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Smartkarma Daily Briefs

Daily Brief India: Tata Consultancy Svcs, IREDA and more

By | Daily Briefs, India

In today’s briefing:

  • Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
  • Indian Renewable Energy Development Authority IPO – A Top Player in Indian Renewable Financing


Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date

By Janaghan Jeyakumar, CFA

  • Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
  • The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
  • In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.

Indian Renewable Energy Development Authority IPO – A Top Player in Indian Renewable Financing

By Ethan Aw

  • IREDA (1845911D IN) is looking to raise at around US$258m in its India IPO. 
  • Indian Renewable Energy Development Authority (IREDA) is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
  • In this note, we look at the company’s past performance and share our quick thoughts on valuation.

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Daily Brief United States: Hollysys Automation Technologies, NVIDIA Corp, S&P 500 INDEX, USD and more

By | Daily Briefs, United States

In today’s briefing:

  • Hollysys (HOLI US): In Court Today …
  • As Expected from Our Earlier BOM/CoWoS Analysis, Consensus to Raise Nvidia Estimates Inevitably
  • Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers
  • US Rates Nugget: 4 Charts on Why November Data Will Reignite the Hawks


Hollysys (HOLI US): In Court Today …

By David Blennerhassett

  • A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
  • There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
  • That hearing took place today. So I went along to hear first-hand the key arguments from both sides. 

As Expected from Our Earlier BOM/CoWoS Analysis, Consensus to Raise Nvidia Estimates Inevitably

By Andrew Lu

  • Nvidia reports/guides a better than expected 3Q/4Q23 sales, margin, and EPS on stronger AI GPU sales growth of nearly 3x.
  • Nvidia reports a healthy 3.04 MOI, down 5% q/q and down 37% y/y and contributes nicely to account for 9% of TSMC sales.
  • In spite of concerns on good news priced in, seasonal weaker 1Q24, and MI300X/ASIC alternative AI solutions, we expect more raise to come in 2024-2025E.

Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers

By Joe Jasper

  • The broad equity market has been on an absolute tear since we discussed in our 10/31/23 Compass how risk/reward favored buyers as key supports were being tested on SPX/QQQ/IWM
  • Furthermore, we discussed in our 11/7/23 Compass our belief that this was more than just another counter-trend rally, and that it is likely the start of a significant year-end rally.
  • Bullish developments have only continued; among them includes 3.5-month downtrend reversals on the S&P 500 and QQQ. We expect more upside into year-end and beyond.

US Rates Nugget: 4 Charts on Why November Data Will Reignite the Hawks

By Andreas Steno

  • Welcome to this US rates nugget with three charts on why November data from the US economy could refuel the hawkish bias within the Federal Reserve.
  • First, our ISM Services model hints at a large rebound in the ISM number released on December 5.
  • ISM Services jumps to >60 in our models when you adjust for the spreadsheet wizardry of the Institute of Supply Management (remember the abysmal prints in Nov/Dec of 2022) as the seasonal adjustment factors are much more helpful than a year ago.

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Daily Brief China: Trip.com, Haitong International Securities Group, NetEase Inc, Health And Happiness (H&H), Air China Ltd (H), Kanzhun , Kuaishou Technology, JD Health International , AGBA Group Holding and more

By | China, Daily Briefs

In today’s briefing:

  • Trip.com Q3 Quick Take: Net Inc > Consensus | Progress on Expenses | But Not a Game-Changer
  • Haitong International (665 HK): Vote on 15 December
  • [NetEase, Inc.(NTES US,BUY,TP US$138)TP Change]: Raise TP for Upcoming and Highly Anticipated Titles
  • Haitong Sec (665 HK) 15th Dec Scheme Vote
  • Morning Views Asia:
  • 2024 High Conviction: Air China (753 HK) – What Comes Down Must Go Up
  • [Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation
  • KS (Kuaishou 1024 HK): 3Q23, High Growth and Higher Margin
  • JD Health (6618.HK) 23Q3 – Performance Decline Is Inevitable, but There Is Upside Room for Valuation
  • AGBA – Year-to-date pre-tax result in line


