In today’s briefing:
- 7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
- CK Hutch (1 HK): Back To Square One
- USTR Hearings on Section 301 China Maritime Dominance – Fees on Chinese Ships
- HKBN (1310 HK): China Mobile Agrees to Acquire TPG’s Stake
- China ETF Inflows & Implications: Central Huijin’s Huge Buying
- Abacus Storage (ASK AU): Kirsh/Public Storage Buck Market Volatility With NBIO
- HKBN (1310 HK): TPG Cashes In Early
- BWGI’s Tender Offer for Verallia
- Trial Purchase of Seiyu Creates New Japanese Retail Power
7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
- Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1.
- The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
- The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good.
CK Hutch (1 HK): Back To Square One
- The irony is that CKH (1 HK)‘s Panama-port sale was probably prompted, at least in part, by a desire to get out of a situation which was becoming increasingly political.
- Instead, it has thrust the company right into the heart of it. And the share price has now given up all of its initial gains. And then some.
- After Panama’s Attorney General recently determined CK Hutchison’s concessions were unconstitutional, the Comptroller-General has now announced that an audit had found “many breaches” of the concession.
USTR Hearings on Section 301 China Maritime Dominance – Fees on Chinese Ships
- The original issues were discussed in depth in The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors (now unpaywalled). Hearings took place 24-26 March 2025.
- The hearings were long, and comments were predictable. Those supporting the measures offered evidence which was simply incorrect. Those against tried. Post-hearing comments were due 2 April.
- We don’t yet know what will happen, but if they stay in place, starting 17 April, US exports of grain/pulses, coal, etc will suffer. Imports will see higher costs too.
HKBN (1310 HK): China Mobile Agrees to Acquire TPG’s Stake
- China Mobile (941 HK) has entered a share purchase agreement to acquire TPG’s HKBN Ltd (1310 HK) shares and vendor loan note conversion shares by 28 November.
- On completion, TPG will be released from its irrevocable, which has a competing offer clause. China Mobile’s agreement signals its expectation that I Squared will launch a competing proposal.
- The agreement will not change I Squared’s approach as it would not negatively impact regulatory approvals (a key risk) or prevent it from meeting a 50% minimum tendering condition.
China ETF Inflows & Implications: Central Huijin’s Huge Buying
- Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
- Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
- There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.
Abacus Storage (ASK AU): Kirsh/Public Storage Buck Market Volatility With NBIO
- Ki Corporation and Public Storage (PSA US) together announced a NBIO, by way of a Scheme, to acquire all of the outstanding securities of Abacus Storage (ASK AU) not held.
- The indicative offer of A$1.47/stapled security is a 26.7% premium to undisturbed and ~8% discount to the latest NTA/security. Nathan Kirsh directly/indirectly holds a 59.47% stake in ASK.
- Trading at a gross/annualised spread of 6.9%/10.9%, assuming late Nov completion. That’s tight given timing risk, and terms not being firm.
HKBN (1310 HK): TPG Cashes In Early
- Back in December, China Mobile (941 HK) made a pre-conditional HK$5.23/share voluntary Offer for HKBN (1310 HK). The wild card is whether I Squared launches a counter-proposal.
- This transaction has no shortage of intriguing developments. Last month, MBK mysteriously converted its VLNs. Now TPG has entered into an SPA with Mobile to sell its 15.46% stake.
- IF I Squared were to make a counter-proposal, I doubt it would secure the necessary regulatory approvals. Evidently TPG is not waiting around to find out.
BWGI’s Tender Offer for Verallia
- BWGI proposes a voluntary tender offer at €30 per share (cum dividend), aiming for majority control without delisting, supported by the Moreira Salles family’s substantial financial capacity and credibility.
- BWGI’s offer, backed by a $26 billion family office, presents a credible liquidity event; however, valuation and DCF analysis suggest room for a higher bid or competing interest.
- Market volatility may increase investor preference for deal certainty, potentially improving acceptance of BWGI’s offer despite its modest premium over Verallia’s recent trading levels and long-term valuation benchmarks.
Trial Purchase of Seiyu Creates New Japanese Retail Power
- Until last year, Trial was a Kyushu-based discount FMCG retailer, that had just completed its IPO.
- Today, it is one of the largest FMCG retailers in the country having won the bidding to acquire Seiyu from foster care under KKR.
- This is a massive development that will pressure other rivals to step up in order to compete.
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