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Utilities Sector

Brief Utlilities: (Mostly) Asia M&A: June 2020 Roundup and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. (Mostly) Asia M&A: June 2020 Roundup
  2. GULF: Upside from Investment in INTUCH
  3. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

1. (Mostly) Asia M&A: June 2020 Roundup

Image 54895522921593479397888

For the month of June, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$12bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.

New Deals

Industry

Size (US$bn)

Type

Premium

Australia

Cardinal Resources (CDV AU) Mining0.2Off-market75%
Shandong’s Competing Offer For Cardinal
Cassini Resources (CZI AU) Mining0.1Scheme31%
Uniti/OptiComm: High-Fibre Diet
Cromwell Property (CMW AU) Property0.5Partial3.4%
Cromwell/ARA: A Festering Relationship
Onevue Holdings (OVH AU) Software0.1Scheme66.7%
OneVue-Iress: Australian Deal Trading Wide
Infigen Energy (IFN AU) Energy0.6Off-market45.8%

Infigen Energy Deal – Interesting Optionality

Infigen Gets Iberdrola As Overbidder.

Infigen’s White Knight on a Charger

OptiComm Ltd (OPC AU) Fibre network0.4Scheme3.6%
Uniti/OptiComm: High-Fibre Diet

 

China

Kingswood Enterprise  (600255 CH) Copper Alloy0.1Partial13%
Kingswood Enterprise (600255 CH): Partial Offer. Read more: https://skr.ma/NdWia

 

Hong Kong

Golden Meditech Holdings (801 HK) Hospitals0.1Scheme42%
Golden Meditech (801 HK): Prescription Renewal 
Huadian Fuxin Energy Corp (816 HK) Clean Energy1.0Merger by Absorption65.6%
Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play
Jinmao Hotel & Jinmao (China) (6139 HK) Hotels0.4Scheme30.4%
Jinmao Hotel (6139 HK): Priced To Check Out
Skyworth Group Limited (751 HK) Electronics0.2Partial32%
Skyworth (751 HK)’s Partial Buyback.

 

India

Adani Power Ltd (ADANI IN) Energy0.4DelistingN/A
Adani Power – The Next Delisting/Exit Offer?
Hexaware Technologies (HEXW IN) Info tech0.5DelistingN/A
Hexaware Delisting Proposal – This Could Go Higher
Hexaware:  Dips and Doodles in the Delisting Proposal Process
 
Japan
LIXIL VIVA (3564 JP) Houseware0.5Tender Offer0.5%
Lixil Viva (3564 JP) Takeout Tender Offer

Singapore

Accordia Golf Trust (AGT SP) Golf courses0.4Asset sale/divestment20%
Accordia Golf Trust Buyout… A Gimme But….
Perennial Real Estate Holdings (PREH SP) Real estate1.1Conditional Offer37.7%
Perennial Takeover – Disappointing Precedents Suggest “Fair” Even if Not Really

 

US

China Distance Education (ADR) (DL US) Online Education0.2Non-binding25.8%
China Distance Education (DL US): Takeover Proposal by the Founders

 

Europe

Masmovil Ibercom (MAS SM) Telco3.3Tender Offer20.1%
Masmovil: Target Shareholders Looking for a Bump
Mediawan (MDW FP) Media0.4Tender Offer42%
Mediawan Tender Offer: Trading Close to Terms
NetEnt AB (NETB SS) Casino2.0Public takeover43%
NetEnt-Evolution: Are People Betting on an Overbid?
Source: Smartkarma Insights
Because Indian delisting offers are what they are, Adani and Hexaware have no offer premium. They will be reverse book builds. Adani “price” of INR 33.82 is the floor price. It is a legal minimum which must be declared. It is not the price of the offer and nobody expects it there.

The average premium for the new deals announced in June was ~33% and the YTD average premium for all deals discussed on Smartkarma is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.


The charts below provide some colour of deals YTD discussed on Smartkarma.


Brief Summary of News in June of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in June, I’ve included a link, in bold, to that insight in italics.)

Australia

Comments (with links to announcements & insights)

16 June: VRL has extended its exclusivity with BGH to the 30 June:

29 June: Apex had joined PEP/Elemental’s proposed Scheme.
Zenith Energy: PEP Cuts In OPTrust and ICG

China

Comments 

No June update

No June update

Hong Kong

Comments (with links to announcements & insights)

18 June: The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair & reasonable.
Allied Props (56 HK)’s Scheme Document Despatched

29 June: An update to say there is no update.

15 June: This unconditional Offer was extended until the 29 June.
29 June: The Offer was extended until the 13 July.

16 June: In its monthly announcement in compliance with the Takeovers Code, Haier said the Offeror continues to explore a privatisation proposal.:

17 June. Offer closed.

18 June: Leyou has announced the “Potential Buyer” has commenced due diligence and “are in the course of discussing possible deal structures in respect of the New Possible Share Disposal“:

12 June. Deal approved. Shares have ceased trading

Done Deal As Li & Fung’s Offer Gets Up

16 June: The Scheme is approved. Timetable remains unchanged. Wharf and WREIC shares despatched on the 22 Jul, and first day of trading on the 23 Jul. Cheques to be despatched on the 3 August. 