Trip.com Q3 Quick Take: Net Inc > Consensus | Progress on Expenses | But Not a Game-Changer

By Daniel Hellberg

  • Trip.com reported strong Q3 earnings, reflecting 2023’s ongoing tourism revival
  • Net Income beat expectations, and company made progress on expense control
  • But we don’t see “game-changing” numbers in Trip.com’s latest earnings release

Haitong International (665 HK): Vote on 15 December

By Arun George

  • Haitong International Securities Group (665 HK)’s scheme meeting is on 15 December. The IFA considers Haitong Securities Co Ltd (H) (6837 HK)’s HK$1.52 per share offer fair and reasonable. 
  • Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
  • The high takeover premium ensures a done deal. At the last close and for the 18 January 2024 payment, the gross and annualised spread is 2.7% and 18.2%, respectively.

[NetEase, Inc.(NTES US,BUY,TP US$138)TP Change]: Raise TP for Upcoming and Highly Anticipated Titles

By Ying Pan

  • NetEase reported revenue/non-GAAP operating profit/GAAP net income inline/5.24%/16.2% vs. our estimation.
  • The bottom-line beats were primarily attributed to the operational efficiency achieved through the usage of AIGC tools, and reduced S&M expenses resulting from organic traffic generated by high-quality game content.
  • We maintain our BUY rating and raised TP to $138 for future game releases, implying 19x PE, and it is currently trading at 17x PE in 2024

Haitong Sec (665 HK) 15th Dec Scheme Vote

By David Blennerhassett

  • Once the pre-cons were satisfied on the 15th November, it seemed pessimistic to stick to the delayed 29 December dispatch date for Haitong International Securities Group (665 HK)‘s Scheme Document. 
  • And right on cue, the Doc was issued last night (21 Nov). The Court Meeting is the 15 December. with an expected cash despatch on or around the 18 January.
  • Trading at a gross spread to terms of 2.7%. The headcount test applies. But this should comfortably get up. 

Morning Views Asia:

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


    2024 High Conviction: Air China (753 HK) – What Comes Down Must Go Up

    By Osbert Tang, CFA

    • With P/B back to the 5-year average of 1.9x but ROE surpassing the last five years, Air China Ltd (753 HK) is our High Conviction pick for 2024.
    • Lower US interest rates next year will reduce interest expenses as 18.7% of debt is USD-denominated. Potential Rmb appreciation vs. USD may bring significant exchange gain too.
    • Supportive government policies will further drive domestic traffic. For international traffic, more capacity resumption will power recovery. Cathay Pacific Airways (293 HK) is another profit accelerator.

    [Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation

    By Eric Wen

    • BZ reported 3Q23 cash billing 0.8% higher than our est., revenue beat our estimate/consensus 5.2%/3.8%, non-GAAP NI beat our estimate/consensus by 103%/50%.
    • Cost saving and investment income are the main reasons for bottom-line beat, which we think are not sustainable.
    • Even BZ can deliver its “3 years with 100mn new users” target until 2025, we think its 20% earnings CAGR in 2023-25E still cannot justify its high valuation (TBC)

    KS (Kuaishou 1024 HK): 3Q23, High Growth and Higher Margin

    By Ming Lu

    • Total revenue grew by 21% YoY in 3Q23, as both advertising and e-commerce expanded strongly.
    • KS achieved historical high operating margin and operating profit, as the company continue to cut all operating expenses.
    • We believe the stock has an upside of 63% and a price target of HK$95. Buy.

    JD Health (6618.HK) 23Q3 – Performance Decline Is Inevitable, but There Is Upside Room for Valuation

    By Xinyao (Criss) Wang

    • JD Health’s 23Q3 results were below expectations. Due to the high base of 22H2 (especially 22Q4), revenue growth could become negative in 23Q4, thus dragging down 2023 full year growth.
    • Considering the high base in 23H1, performance pressure could continue until 24H1. JD Health’s past high growth will be gone. Investors may need to get used to the lower-than-expected growth.
    • Share price of JD Health is now in the bottom range. Current valuation is attractive. Despite the performance headwind, P/S is expected to return to about 3 to 4.

