along-marvelously" target="_blank" rel="noopener">Milton’s Marvelous Arb Meanders Along... Marvelously</a></td>
</tr>
<tr>
<td>5 Aug 21</td>
<td><a href="https://www.smartkarma.com/insights/the-still-marvelous-milton-arb-confirms-its-schedule-much-marvelousness-to-come" target="_blank" rel="noopener">The STILL MARVELOUS Milton Arb Confirms Its Schedule - Much Marvelousness to Come</a></td>
</tr>
<tr>
<td>12 Aug 21</td>
<td><a href="https://www.smartkarma.com/insights/the-magnality-of-the-marvelous-milton-merger-makes-a-moribund-march-to-metaphysis-it-s-mirific" target="_blank" rel="noopener">The Magnality of the Marvelous Milton Merger Makes a Moribund March To Metaphysis (It’s Mirific!)</a></td>
</tr>
<tr>
<td>25 Aug 21</td>
<td>
<a href="https://www.smartkarma.com/insights/marvelous-milton-making-its-move-new-30yr-highs-on-both-stocks" target="_blank" data-smartkarma-citation="insights:56651" rel="noopener">Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks</a> </td>
</tr>
</tbody>
</table></div><div><p></p></div>

On 2 September at 7pm Australia time, the Marvelous Milton Merger Arb ratio was fixed, and just now it was announced. The ratio of Milton Corp Ltd (MLT AU) shares to Washington H. Soul Pattinson and Co. Ltd (SOL AU) shares has been decided at 0.1863. Entitlements will be rounded up or down to the nearest share.Those who have been following on my model would have the NAV at A$5.622 on 2 Sep at the close, or A$5.702/share including the A$0.08 of dividend which went ex- on August 31. That delivered me a number of 0.1864 but they started with A$5.70 rather than A$5.702.As reported in the AFR, both major proxy services came out in favor of the deal saying advantages outweighed disadvantages, and noting the IE's "fair value" range said pricing was appropriate; in a good quote from the article, "there were no stones thrown", which usually results in an approval at the Scheme Meeting.The schedule reported in the filing is unchanged from the schedule in the Scheme Booklet.
Today's announcement means the merger trade is "fixed" rather than floating and now the remaining "risks" are...

a small and eminently arb-able risk arb spread (which is 3.56% less comms and borrow fees as I type (excluding any franking credit benefit)
the risk of whether this gets voted through at the Scheme Meeting on the 13th, and
the index impacts

There is, as always, more below the fold.






History of Insights on the Situation

Date
Title


22 Jun 21
Milton Merger Is A Most Marvelous Arb


24 Jun 21
Milton-WHSP Merger Index Implications and the Marvelous Arb


21 Jul 21
Milton’s Marvelous Arb Meanders Along... Marvelously


5 Aug 21
The STILL MARVELOUS Milton Arb Confirms Its Schedule - Much Marvelousness to Come


12 Aug 21
The Magnality of the Marvelous Milton Merger Makes a Moribund March To Metaphysis (It’s Mirific!)


25 Aug 21

Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks 




Marvelous Milton Merger Mapping Mabbled: Ratio Done, Now For The Hard Part

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

China Biologic Products / Equity Capital Markets

<p>On Wednesday after market close, <a href="https://www.smartkarma.com/entities/china-biologic-products-hold" target="_blank" data-smartkarma-citation="entities:22633:1" rel="noopener">China Biologic Products (CBPO US)</a> announced a surprising privatisation bid from a consortium for $120 per ADS. The bid values China Biologic at a market cap of $4.6 billion. China Biologic shares jumped 10% to $114 per ADS, which is 5% below the bid price. </p><div class="content-highlight"><p>The latest privatisation bid follows privatisation offers in July (withdrawn) and August 2018 (rejected). Overall, we believe that the bid is unattractive and faces several hurdles. </p></div>

On Wednesday after market close, China Biologic Products (CBPO US) announced a surprising privatisation bid from a consortium for $120 per ADS. The bid values China Biologic at a market cap of $4.6 billion. China Biologic shares jumped 10% to $114 per ADS, which is 5% below the bid price. The latest privatisation bid follows privatisation offers in July (withdrawn) and August 2018 (rejected). Overall, we believe that the bid is unattractive and faces several hurdles. 