Wheelock’s Scheme Approved

12 June: Bitauto announced it has entered into a definitive Merger Agreement with Tencent and Hammer at the previously-announced Offer price of US$16/ADS. 
Bitauto (BITA US): Done Deal. Keep An Eye on Yixin’s MGO

India

Comments (with links to announcements & insights)

19 June: According to SEBI’s weekly update on “PROCESSING STATUS OF DRAFT OFFER DOCUMENTS” (as on 12th June 2020), SEBI has sought clarification from the Merchant Banker (Nomura) regarding Carlyle’s Partial Tender Offer (PTO) for Sequent Scientific (SEQ IN). The PTO price is INR86.00. Sequent Scientific’s shares are currently trading at around INR88.25. 

4 June: Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?
22 June: Vedanta Delisting Offer: Opportunities and Timing

25 June: Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing

25 June: Shareholders approved the Vedanta Ltd (VEDL IN) delisting offer process.
It was 85/15 for those who voted amongst institutional investors and 75/25 for in terms of non-insto public. 
26 June: VED has said that it is in the process of arranging financing for the delisting and expects the financing to be completed in the ‘coming weeks’, at which point Vedanta Ltd (VEDL IN) will apply to the stock exchanges for approval to proceed with the delisting process.

Indonesia

Comments (with links to insights)

No June update…. Waiting….. Waiting…. Waiting….

Japan

Comments (with links to announcements & insights)

Shareholder approval to delist on 26 June, Delisting 30 July
No June update
Tender Offer successful, early exit. Delisting 29 July
No June update
No June update
No June update
No June update

12 June: An Activist Appears in Nichii Gakkan (9792): Good!

19 June:Thinking Through Nichii Gakkan Tender Strategy

22 June: BCJ-44 (the Bain entity which will include the family) conducting the Tender Offer MBO on Nichii Gakkan Co (9792 JP)announced that it would extend the Tender Offer deadline from 22 June to 9 July. 

No June update
No June update
No June update

Malaysia

Comments (with links to announcements)

3 June: Tthe SC has declined TA Enterprise (the Offeror)’s application to withdraw:

New Zealand

Comments (with links to announcements and insights)

8 June: A shareholders meeting to vote on the litigation will be held on the 10 July.

Metlifecare: Preparing For A Protracted Legal Stoush

Philippines

Comments (with links)

24 June: KKR’s Tender Offer closed at noon. KKR acquired 11.9% Pro-ration is 100%.

Taiwan

Comments 

11 June: Taiwan Fair Trade Commission has asked for public submissions in their review of the Qisda deal for Alpha. Submission deadline is the 16th. 
23 June: Qisda Corp (2352 TT) announced that the deal for Alpha was extended to 23 July 2020 3:30pm. Still waiting on word whether the Tender Offer will be lowered by TWD 0.44 to account for the dividend which is expected but for which there is no record date.
No June update

Thailand

Comments (with links)

June 24: Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder. 

4 June: Tender Offer doc out for  GOLD. The offer period is from 5 June to 8 August (45 biz days). Settlement is the 14 August.

Middle East

Comments (with links to announcements & insights)

4 June: DP World – Ticking Down To The Last Trade

17 June: And the trade is doneDP World (DPW DU) Scheme was sanctioned. 
Now you wait for your money. 

Europe

Comments (with links to announcements and insights)

No June update 

No June update

No June update 

2. GULF: Upside from Investment in INTUCH

P6

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
  • Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.

3. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

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Brief Utlilities: (Mostly) Asia M&A: June 2020 Roundup and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. (Mostly) Asia M&A: June 2020 Roundup
  2. GULF: Upside from Investment in INTUCH
  3. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call
  4. ACE: Great Growth Opportunities, but the Stock Is Overpriced

1. (Mostly) Asia M&A: June 2020 Roundup

Image 54895522921593479397888

For the month of June, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$12bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.

New Deals

Industry

Size (US$bn)

Type

Premium

Australia

Cardinal Resources (CDV AU) Mining0.2Off-market75%
Shandong’s Competing Offer For Cardinal
Cassini Resources (CZI AU) Mining0.1Scheme31%
Uniti/OptiComm: High-Fibre Diet
Cromwell Property (CMW AU) Property0.5Partial3.4%
Cromwell/ARA: A Festering Relationship
Onevue Holdings (OVH AU) Software0.1Scheme66.7%
OneVue-Iress: Australian Deal Trading Wide
Infigen Energy (IFN AU) Energy0.6Off-market45.8%

Infigen Energy Deal – Interesting Optionality

Infigen Gets Iberdrola As Overbidder.

