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.

Event-Driven

<a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> made an offer to acquire <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>/IJMC’s entire stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  <div class="content-highlight">A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  </div>

Kuala Lumpur Kepong (KLK MK) made an offer to acquire Ijm Corp Bhd (IJM MK)/IJMC’s entire stake in Ijm Plantations (IJMP MK)/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

The <a href="https://www.smartkarma.com/entities/kuala-lumpur-composite-index" target="_blank" data-smartkarma-citation="entities:22913:1" rel="noopener">Kuala Lumpur Composite Index (Klci) (FBMKLCI INDEX)</a> is the flagship index of the Bursa Malaysia. The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be announced on 3 December and will be effective after the close of trading on 18 December.Based on last market prices, we see <a href="https://www.smartkarma.com/entities/supermax-corp-bhd" target="_blank" data-smartkarma-citation="entities:12883:1" rel="noopener">Supermax Corp (SUCB MK)</a> and <a href="https://www.smartkarma.com/entities/kossan-rubber-industries" target="_blank" data-smartkarma-citation="entities:20482:1" rel="noopener">Kossan Rubber Industries (KRI MK)</a> being included in the index, and expect <a href="https://www.smartkarma.com/entities/genting-malaysia-bhd" target="_blank" data-smartkarma-citation="entities:3141:1" rel="noopener">Genting Malaysia (GENM MK)</a> and <a href="https://www.smartkarma.com/entities/genting-bhd" target="_blank" data-smartkarma-citation="entities:14210:1" rel="noopener">Genting Bhd (GENT MK)</a> to be deleted.The one-way turnover of the rebalance is expected to be 4.84%. The impact of passive buying on the expected inclusions is less than 0.6 days of ADV, while the impact on the expected deletions is larger at over 2 days of ADV to sell.With the glove makers already having rallied a lot, we take a look at some trade ideas that we believe have a good reward/risk ratio.

The Kuala Lumpur Composite Index (Klci) (FBMKLCI INDEX) is the flagship index of the Bursa Malaysia. The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be announced on 3 December and will be effective after the close of trading on 18 December.Based on last market prices, we see Supermax Corp (SUCB MK) and Kossan Rubber Industries (KRI MK) being included in the index, and expect Genting Malaysia (GENM MK) and Genting Bhd (GENT MK) to be deleted.The one-way turnover of the rebalance is expected to be 4.84%. The impact of passive buying on the expected inclusions is less than 0.6 days of ADV, while the impact on the expected deletions is larger at over 2 days of ADV to sell.With the glove makers already having rallied a lot, we take a look at some trade ideas that we believe have a good reward/risk ratio.

KLCI Index Rebalance Preview: Getting the Glove Makers to Fit

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Equity Bottom-Up

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like <a href="https://www.smartkarma.com/entities/1142" target="_blank" data-smartkarma-citation="entities:1142:1">Golden Agri Resources (GGR SP)</a> (GAR).

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like Golden Agri Resources (GGR SP) (GAR). 

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

Our overall global outlook remains cautious and continued downward pressure on global equities remains our expectation. One bright spot is EM (more on this below), which continues to give us hope that global equities can bottom out.  We provide a technical appraisal of major markets and highlight actionable setups within the global Utilities and Staples Sectors.

Our overall global outlook remains cautious and continued downward pressure on global equities remains our expectation. One bright spot is EM (more on this below), which continues to give us hope that global equities can bottom out.  We provide a technical appraisal of major markets and highlight actionable setups within the global Utilities and Staples Sectors.

Global Ex-U.S. Equity Strategy: MSCI EM in Early Stages of Bottoming

ASEAN (Indo) & China-focused. Ex-Deputy HoR UBS.

Johannes Salim, CFA

<ul><li>Our stub valuation method reveals that <a href="https://www.smartkarma.com/entities/14210" target="_blank" data-smartkarma-citation="entities:14210:1">Genting Bhd (GENT MK)</a> attractively trades at (near) 2 SD below its 5-yr mean of NAV discount (see Chart 2).</li><li>Fundamentals at <a href="https://www.smartkarma.com/entities/439" target="_blank" data-smartkarma-citation="entities:439:1">Genting Singapore Plc (GENS SP)</a> and <a href="https://www.smartkarma.com/entities/3141" target="_blank" data-smartkarma-citation="entities:3141:1">Genting Malaysia Bhd (GENM MK)</a>, which combined account for 84% of GENT's EBITDA, have considerably improved.</li><li>GENT is directly undertaking Resorts World Las Vegas (RWLV) Integrated Resorts project, which we think could generate decent EBITDA if executed properly. </li><li>Assuming a 20% holdco discount, 12-mo PT for GENT works out to be RM11.12/share, a 27% upside potential from current share price.</li></ul>

Our stub valuation method reveals that Genting Bhd (GENT MK) attractively trades at (near) 2 SD below its 5-yr mean of NAV discount (see Chart 2).Fundamentals at Genting Singapore Plc (GENS SP) and Genting Malaysia Bhd (GENM MK), which combined account for 84% of GENT's EBITDA, have considerably improved.GENT is directly undertaking Resorts World Las Vegas (RWLV) Integrated Resorts project, which we think could generate decent EBITDA if executed properly. Assuming a 20% holdco discount, 12-mo PT for GENT works out to be RM11.12/share, a 27% upside potential from current share price.

Genting Berhad: Attractively Valued on 5-Yr NAV Discount History

Malaysia

Genting Plantations Berhad is an investment holding company which operates plantations. The Company, through its subsidiaries, also develops and invests in properties, processes fresh fruit bunches, trades rubber wood, provides palm oil mill management services, and operates golf course.

Genting Plantations (GENP MK)

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

KLK MK made an offer to acquire IJMC’s entire stake in IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. If the SPA...

Arun George

KLCI Index Rebalance Preview: Getting the Glove Makers to Fit

The Kuala Lumpur Composite Index (Klci) (FBMKLCI INDEX) is the flagship index of the Bursa Malaysia. The index has 30 stocks and is a free float...

Brian Freitas

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

INVESTMENT VIEW:The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional...

Charles Spencer

Global Ex-U.S. Equity Strategy: MSCI EM in Early Stages of Bottoming

Our overall global outlook remains cautious and continued downward pressure on global equities remains our expectation. One bright spot is EM (more...

Vermilion Research

Genting Berhad: Attractively Valued on 5-Yr NAV Discount History

Our stub valuation method reveals that Genting Bhd (GENT MK) attractively trades at (near) 2 SD below its 5-yr mean of NAV discount (see Chart...

Johannes Salim, CFA