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Ramsay Health Care / Equity Capital Markets

<p>Ramsay Health Care's largest shareholder, Paul Ramsay Foundation, is selling AUD 1.3 billion block after market close today. In this insight, we would like to discuss our thoughts on the deal. </p><p>The company is a decent blue-chip healthcare stock operating the largest private hospital chains in Australia, France and Scandinavian. It offers undemanding valuation compared to other Australia listed healthcare peers with a track record of growing its dividend payout. Hence we believe the deal will attract long-only participation. </p><p>Despite an average positive one month return, the recent deal did not do well and the deal scores slightly negative in our ECM Framework. We would bid the deal at the low end.</p>

Ramsay Health Care's largest shareholder, Paul Ramsay Foundation, is selling AUD 1.3 billion block after market close today. In this insight, we would like to discuss our thoughts on the deal. The company is a decent blue-chip healthcare stock operating the largest private hospital chains in Australia, France and Scandinavian. It offers undemanding valuation compared to other Australia listed healthcare peers with a track record of growing its dividend payout. Hence we believe the deal will attract long-only participation. Despite an average positive one month return, the recent deal did not do well and the deal scores slightly negative in our ECM Framework. We would bid the deal at the low end.

Ramsay Health Care A$1.3bn Placement - A Decent Stock but Past Performance Weighs

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<p style="text-align: left;">Of the 134 companies that reported annual results in August, 65% missed their targets on the top line and just over half reported a rise in profits over the previous year.</p><p style="text-align: left;">Total short notional in Australian stocks as of August month end was A$32.64bn, down A$1.15bn over the month.</p><p style="text-align: left;">Over the month, the largest short positions were built in <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:147:1">Bhp Billiton (BHP AU)</a>, <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:41:1">Fortescue Metals (FMG AU)</a>, <a href="https://www.smartkarma.com/entities/suncorp-group-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:4218:1">Suncorp (SUN AU)</a>, <a href="https://www.smartkarma.com/entities/a2-milk-co-ltd-95d4fbed-afa1-41e9-bafb-a5f1ef97622e" target="_blank" rel="noopener" data-smartkarma-citation="entities:22775:1">A2 Milk Co Ltd (A2M AU)</a> and <a href="https://www.smartkarma.com/entities/worleyparsons-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:178:1">WorleyParsons Ltd (WOR AU)</a> and shorts were covered in <a href="https://www.smartkarma.com/entities/woolworths-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:500:1">Woolworths Ltd (WOW AU)</a>, <a href="https://www.smartkarma.com/entities/westpac-banking-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:444:1">Westpac Banking (WBC AU)</a>, <a href="https://www.smartkarma.com/entities/national-australia-bank-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:15:1">National Australia Bank (NAB AU)</a>, <a href="https://www.smartkarma.com/entities/transurban-group" target="_blank" rel="noopener" data-smartkarma-citation="entities:593:1">Transurban Group (TCL AU)</a> and <a href="https://www.smartkarma.com/entities/csl-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:917:1">CSL Ltd (CSL AU)</a>.</p><p style="text-align: left;">The largest short positions as a percentage of free float are <a href="https://www.smartkarma.com/entities/netwealth-group-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:25951:1">Netwealth (NWL AU)</a>, <a href="https://www.smartkarma.com/entities/nufarm-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:1128:1">Nufarm Ltd (NUF AU)</a>, <a href="https://www.smartkarma.com/entities/inghams-group-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:23640:1">Inghams (ING AU)</a>, <a href="https://www.smartkarma.com/entities/harvey-norman-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:645:1">Harvey Norman Holdings (HVN AU)</a> and <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:3572:1">Orocobre Ltd (ORE AU)</a> while the large cap stocks with the highest days to cover are <a href="https://www.smartkarma.com/entities/apn-news-media-limited" target="_blank" rel="noopener" data-smartkarma-citation="entities:709:1">HT&amp;E Ltd (HT1 AU)</a>, <a href="https://www.smartkarma.com/entities/mesoblast-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:769:1">Mesoblast Ltd (MSB AU)</a>, <a href="https://www.smartkarma.com/entities/australian-agricultural-co" target="_blank" rel="noopener" data-smartkarma-citation="entities:3329:1">Australian Agricultural Co (AAC AU)</a> and <a href="https://www.smartkarma.com/entities/myer-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:577:1">Myer Holdings (MYR AU)</a>.</p>