Infigen’s White Knight on a Charger

OptiComm Ltd (OPC AU) Fibre network0.4Scheme3.6%
Uniti/OptiComm: High-Fibre Diet

 

China

Kingswood Enterprise  (600255 CH) Copper Alloy0.1Partial13%
Kingswood Enterprise (600255 CH): Partial Offer. Read more: https://skr.ma/NdWia

 

Hong Kong

Golden Meditech Holdings (801 HK) Hospitals0.1Scheme42%
Golden Meditech (801 HK): Prescription Renewal 
Huadian Fuxin Energy Corp (816 HK) Clean Energy1.0Merger by Absorption65.6%
Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play
Jinmao Hotel & Jinmao (China) (6139 HK) Hotels0.4Scheme30.4%
Jinmao Hotel (6139 HK): Priced To Check Out
Skyworth Group Limited (751 HK) Electronics0.2Partial32%
Skyworth (751 HK)’s Partial Buyback.

 

India

Adani Power Ltd (ADANI IN) Energy0.4DelistingN/A
Adani Power – The Next Delisting/Exit Offer?
Hexaware Technologies (HEXW IN) Info tech0.5DelistingN/A
Hexaware Delisting Proposal – This Could Go Higher
Hexaware:  Dips and Doodles in the Delisting Proposal Process
 
Japan
LIXIL VIVA (3564 JP) Houseware0.5Tender Offer0.5%
Lixil Viva (3564 JP) Takeout Tender Offer

Singapore

Accordia Golf Trust (AGT SP) Golf courses0.4Asset sale/divestment20%
Accordia Golf Trust Buyout… A Gimme But….
Perennial Real Estate Holdings (PREH SP) Real estate1.1Conditional Offer37.7%
Perennial Takeover – Disappointing Precedents Suggest “Fair” Even if Not Really

 

US

China Distance Education (ADR) (DL US) Online Education0.2Non-binding25.8%
China Distance Education (DL US): Takeover Proposal by the Founders

 

Europe

Masmovil Ibercom (MAS SM) Telco3.3Tender Offer20.1%
Masmovil: Target Shareholders Looking for a Bump
Mediawan (MDW FP) Media0.4Tender Offer42%
Mediawan Tender Offer: Trading Close to Terms
NetEnt AB (NETB SS) Casino2.0Public takeover43%
NetEnt-Evolution: Are People Betting on an Overbid?
Source: Smartkarma Insights
Because Indian delisting offers are what they are, Adani and Hexaware have no offer premium. They will be reverse book builds. Adani “price” of INR 33.82 is the floor price. It is a legal minimum which must be declared. It is not the price of the offer and nobody expects it there.

The average premium for the new deals announced in June was ~33% and the YTD average premium for all deals discussed on Smartkarma is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.


The charts below provide some colour of deals YTD discussed on Smartkarma.


Brief Summary of News in June of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in June, I’ve included a link, in bold, to that insight in italics.)

Australia

Comments (with links to announcements & insights)

16 June: VRL has extended its exclusivity with BGH to the 30 June:

29 June: Apex had joined PEP/Elemental’s proposed Scheme.
Zenith Energy: PEP Cuts In OPTrust and ICG

China

Comments 

No June update

No June update

Hong Kong

Comments (with links to announcements & insights)

18 June: The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair & reasonable.
Allied Props (56 HK)’s Scheme Document Despatched

29 June: An update to say there is no update.

15 June: This unconditional Offer was extended until the 29 June.
29 June: The Offer was extended until the 13 July.

16 June: In its monthly announcement in compliance with the Takeovers Code, Haier said the Offeror continues to explore a privatisation proposal.:

17 June. Offer closed.

18 June: Leyou has announced the “Potential Buyer” has commenced due diligence and “are in the course of discussing possible deal structures in respect of the New Possible Share Disposal“:

12 June. Deal approved. Shares have ceased trading

Done Deal As Li & Fung’s Offer Gets Up

16 June: The Scheme is approved. Timetable remains unchanged. Wharf and WREIC shares despatched on the 22 Jul, and first day of trading on the 23 Jul. Cheques to be despatched on the 3 August. 

Wheelock’s Scheme Approved

12 June: Bitauto announced it has entered into a definitive Merger Agreement with Tencent and Hammer at the previously-announced Offer price of US$16/ADS. 
Bitauto (BITA US): Done Deal. Keep An Eye on Yixin’s MGO

India

Comments (with links to announcements & insights)

19 June: According to SEBI’s weekly update on “PROCESSING STATUS OF DRAFT OFFER DOCUMENTS” (as on 12th June 2020), SEBI has sought clarification from the Merchant Banker (Nomura) regarding Carlyle’s Partial Tender Offer (PTO) for Sequent Scientific (SEQ IN). The PTO price is INR86.00. Sequent Scientific’s shares are currently trading at around INR88.25. 