    AGBA – Year-to-date pre-tax result in line

    By Edison Investment Research

    AGBA’s Q323 results continued to be affected by the weak recovery in China and consequent subdued mainland demand for Hong Kong health and wealth products. As a result, revenues were flat year-on-year at US$13.2m, but down from US$17.4m in Q223. The pre-tax loss was US$12.9m, putting the company on track to meet its US$49m projected loss for FY23. AGBA also announced that it has entered into term sheets for a US$6.2m private share placing with a new institutional investor, AGBA’s group president and AGBA management at US$0.70 per share plus warrants with an exercise price of US$1.00/share. The amount could expand subject to ongoing conversations with additional potential investors. The significant premium to the current share price signals management’s confidence in AGBA’s long-term value. The capital will go towards funding organic growth, strategic acquisitions and managing liquidity until projected material profitability in FY25.


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    Daily Brief Japan: Asahi Intecc, Panasonic Corp, TSE Tokyo Price Index TOPIX, Kantsu, WILLs and more

    By | Daily Briefs, Japan

    In today’s briefing:

    • 2024 High Conviction: Asahi Intecc (7747 JP)- Procedure Volume Recovery to Accelerate Growth
    • Panasonic (6752) | PAS-Ing the Keys
    • Companies Are Finally at the Starting Line of Taking the First Steps to Improve ROE
    • 2Q Follow-Up – Kantsu (9326 Jp)
    • WILLs (4482) – Stronger than Expected Results with Positive Trends


    2024 High Conviction: Asahi Intecc (7747 JP)- Procedure Volume Recovery to Accelerate Growth

    By Tina Banerjee

    • Asahi Intecc (7747 JP) is poised for multi-year growth through strong market demand for its technically superior guidewires, market leadership positioning, new product launches, and direct marketing initiatives.
    • In FY24, Asahi Intecc aims to achieve revenue of ¥100B (+11% YoY), a significant milestone. The company targets revenue of ¥110B and an operating profit margin of 23–25% in FY26.
    • Asahi Intecc is expected to be a continued beneficiary of global procedure volume recovery. The company is likely to achieve its medium-term business plan ahead of schedule.

    Panasonic (6752) | PAS-Ing the Keys

    By Mark Chadwick

    • Panasonic Holdings Corporation (PHD) is entering a strategic partnership with Apollo Global Management, involving the partial sale of its ownership in Panasonic Automotive Systems Corporation (PAS).
    • PAS, historically known for car stereos and navigation systems, has expanded into automotive electronics, holding approximately 15% of the global Automotive Digital Cockpit market with $3.6 billion in sales.
    • Despite a bearish view on Panasonic, this deal is seen as a positive step toward streamlining the group structure and concentrating on core, sustainable growth areas.

    Companies Are Finally at the Starting Line of Taking the First Steps to Improve ROE

    By Aki Matsumoto

    • Since the list of companies disclosing information based on TSE’s request only shows “whether they disclosed,” more companies will disclose the information in their corporate governance reports by December anyway.
    • Good practices published by TSE will provide hints for companies to improve their future disclosures. Investors will also be more likely to demand improvements from companies based on good practices.
    • The next step after disclosing the cost of capital is whether companies can disclose measures to fill gap between cost of capital and actual return and to raise return further.

    2Q Follow-Up – Kantsu (9326 Jp)

    By Sessa Investment Research

    • Kantsu is a logistics company that supports the high-growth e-commerce industry, specializing in warehouse logistics and handling the entire upstream logistics process, from order processing to delivery.
    • The company is also creating a highly profitable business by selling its in-house developed IT system that boosts efficiency to external customers.
    • In 1H FY24/2, Kantsu reported net sales of ¥5,619 mn (+10.0% YoY), operating profit of ¥164 mn (-14.1% YoY), ordinary profit of ¥162 mn (-7.4% YoY), and profit attributable to owners of the parent of ¥115 mn (+2.3% YoY).

