Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The S&amp;P DJI Index team announced the replacement for <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> when it is deleted from the S&amp;P/ASX200 Friday at the close: <a href="https://www.smartkarma.com/entities/arena-reit" target="_blank" data-smartkarma-citation="entities:12209:1" rel="noopener">Arena Reit (ARF AU)</a> </li>
<li>There are other changes to sub-indices which are not publicly announced but which should align with previous analysis</li>
<li>This insight provides estimates for the index events Friday and ways to play them.</li>
</ul>


The S&amp;P DJI Index team announced the replacement for Ausnet Services (AST AU) when it is deleted from the S&amp;P/ASX200 Friday at the close: Arena Reit (ARF AU) 
There are other changes to sub-indices which are not publicly announced but which should align with previous analysis
This insight provides estimates for the index events Friday and ways to play them.


Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Index Rebalance

<ul>
<li>The S&amp;P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies. </li>
<li>In March 2022, Index rebalance events will take place for the S&amp;P/ASX capitalization-weighted indices including ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20. </li>
<li>In this insight, we take a look at the leading candidates who could become Adds/Deletes during the March 2022 Rebalance and other potential intra-quarterly changes.</li>
</ul>


The S&amp;P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies. 
In March 2022, Index rebalance events will take place for the S&amp;P/ASX capitalization-weighted indices including ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20. 
In this insight, we take a look at the leading candidates who could become Adds/Deletes during the March 2022 Rebalance and other potential intra-quarterly changes.


S&P/​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance

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.

<ul>
<li>The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).</li>
<li>The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.</li>
<li>Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. </li>
</ul>


The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).
The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.
Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. 


As a reminder, <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> entered into a definitive agreement for a privatisation transaction at $79.05 in cash per ADS on 21 June. The consortium consists of DCP, Ocean Link Partners, <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> and Mr Rick Yan, the CEO since 2000. The merger was expected to close during the second half of 2021. The merger required shareholders representing two-thirds of shares present and voting to approve the deal. However, since the announcement of the definitive agreement, the gross spread reached a high of 33% on 29 October largely due to the radio silence on the deal completion. In the current uncertain Chinese regulatory climate, 51job did little to soothe investors’ nerves by failing to even mention the privatisation deal in its 2Q21 results released on 24 September.Encouragingly, the shares climbed 10% on 2 November due to the release of a Schedule 13D filing on 1 November which highlighted the consortium’s acquisition facilities agreement of $1.8 billion entered on 21 October and Mr Rick Yan’s facility agreement of $450 million entered on 28 October, both with China Merchants Bank. We think that the signing of the acquisition facilities is a significant step towards deal completion. While the privatisation price is not a knockout bid and is a modest premium to historical VWAPs over a 3-years and 1-year time period, the offer is reasonable in the context of 51job’s forecasted growth (PEG basis). Nevertheless, for shareholders seeking to be paid the fair value of their shares, dissenter rights are available.  <div class="content-highlight">The announcement on 21 June stated that Mr Rick, Recruit and certain other existing shareholders have agreed to vote their shares, which represent 54.9% of the voting rights, in favour of the privatisation deal. We continue to think that this level of support should be enough to get past the two-thirds shareholder approval threshold. The gross spread to the offer price is 17.3% at the last close price of $67.40 per ADS. </div>

As a reminder, 51 Job Inc Adr (JOBS US) entered into a definitive agreement for a privatisation transaction at $79.05 in cash per ADS on 21 June. The consortium consists of DCP, Ocean Link Partners, Recruit Holdings (6098 JP) and Mr Rick Yan, the CEO since 2000. The merger was expected to close during the second half of 2021. The merger required shareholders representing two-thirds of shares present and voting to approve the deal. However, since the announcement of the definitive agreement, the gross spread reached a high of 33% on 29 October largely due to the radio silence on the deal completion. In the current uncertain Chinese regulatory climate, 51job did little to soothe investors’ nerves by failing to even mention the privatisation deal in its 2Q21 results released on 24 September.Encouragingly, the shares climbed 10% on 2 November due to the release of a Schedule 13D filing on 1 November which highlighted the consortium’s acquisition facilities agreement of $1.8 billion entered on 21 October and Mr Rick Yan’s facility agreement of $450 million entered on 28 October, both with China Merchants Bank. We think that the signing of the acquisition facilities is a significant step towards deal completion. While the privatisation price is not a knockout bid and is a modest premium to historical VWAPs over a 3-years and 1-year time period, the offer is reasonable in the context of 51job’s forecasted growth (PEG basis). Nevertheless, for shareholders seeking to be paid the fair value of their shares, dissenter rights are available.  The announcement on 21 June stated that Mr Rick, Recruit and certain other existing shareholders have agreed to vote their shares, which represent 54.9% of the voting rights, in favour of the privatisation deal. We continue to think that this level of support should be enough to get past the two-thirds shareholder approval threshold. The gross spread to the offer price is 17.3% at the last close price of $67.40 per ADS. 