4 June: Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?
22 June: Vedanta Delisting Offer: Opportunities and Timing

25 June: Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing

25 June: Shareholders approved the Vedanta Ltd (VEDL IN) delisting offer process.
It was 85/15 for those who voted amongst institutional investors and 75/25 for in terms of non-insto public. 
26 June: VED has said that it is in the process of arranging financing for the delisting and expects the financing to be completed in the ‘coming weeks’, at which point Vedanta Ltd (VEDL IN) will apply to the stock exchanges for approval to proceed with the delisting process.

Indonesia

Comments (with links to insights)

No June update…. Waiting….. Waiting…. Waiting….

Japan

Comments (with links to announcements & insights)

Shareholder approval to delist on 26 June, Delisting 30 July
No June update
Tender Offer successful, early exit. Delisting 29 July
No June update
No June update
No June update
No June update

12 June: An Activist Appears in Nichii Gakkan (9792): Good!

19 June:Thinking Through Nichii Gakkan Tender Strategy

22 June: BCJ-44 (the Bain entity which will include the family) conducting the Tender Offer MBO on Nichii Gakkan Co (9792 JP)announced that it would extend the Tender Offer deadline from 22 June to 9 July. 

No June update
No June update
No June update

Malaysia

Comments (with links to announcements)

3 June: Tthe SC has declined TA Enterprise (the Offeror)’s application to withdraw:

New Zealand

Comments (with links to announcements and insights)

8 June: A shareholders meeting to vote on the litigation will be held on the 10 July.

Metlifecare: Preparing For A Protracted Legal Stoush

Philippines

Comments (with links)

24 June: KKR’s Tender Offer closed at noon. KKR acquired 11.9% Pro-ration is 100%.

Taiwan

Comments 

11 June: Taiwan Fair Trade Commission has asked for public submissions in their review of the Qisda deal for Alpha. Submission deadline is the 16th. 
23 June: Qisda Corp (2352 TT) announced that the deal for Alpha was extended to 23 July 2020 3:30pm. Still waiting on word whether the Tender Offer will be lowered by TWD 0.44 to account for the dividend which is expected but for which there is no record date.
No June update

Thailand

Comments (with links)

June 24: Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder. 

4 June: Tender Offer doc out for  GOLD. The offer period is from 5 June to 8 August (45 biz days). Settlement is the 14 August.

Middle East

Comments (with links to announcements & insights)

4 June: DP World – Ticking Down To The Last Trade

17 June: And the trade is doneDP World (DPW DU) Scheme was sanctioned. 
Now you wait for your money. 

Europe

Comments (with links to announcements and insights)

No June update 

No June update

No June update 

2. GULF: Upside from Investment in INTUCH

P6

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
  • Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.

3. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

4. ACE: Great Growth Opportunities, but the Stock Is Overpriced

Slide6

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.

Investment thesis:

  • Power producer with high growth potential, but already priced in
  • Long-term contracts and supply control drive high profitability
  • Government driven demand can pose a risk

Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Utlilities: GULF: Short Term Negative Sentiments from Capital Increase and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. GULF: Short Term Negative Sentiments from Capital Increase
  2. Gulf Energy Placement – No Big Deal
  3. Zenith Energy: Done Deal As PEP Bumps
  4. Beijing Jingneng Clean Energy’s Potential Privatisation Bid
  5. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?

1. GULF: Short Term Negative Sentiments from Capital Increase

P6

We see the fall in GULF’s share price by 9% due to the news on capital increase and ADB’s divestment of stake in GULF as an opportunity for accumulative buying given there is minimal impact to our valuation. Thus, we maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived using sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • GULF announced increase of paid-up capital from Bt10.66bn to Bt11.73bn by issuing new 1.07bn common shares through rights offering.
  • Limited impact on GULFS valuation from ADB’s divestment of 1.7% stake in the company.

2. Gulf Energy Placement – No Big Deal

Image 85077132941595419579577

Asian Development Bank (ADB) is looking to sell 176m shares in Gulf Energy Development Public Company (GULF TB), worth about US$200m. Post selldown, ADB will still have about 1.35% of stake in GULF. 

In this note, we will look at deal dynamics, recent performance, and run the deal through our framework.

We have covered GULF’s IPO in:

3. Zenith Energy: Done Deal As PEP Bumps

Image 82398760121595316084997

On the 6 March, remote power generator Zenith Energy Ltd (ZEN AU) specialist announced an Offer, by way of a Scheme, from Elemental Infrastructure BidCo, a Pacific Equity Partners (PEP) entity, at $1.01/share in cash, a 45.3% premium to last close.  Since then:

A Summary of Recent Events

Date
Data in the Date
An initial substantial shareholder announcement (15.45%) was made by Apex Opportunities, an entity controlled by Infrastructure Specialist Asset Management, a trustee of Diversified Infrastructure Trust/Infrastructure Capital Group (ICG) and OPSEU Pension Plant Trust Fund (OPTrust). 
Zenith announced the Board intended to pay a A$0.13/share fully franked dividend, as part of the A$1.01 Scheme consideration. The special dividend was expected to be paid with an anticipated record date of the 23 June. 
Apex stake was bumped to 17.61%.
A “business as usual” update, despite COVID-19.
PEP noted Apex’s holding, and that it would be challenging to implement the Scheme if Apex were to vote against the resolutions. PEP reached out to Apex such that Apex’s consortium members could take an equity position in the Elemental/PEP group holding structure.
Zenith announced Apex had joined PEP/Elemental’s proposed Scheme. There was no other material changes to the Scheme implementation deed announced on the 6 March.
Westoz bumps stake to 10.04% from 8.91%
Westoz bumps stake to 11.90% from 10.04%
Court orders the convening of the Scheme meetings, to be held on the 31 July.
Scheme booklet registered with ASIC
Westoz bumps stake to 12.94% from 11.90%

Early-stage submissions in relation to the Scheme indicate a risk …. the Scheme may not be passed“. The announcement mentions a substantial shareholder, together with a number of minor shareholders, holding 19.59mn Zenith shares, or 22.25% of shares out, will vote against the Scheme. One of the dissenting shareholders is believed to be Westoz.

FIRB approves Scheme

Source: ASX

The New News

This morning Elemental Infrastructure increased the cash price to A$1.05/share from $1.01/share. The Offer is now best and final – provided no competing proposal emerges.

  • The Scheme Consideration will include a fully franked special dividend of A$00.14/share. 
  • More importantly, Westoz said it would vote in favour of the Scheme.  Shareholders have until the 29 July to submit their proxies or to change any exiting proxy.
  • The revised Offer price is a 51.1% premium to the undisturbed price and above the independent experts’ range of A$0.89-A$1.02. 

This deal is done. Given the benefits of the franking credits to those shareholders who can take advantage, this is trading tight to terms.

4. Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Val

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – Huadian Fuxin Energy Corp (816 HK),  Huaneng Renewables Corp H (958 HK) and CP Clean Energy and the potential privatisation of CGN New Energy Holdings (1811 HK).

The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (<10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. 

5. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?

Image 13411387621593827706009

Beijing Jingneng Clean Energy (579 HK), an SOE utility, was suspended Friday morning pursuant to the Code on Takeovers and Mergers. Should an Offer be tabled, this would be the fourth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in a little over a year – and sixth in which interested parties have been circling:

An Offer, should one unfold, would continue a clear directive to privatise clean energy plays. Now is the time to run a ruler over other peers, in addition to other SOE-controlled entities, potentially subject to a delisting proposal.

As always, more below the fold.

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Brief Utlilities: Gulf Energy Placement – No Big Deal and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Gulf Energy Placement – No Big Deal
  2. Zenith Energy: Done Deal As PEP Bumps
  3. Beijing Jingneng Clean Energy’s Potential Privatisation Bid
  4. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?
  5. (Mostly) Asia M&A: June 2020 Roundup

1. Gulf Energy Placement – No Big Deal

Image 23375903031595419563993

Asian Development Bank (ADB) is looking to sell 176m shares in Gulf Energy Development Public Company (GULF TB), worth about US$200m. Post selldown, ADB will still have about 1.35% of stake in GULF. 

In this note, we will look at deal dynamics, recent performance, and run the deal through our framework.

We have covered GULF’s IPO in:

2. Zenith Energy: Done Deal As PEP Bumps

Image 82398760121595316084997

On the 6 March, remote power generator Zenith Energy Ltd (ZEN AU) specialist announced an Offer, by way of a Scheme, from Elemental Infrastructure BidCo, a Pacific Equity Partners (PEP) entity, at $1.01/share in cash, a 45.3% premium to last close.  Since then:

A Summary of Recent Events

Date
Data in the Date
An initial substantial shareholder announcement (15.45%) was made by Apex Opportunities, an entity controlled by Infrastructure Specialist Asset Management, a trustee of Diversified Infrastructure Trust/Infrastructure Capital Group (ICG) and OPSEU Pension Plant Trust Fund (OPTrust). 
Zenith announced the Board intended to pay a A$0.13/share fully franked dividend, as part of the A$1.01 Scheme consideration. The special dividend was expected to be paid with an anticipated record date of the 23 June. 
Apex stake was bumped to 17.61%.
A “business as usual” update, despite COVID-19.
PEP noted Apex’s holding, and that it would be challenging to implement the Scheme if Apex were to vote against the resolutions. PEP reached out to Apex such that Apex’s consortium members could take an equity position in the Elemental/PEP group holding structure.
Zenith announced Apex had joined PEP/Elemental’s proposed Scheme. There was no other material changes to the Scheme implementation deed announced on the 6 March.
Westoz bumps stake to 10.04% from 8.91%
Westoz bumps stake to 11.90% from 10.04%
Court orders the convening of the Scheme meetings, to be held on the 31 July.
Scheme booklet registered with ASIC
Westoz bumps stake to 12.94% from 11.90%

Early-stage submissions in relation to the Scheme indicate a risk …. the Scheme may not be passed“. The announcement mentions a substantial shareholder, together with a number of minor shareholders, holding 19.59mn Zenith shares, or 22.25% of shares out, will vote against the Scheme. One of the dissenting shareholders is believed to be Westoz.