    WILLs (4482) – Stronger than Expected Results with Positive Trends

    By Astris Advisory Japan

    • Upside risk to company guidance – Q1-3 FY12/2023 results were ahead of guidance and a positive surprise in our view.
    • Operating profit grew 25.8% YoY, driven by a major improvement in profitability in the Advertising segment, continued robust demand for ESG services, and management’s prudent cost control (with SG&A margins stable YoY).
    • The mainstay Premium Benefits Club service saw 2 net additional customers QoQ for Q3 FY12/2023, rising to 89 customers – the service is experiencing a positive trend of demand from an increasing number of retail shareholders, and a hike in spending by companies on shareholder benefits program. 

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    Daily Brief Technical Analysis: Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers and more

    By | Daily Briefs, Technical Analysis

    In today’s briefing:

    • Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers


    Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers

    By Joe Jasper

    • The broad equity market has been on an absolute tear since we discussed in our 10/31/23 Compass how risk/reward favored buyers as key supports were being tested on SPX/QQQ/IWM
    • Furthermore, we discussed in our 11/7/23 Compass our belief that this was more than just another counter-trend rally, and that it is likely the start of a significant year-end rally.
    • Bullish developments have only continued; among them includes 3.5-month downtrend reversals on the S&P 500 and QQQ. We expect more upside into year-end and beyond.

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    Daily Brief ESG: Companies Are Finally at the Starting Line of Taking the First Steps to Improve ROE and more

    By | Daily Briefs, ESG

    In today’s briefing:

    • Companies Are Finally at the Starting Line of Taking the First Steps to Improve ROE


    Companies Are Finally at the Starting Line of Taking the First Steps to Improve ROE

    By Aki Matsumoto

    • Since the list of companies disclosing information based on TSE’s request only shows “whether they disclosed,” more companies will disclose the information in their corporate governance reports by December anyway.
    • Good practices published by TSE will provide hints for companies to improve their future disclosures. Investors will also be more likely to demand improvements from companies based on good practices.
    • The next step after disclosing the cost of capital is whether companies can disclose measures to fill gap between cost of capital and actual return and to raise return further.

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    Daily Brief Thematic (Sector/Industry): Ohayo Japan | All Eyes on Nvidia; Xiaomi’s EV Entry Disrupts Auto Makers and more

    By | Daily Briefs, Thematic (Sector/Industry)

    In today’s briefing:

    • Ohayo Japan | All Eyes on Nvidia; Xiaomi’s EV Entry Disrupts Auto Makers


    Ohayo Japan | All Eyes on Nvidia; Xiaomi’s EV Entry Disrupts Auto Makers

    By Mark Chadwick

    • Overseas: SPX , Nasdaq; Nvidia beats estimates, sees Q4 revenue hitting $20B, but China sales to decline significantly. Stock -1% in extended hours
    • Today: NKY Futs -0.5% v cash. JPY 148.4; TSMC thinking about building a third semicon plant in Japan
    • JapanX: Xiaomi disrupts auto industry, debuting SU7 EV to challenge Tesla, signaling a formidable entry into electric vehicle competition.

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    Daily Brief Credit: Morning Views Asia: and more

    By | Credit, Daily Briefs

    In today’s briefing:

    • Morning Views Asia:


    Morning Views Asia:

    By Charles Macgregor

    Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


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      Daily Brief ECM: Indian Renewable Energy Development Authority IPO – A Top Player in Indian Renewable Financing and more

      By | Daily Briefs, ECM

      In today’s briefing:

      • Indian Renewable Energy Development Authority IPO – A Top Player in Indian Renewable Financing


      Indian Renewable Energy Development Authority IPO – A Top Player in Indian Renewable Financing

      By Ethan Aw

      • IREDA (1845911D IN) is looking to raise at around US$258m in its India IPO. 
      • Indian Renewable Energy Development Authority (IREDA) is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
      • In this note, we look at the company’s past performance and share our quick thoughts on valuation.