51job’s Privatisation Spread Risk/Reward

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

PB Fintech (PBF), India’s largest online platform for insurance and lending products, aims to raise up to US$793m via selling a mix of primary and secondary shares in its India IPO. The company is backed by a strong set of investors including Info Edge, Tencent, Temasek, Tiger Global and Softbank.The company operates two platforms: Policybazaar operates in India’s online insurance product and service industry; and Paisabazaar platform operates in India’s online credit industry. As per Frost &amp; Sullivan, the company is a leader in the online sphere in both segments. Despite Paisabazaar having taken a hit due to COVID-19, the company has managed to grow its revenue by 80% over FY19-21. In addition, it has been able to rein in expenses as well leading to an improvement in margins. Although, it was still making losses in FY21. On the flip side, its growth has come on the back of large ad spending and given the transactional nature of both of its platforms combined with the increase in competition, its ad spending will probably remain high. We have covered most aspects of the deal in our previous notes,  <a href="https://www.smartkarma.com/insights/pb-fintech-policybazaar-pre-ipo-the-positives-fast-growth" target="_blank" rel="noopener">PB Fintech (Policybazaar) Pre-IPO - The Positives - Fast Growth</a> and <a href="https://www.smartkarma.com/insights/pb-fintech-policybazaar-pre-ipo-the-negatives-patchy-data-strategy-missteps" target="_blank" rel="noopener">PB Fintech (Policybazaar) Pre-IPO - The Negatives - Patchy Data, Strategy Missteps</a>.In this note, we will talk about updates since our last note and valuations.

PB Fintech (PBF), India’s largest online platform for insurance and lending products, aims to raise up to US$793m via selling a mix of primary and secondary shares in its India IPO. The company is backed by a strong set of investors including Info Edge, Tencent, Temasek, Tiger Global and Softbank.The company operates two platforms: Policybazaar operates in India’s online insurance product and service industry; and Paisabazaar platform operates in India’s online credit industry. As per Frost &amp; Sullivan, the company is a leader in the online sphere in both segments. Despite Paisabazaar having taken a hit due to COVID-19, the company has managed to grow its revenue by 80% over FY19-21. In addition, it has been able to rein in expenses as well leading to an improvement in margins. Although, it was still making losses in FY21. On the flip side, its growth has come on the back of large ad spending and given the transactional nature of both of its platforms combined with the increase in competition, its ad spending will probably remain high. We have covered most aspects of the deal in our previous notes,  PB Fintech (Policybazaar) Pre-IPO - The Positives - Fast Growth and PB Fintech (Policybazaar) Pre-IPO - The Negatives - Patchy Data, Strategy Missteps.In this note, we will talk about updates since our last note and valuations.

PB Fintech (Policybazaar) IPO - Increasing Competition Will Keep Ad Spending High

Australia

Seek Limited operates an Internet website.  The Company offers online employment advertisements and online training in Australia and New Zealand, and offers online employment advertisements in the United Kingdom targeted at Australian and New Zealand job seekers.

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Seek Ltd (SEK AU)

S&P/ASX200 - Ausnet OUT, Arena REIT IN

The S&P/ASX 200 will see Ausnet replaced by Arena REIT on 4 Feb. This is widely expected/predicted and Arena has outperformed, but it is a lot of...

Travis Lundy

S&P/ASX Indices: Quiddity Leaderboard for March 2022 Rebalance

A look at the leading candidates who could become Adds/Deletes for the S&P ASX Indices during the March 2022 Rebalance and other potential intra...

Janaghan Jeyakumar, CFA

51job’s Lowered Privatisation Bid

The consortium has lowered the offer price -27.6% to $57.25 in cash per ADS. Meeting the 2/3rd approval threshold is likely a challenge as it...

Arun George

51job’s Privatisation Spread Risk/Reward

We think that the signing of the acquisition facilities is a significant step towards deal completion. The gross spread to the offer price is 17.3%...

Arun George

PB Fintech (Policybazaar) IPO - Increasing Competition Will Keep Ad Spending High

PB Fintech, India’s largest online platform for insurance and lending products, aims to raise up to US$793m in its India IPO. The company is backed...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

S&P/ASX200 - Ausnet OUT, Arena REIT IN

The S&P/ASX 200 will see Ausnet replaced by Arena REIT on 4 Feb. This is widely expected/predicted and Arena has outperformed, but it is a lot of...

Travis Lundy

S&P/​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance

A look at the leading candidates who could become Adds/Deletes for the S&P ASX Indices during the March 2022 Rebalance and other potential intra...

Janaghan Jeyakumar, CFA

51job’s Lowered Privatisation Bid

The consortium has lowered the offer price -27.6% to $57.25 in cash per ADS. Meeting the 2/3rd approval threshold is likely a challenge as it...

Arun George

51job’s Privatisation Spread Risk/Reward

We think that the signing of the acquisition facilities is a significant step towards deal completion. The gross spread to the offer price is 17.3%...

Arun George

PB Fintech (Policybazaar) IPO - Increasing Competition Will Keep Ad Spending High

PB Fintech, India’s largest online platform for insurance and lending products, aims to raise up to US$793m in its India IPO. The company is backed...

Sumeet Singh

S&P/ASX Indices: Quiddity Leaderboard for March 2022 Rebalance