FIRB approves Scheme

Source: ASX

The New News

This morning Elemental Infrastructure increased the cash price to A$1.05/share from $1.01/share. The Offer is now best and final – provided no competing proposal emerges.

  • The Scheme Consideration will include a fully franked special dividend of A$00.14/share. 
  • More importantly, Westoz said it would vote in favour of the Scheme.  Shareholders have until the 29 July to submit their proxies or to change any exiting proxy.
  • The revised Offer price is a 51.1% premium to the undisturbed price and above the independent experts’ range of A$0.89-A$1.02. 

This deal is done. Given the benefits of the franking credits to those shareholders who can take advantage, this is trading tight to terms.

3. Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Val

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – Huadian Fuxin Energy Corp (816 HK),  Huaneng Renewables Corp H (958 HK) and CP Clean Energy and the potential privatisation of CGN New Energy Holdings (1811 HK).

The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (<10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. 

4. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?

Image 13411387621593827706009

Beijing Jingneng Clean Energy (579 HK), an SOE utility, was suspended Friday morning pursuant to the Code on Takeovers and Mergers. Should an Offer be tabled, this would be the fourth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in a little over a year – and sixth in which interested parties have been circling:

An Offer, should one unfold, would continue a clear directive to privatise clean energy plays. Now is the time to run a ruler over other peers, in addition to other SOE-controlled entities, potentially subject to a delisting proposal.

As always, more below the fold.

5. (Mostly) Asia M&A: June 2020 Roundup

Image 54895522921593479397888

For the month of June, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$12bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.

New Deals

Industry

Size (US$bn)

Type

Premium

Australia

Cardinal Resources (CDV AU) Mining0.2Off-market75%
Shandong’s Competing Offer For Cardinal
Cassini Resources (CZI AU) Mining0.1Scheme31%
Uniti/OptiComm: High-Fibre Diet
Cromwell Property (CMW AU) Property0.5Partial3.4%
Cromwell/ARA: A Festering Relationship
Onevue Holdings (OVH AU) Software0.1Scheme66.7%
OneVue-Iress: Australian Deal Trading Wide
Infigen Energy (IFN AU) Energy0.6Off-market45.8%

Infigen Energy Deal – Interesting Optionality

Infigen Gets Iberdrola As Overbidder.

Infigen’s White Knight on a Charger

OptiComm Ltd (OPC AU) Fibre network0.4Scheme3.6%
Uniti/OptiComm: High-Fibre Diet

 

China

Kingswood Enterprise  (600255 CH) Copper Alloy0.1Partial13%
Kingswood Enterprise (600255 CH): Partial Offer. Read more: https://skr.ma/NdWia

 

Hong Kong

Golden Meditech Holdings (801 HK) Hospitals0.1Scheme42%
Golden Meditech (801 HK): Prescription Renewal 
Huadian Fuxin Energy Corp (816 HK) Clean Energy1.0Merger by Absorption65.6%
Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play
Jinmao Hotel & Jinmao (China) (6139 HK) Hotels0.4Scheme30.4%
Jinmao Hotel (6139 HK): Priced To Check Out
Skyworth Group Limited (751 HK) Electronics0.2Partial32%
Skyworth (751 HK)’s Partial Buyback.

 

India

Adani Power Ltd (ADANI IN) Energy0.4DelistingN/A
Adani Power – The Next Delisting/Exit Offer?
Hexaware Technologies (HEXW IN) Info tech0.5DelistingN/A
Hexaware Delisting Proposal – This Could Go Higher
Hexaware:  Dips and Doodles in the Delisting Proposal Process
 
Japan
LIXIL VIVA (3564 JP) Houseware0.5Tender Offer0.5%
Lixil Viva (3564 JP) Takeout Tender Offer

Singapore

Accordia Golf Trust (AGT SP) Golf courses0.4Asset sale/divestment20%
Accordia Golf Trust Buyout… A Gimme But….
Perennial Real Estate Holdings (PREH SP) Real estate1.1Conditional Offer37.7%
Perennial Takeover – Disappointing Precedents Suggest “Fair” Even if Not Really

 

US

China Distance Education (ADR) (DL US) Online Education0.2Non-binding25.8%
China Distance Education (DL US): Takeover Proposal by the Founders

 

Europe

Masmovil Ibercom (MAS SM) Telco3.3Tender Offer20.1%
Masmovil: Target Shareholders Looking for a Bump
Mediawan (MDW FP) Media0.4Tender Offer42%
Mediawan Tender Offer: Trading Close to Terms
NetEnt AB (NETB SS) Casino2.0Public takeover43%
NetEnt-Evolution: Are People Betting on an Overbid?
Source: Smartkarma Insights
Because Indian delisting offers are what they are, Adani and Hexaware have no offer premium. They will be reverse book builds. Adani “price” of INR 33.82 is the floor price. It is a legal minimum which must be declared. It is not the price of the offer and nobody expects it there.