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      Daily Brief Event-Driven: What Should We Do About the Futures Basis Spread Caused by Hanwha Ocean’s Rights Offering? and more

      By | Daily Briefs, Event-Driven

      In today’s briefing:

      • What Should We Do About the Futures Basis Spread Caused by Hanwha Ocean’s Rights Offering?
      • Hollysys (HOLI US): In Court Today …
      • Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?
      • Haitong International (665 HK): Vote on 15 December
      • Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
      • Nice Holdings: Material Increase in Dividends and Share Cancellations
      • DMA ONE: JSE December ‘23 Rebalance Rankings
      • Haitong Sec (665 HK) 15th Dec Scheme Vote
      • H.I.G./DX (Group): Recommended Offer with Possibility of Bump-Up


      What Should We Do About the Futures Basis Spread Caused by Hanwha Ocean’s Rights Offering?

      By Sanghyun Park

      • The day the basis spread disappears is this Friday, the 24th of November. This mirrors a comparable pattern observed during Korean Air’s rights offering in 2020.
      • If the spot price does not fall below the futures price of our entry until this Friday, we could potentially be in a profitable range.
      • There has been a notable pattern where the spread continues to exist until just before the moment when new share selling becomes feasible.

      Hollysys (HOLI US): In Court Today …

      By David Blennerhassett

      • A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
      • There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
      • That hearing took place today. So I went along to hear first-hand the key arguments from both sides. 

      Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?

      By Brian Freitas


      Haitong International (665 HK): Vote on 15 December

      By Arun George

      • Haitong International Securities Group (665 HK)’s scheme meeting is on 15 December. The IFA considers Haitong Securities Co Ltd (H) (6837 HK)’s HK$1.52 per share offer fair and reasonable. 
      • Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
      • The high takeover premium ensures a done deal. At the last close and for the 18 January 2024 payment, the gross and annualised spread is 2.7% and 18.2%, respectively.

      Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date

      By Janaghan Jeyakumar, CFA

      • Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
      • The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
      • In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.

      Nice Holdings: Material Increase in Dividends and Share Cancellations

      By Douglas Kim

      • On 21 November, Nice Holdings (034310 KS) announced new shareholder return policies that included material increase in dividends and share cancellations.
      • First, Nice Holdings has decided to raise dividends by more than 10% every year for the next three years. Nice Holdings paid dividend per share of 410 won last year. 
      • Nice Holdings also announced that it will cancel more than 1% of total outstanding shares every year for the next three years. 

      DMA ONE: JSE December ‘23 Rebalance Rankings

      By Charlotte van Tiddens, CFA

      • We do not expect any constituent changes for the following indices: Top 40, Top 40 SWIX, FINI, FINDI or INDI.
      • HAR is expected to enter the RESI and AMS is expected to fall out.
      • After much anticipation, ANG’s indicative free float came in at 75%, 21.9 percentage points lower than the current SWIX float of 96.8%.

      Haitong Sec (665 HK) 15th Dec Scheme Vote

      By David Blennerhassett

      • Once the pre-cons were satisfied on the 15th November, it seemed pessimistic to stick to the delayed 29 December dispatch date for Haitong International Securities Group (665 HK)‘s Scheme Document. 
      • And right on cue, the Doc was issued last night (21 Nov). The Court Meeting is the 15 December. with an expected cash despatch on or around the 18 January.
      • Trading at a gross spread to terms of 2.7%. The headcount test applies. But this should comfortably get up. 

      H.I.G./DX (Group): Recommended Offer with Possibility of Bump-Up

      By Jesus Rodriguez Aguilar

      • DX Group PLC (DX/ LN) agreed to a 47.5p/share offer (plus 1p dividend, ex-dividend 16 November) from H.I.G., 33% premium, 8.8x 2023a EBITDA, to be conducted via scheme of arrangement.
      • DX had a substantial improvement in revenue and profitability in 2018-2023. Although irrevocables represent 33.1% of the share capital, some shareholders have some doubts and letters of intent total 21.5%.
      • Some shareholders will try to extract more: DCF-based 50p could be defended, 5.2% above current offer. Spread 1.05%/3% (gross/annualised, assuming 30 March settlement). I’d be long in case of bump-up.

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