Of the 134 companies that reported annual results in August, 65% missed their targets on the top line and just over half reported a rise in profits over the previous year.Total short notional in Australian stocks as of August month end was A$32.64bn, down A$1.15bn over the month.Over the month, the largest short positions were built in Bhp Billiton (BHP AU), Fortescue Metals (FMG AU), Suncorp (SUN AU), A2 Milk Co Ltd (A2M AU) and WorleyParsons Ltd (WOR AU) and shorts were covered in Woolworths Ltd (WOW AU), Westpac Banking (WBC AU), National Australia Bank (NAB AU), Transurban Group (TCL AU) and CSL Ltd (CSL AU).The largest short positions as a percentage of free float are Netwealth (NWL AU), Nufarm Ltd (NUF AU), Inghams (ING AU), Harvey Norman Holdings (HVN AU) and Orocobre Ltd (ORE AU) while the large cap stocks with the highest days to cover are HT&amp;E Ltd (HT1 AU), Mesoblast Ltd (MSB AU), Australian Agricultural Co (AAC AU) and Myer Holdings (MYR AU).

Australia Short Interest - August in Review

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

<div class="content-highlight"><p style="text-align: center;"><em>A novel approach targeting recurrent heart attacks adds significant upside potential to CSL's pipeline</em></p></div><hr><p style="text-align: left;">Breakthrough medicine candidate CSL112 represents an exciting opportunity for <a href="https://www.smartkarma.com/entities/917" target="_blank" data-smartkarma-citation="entities:917:1">CSL Ltd (CSL AU)</a> to address a high unmet medical need in patients at risk of recurrent cardiovascular events in the first 90 days following an initial heart attack. This is an area not adequately addressed by current drug therapies. While significant risks remain, we think successful completion of the phase 3 trial could see commercial launch of CSL112 by 2023 with peak sales of around USD 10 billion by 2029 assuming a role in first heart attack settings. Using a 55% probability of success, CSL112 adds AUD 40 to our current CSL fair value estimate, in part increasing our valuation to AUD 200 per share. All else equal, we see upside potential of AUD 250 pending launch, with downside of AUD 140 should CSL112 fail to progress. </p><hr><h2>Key Takeaways </h2><ul>
<li>CSL112 is a proprietary formulation of plasma-derived lipoprotein, apolipoprotein A-I, shown to enhance cholesterol efflux. Cholesterol efflux capacity is a marker of high-density lipoprotein, or HDL, function and is strongly inversely correlated with cardiovascular risk. This led to the HDL hypothesis, which posits increasing HDL-C may rapidly remove cholesterol from atherosclerotic plaque to the liver and reduce early recurrent events following an initial attack.</li>
<li>CSL112 is the latest in a long line of compounds targeting HDL aimed at modifying atherosclerotic plaque in heart attack patients. Despite limited efficacy data, CSL112 has exhibited a favourable safety profile and proven to be well tolerated among high-risk patient groups. </li>
<li> CSL112 is a reconstituted high-density lipoprotein, or rHDL, and yet another by-product of the process used to manufacture CSL's flagship intravenous immunoglobulin, or IVIG, products. </li>
<li>We increase our fair value estimate for CSL to AUD 200 per share, from AUD 145, driven by our risk-adjusted assessment of the CSL112 opportunity. This is an equivalent market capitalisation increase of approximately AUD 27 billion, highlighting the significance of this opportunity. We remain positive on CSL112's progress given the recently commenced phase 3 (AEGIS II) study. </li>
</ul><p><em>Analyst: Chris Kallos, CFA</em></p>