The average premium for the new deals announced in June was ~33% and the YTD average premium for all deals discussed on Smartkarma is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.


The charts below provide some colour of deals YTD discussed on Smartkarma.


Brief Summary of News in June of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in June, I’ve included a link, in bold, to that insight in italics.)

Australia

Comments (with links to announcements & insights)

16 June: VRL has extended its exclusivity with BGH to the 30 June:

29 June: Apex had joined PEP/Elemental’s proposed Scheme.
Zenith Energy: PEP Cuts In OPTrust and ICG

China

Comments 

No June update

No June update

Hong Kong

Comments (with links to announcements & insights)

18 June: The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair & reasonable.
Allied Props (56 HK)’s Scheme Document Despatched

29 June: An update to say there is no update.

15 June: This unconditional Offer was extended until the 29 June.
29 June: The Offer was extended until the 13 July.

16 June: In its monthly announcement in compliance with the Takeovers Code, Haier said the Offeror continues to explore a privatisation proposal.:

17 June. Offer closed.

18 June: Leyou has announced the “Potential Buyer” has commenced due diligence and “are in the course of discussing possible deal structures in respect of the New Possible Share Disposal“:

12 June. Deal approved. Shares have ceased trading

Done Deal As Li & Fung’s Offer Gets Up

16 June: The Scheme is approved. Timetable remains unchanged. Wharf and WREIC shares despatched on the 22 Jul, and first day of trading on the 23 Jul. Cheques to be despatched on the 3 August. 

Wheelock’s Scheme Approved

12 June: Bitauto announced it has entered into a definitive Merger Agreement with Tencent and Hammer at the previously-announced Offer price of US$16/ADS. 
Bitauto (BITA US): Done Deal. Keep An Eye on Yixin’s MGO

India

Comments (with links to announcements & insights)

19 June: According to SEBI’s weekly update on “PROCESSING STATUS OF DRAFT OFFER DOCUMENTS” (as on 12th June 2020), SEBI has sought clarification from the Merchant Banker (Nomura) regarding Carlyle’s Partial Tender Offer (PTO) for Sequent Scientific (SEQ IN). The PTO price is INR86.00. Sequent Scientific’s shares are currently trading at around INR88.25. 

4 June: Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?
22 June: Vedanta Delisting Offer: Opportunities and Timing

25 June: Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing

25 June: Shareholders approved the Vedanta Ltd (VEDL IN) delisting offer process.
It was 85/15 for those who voted amongst institutional investors and 75/25 for in terms of non-insto public. 
26 June: VED has said that it is in the process of arranging financing for the delisting and expects the financing to be completed in the ‘coming weeks’, at which point Vedanta Ltd (VEDL IN) will apply to the stock exchanges for approval to proceed with the delisting process.

Indonesia

Comments (with links to insights)

No June update…. Waiting….. Waiting…. Waiting….

Japan

Comments (with links to announcements & insights)

Shareholder approval to delist on 26 June, Delisting 30 July
No June update
Tender Offer successful, early exit. Delisting 29 July
No June update
No June update
No June update
No June update

12 June: An Activist Appears in Nichii Gakkan (9792): Good!

19 June:Thinking Through Nichii Gakkan Tender Strategy

22 June: BCJ-44 (the Bain entity which will include the family) conducting the Tender Offer MBO on Nichii Gakkan Co (9792 JP)announced that it would extend the Tender Offer deadline from 22 June to 9 July. 

No June update
No June update
No June update

Malaysia

Comments (with links to announcements)

3 June: Tthe SC has declined TA Enterprise (the Offeror)’s application to withdraw:

New Zealand

Comments (with links to announcements and insights)

8 June: A shareholders meeting to vote on the litigation will be held on the 10 July.

Metlifecare: Preparing For A Protracted Legal Stoush

Philippines

Comments (with links)

24 June: KKR’s Tender Offer closed at noon. KKR acquired 11.9% Pro-ration is 100%.

Taiwan

Comments 

11 June: Taiwan Fair Trade Commission has asked for public submissions in their review of the Qisda deal for Alpha. Submission deadline is the 16th. 
23 June: Qisda Corp (2352 TT) announced that the deal for Alpha was extended to 23 July 2020 3:30pm. Still waiting on word whether the Tender Offer will be lowered by TWD 0.44 to account for the dividend which is expected but for which there is no record date.
No June update

Thailand

Comments (with links)

June 24: Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder. 

4 June: Tender Offer doc out for  GOLD. The offer period is from 5 June to 8 August (45 biz days). Settlement is the 14 August.