A novel approach targeting recurrent heart attacks adds significant upside potential to CSL's pipelineBreakthrough medicine candidate CSL112 represents an exciting opportunity for CSL Ltd (CSL AU) to address a high unmet medical need in patients at risk of recurrent cardiovascular events in the first 90 days following an initial heart attack. This is an area not adequately addressed by current drug therapies. While significant risks remain, we think successful completion of the phase 3 trial could see commercial launch of CSL112 by 2023 with peak sales of around USD 10 billion by 2029 assuming a role in first heart attack settings. Using a 55% probability of success, CSL112 adds AUD 40 to our current CSL fair value estimate, in part increasing our valuation to AUD 200 per share. All else equal, we see upside potential of AUD 250 pending launch, with downside of AUD 140 should CSL112 fail to progress. Key Takeaways 
CSL112 is a proprietary formulation of plasma-derived lipoprotein, apolipoprotein A-I, shown to enhance cholesterol efflux. Cholesterol efflux capacity is a marker of high-density lipoprotein, or HDL, function and is strongly inversely correlated with cardiovascular risk. This led to the HDL hypothesis, which posits increasing HDL-C may rapidly remove cholesterol from atherosclerotic plaque to the liver and reduce early recurrent events following an initial attack.
CSL112 is the latest in a long line of compounds targeting HDL aimed at modifying atherosclerotic plaque in heart attack patients. Despite limited efficacy data, CSL112 has exhibited a favourable safety profile and proven to be well tolerated among high-risk patient groups. 
 CSL112 is a reconstituted high-density lipoprotein, or rHDL, and yet another by-product of the process used to manufacture CSL's flagship intravenous immunoglobulin, or IVIG, products. 
We increase our fair value estimate for CSL to AUD 200 per share, from AUD 145, driven by our risk-adjusted assessment of the CSL112 opportunity. This is an equivalent market capitalisation increase of approximately AUD 27 billion, highlighting the significance of this opportunity. We remain positive on CSL112's progress given the recently commenced phase 3 (AEGIS II) study. 
Analyst: Chris Kallos, CFA

Elevating Heart Rates as Potential CSL Blockbuster Enters Phase 3

Australia

CSL Limited develops, manufactures and markets human pharmaceutical and diagnostic products derived from human plasma. The Company's products include pediatric and adult vaccines, infection, pain medicine, skin disorder remedies, antivenoms, anticoagulants, and immunoglobulins.

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CSL Ltd (CSL AU)

Marvelous Milton Merger Mapping Mabbled: Ratio Done, Now For The Hard Part

Marvelous Milton Merger Mapping Mabbled. The ratio is settled at 0.1863 shares of WHSP for every share of Milton. Next is the index trade... But...

Travis Lundy

China Biologic's Privatisation Redux

On Wednesday after market close, China Biologic Products (CBPO US) announced a surprising privatisation bid from a consortium for $120 per ADS. The...

Arun George

Ramsay Health Care A$1.3bn Placement - A Decent Stock but Past Performance Weighs

Ramsay Health Care's largest shareholder, Paul Ramsay Foundation, is selling AUD 1.3 billion block after market close today. In this insight, we...

Ke Yan, CFA, FRM

Australia Short Interest - August in Review

Of the 134 companies that reported annual results in August, 65% missed their targets on the top line and just over half reported a rise in profits...

Brian Freitas

Elevating Heart Rates as Potential CSL Blockbuster Enters Phase 3

A novel approach targeting recurrent heart attacks adds significant upside potential to CSL's pipelineBreakthrough medicine candidate CSL112...

Morningstar, Inc.

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