Middle East

Comments (with links to announcements & insights)

4 June: DP World – Ticking Down To The Last Trade

17 June: And the trade is doneDP World (DPW DU) Scheme was sanctioned. 
Now you wait for your money. 

Europe

Comments (with links to announcements and insights)

No June update 

No June update

No June update 

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Brief Utlilities: GULF: Upside from Investment in INTUCH and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. GULF: Upside from Investment in INTUCH
  2. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call
  3. ACE: Great Growth Opportunities, but the Stock Is Overpriced

1. GULF: Upside from Investment in INTUCH

P6

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
  • Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.

2. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

3. ACE: Great Growth Opportunities, but the Stock Is Overpriced

Slide6

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.

Investment thesis:

  • Power producer with high growth potential, but already priced in
  • Long-term contracts and supply control drive high profitability
  • Government driven demand can pose a risk

Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Utlilities: China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call
  2. ACE: Great Growth Opportunities, but the Stock Is Overpriced

1. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

2. ACE: Great Growth Opportunities, but the Stock Is Overpriced

Slide6

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.

Investment thesis:

  • Power producer with high growth potential, but already priced in
  • Long-term contracts and supply control drive high profitability
  • Government driven demand can pose a risk

Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Utlilities: Zenith Energy: Done Deal As PEP Bumps and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Zenith Energy: Done Deal As PEP Bumps
  2. Beijing Jingneng Clean Energy’s Potential Privatisation Bid
  3. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?
  4. (Mostly) Asia M&A: June 2020 Roundup
  5. GULF: Upside from Investment in INTUCH

1. Zenith Energy: Done Deal As PEP Bumps

Image 82398760121595316084997

On the 6 March, remote power generator Zenith Energy Ltd (ZEN AU) specialist announced an Offer, by way of a Scheme, from Elemental Infrastructure BidCo, a Pacific Equity Partners (PEP) entity, at $1.01/share in cash, a 45.3% premium to last close.  Since then:

A Summary of Recent Events

Date
Data in the Date
An initial substantial shareholder announcement (15.45%) was made by Apex Opportunities, an entity controlled by Infrastructure Specialist Asset Management, a trustee of Diversified Infrastructure Trust/Infrastructure Capital Group (ICG) and OPSEU Pension Plant Trust Fund (OPTrust). 
Zenith announced the Board intended to pay a A$0.13/share fully franked dividend, as part of the A$1.01 Scheme consideration. The special dividend was expected to be paid with an anticipated record date of the 23 June. 
Apex stake was bumped to 17.61%.
A “business as usual” update, despite COVID-19.
PEP noted Apex’s holding, and that it would be challenging to implement the Scheme if Apex were to vote against the resolutions. PEP reached out to Apex such that Apex’s consortium members could take an equity position in the Elemental/PEP group holding structure.
Zenith announced Apex had joined PEP/Elemental’s proposed Scheme. There was no other material changes to the Scheme implementation deed announced on the 6 March.
Westoz bumps stake to 10.04% from 8.91%
Westoz bumps stake to 11.90% from 10.04%
Court orders the convening of the Scheme meetings, to be held on the 31 July.
Scheme booklet registered with ASIC
Westoz bumps stake to 12.94% from 11.90%

Early-stage submissions in relation to the Scheme indicate a risk …. the Scheme may not be passed“. The announcement mentions a substantial shareholder, together with a number of minor shareholders, holding 19.59mn Zenith shares, or 22.25% of shares out, will vote against the Scheme. One of the dissenting shareholders is believed to be Westoz.

FIRB approves Scheme

Source: ASX

The New News

This morning Elemental Infrastructure increased the cash price to A$1.05/share from $1.01/share. The Offer is now best and final – provided no competing proposal emerges.

  • The Scheme Consideration will include a fully franked special dividend of A$00.14/share. 
  • More importantly, Westoz said it would vote in favour of the Scheme.  Shareholders have until the 29 July to submit their proxies or to change any exiting proxy.
  • The revised Offer price is a 51.1% premium to the undisturbed price and above the independent experts’ range of A$0.89-A$1.02. 

This deal is done. Given the benefits of the franking credits to those shareholders who can take advantage, this is trading tight to terms.

2. Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Val

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – Huadian Fuxin Energy Corp (816 HK),  Huaneng Renewables Corp H (958 HK) and CP Clean Energy and the potential privatisation of CGN New Energy Holdings (1811 HK).

The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (<10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. 

3. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?

Image 13411387621593827706009

Beijing Jingneng Clean Energy (579 HK), an SOE utility, was suspended Friday morning pursuant to the Code on Takeovers and Mergers. Should an Offer be tabled, this would be the fourth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in a little over a year – and sixth in which interested parties have been circling:

An Offer, should one unfold, would continue a clear directive to privatise clean energy plays. Now is the time to run a ruler over other peers, in addition to other SOE-controlled entities, potentially subject to a delisting proposal.

As always, more below the fold.

4. (Mostly) Asia M&A: June 2020 Roundup

Image 54895522921593479397888

For the month of June, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$12bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.

New Deals

Industry

Size (US$bn)

Type

Premium

Australia

Cardinal Resources (CDV AU) Mining0.2Off-market75%
Shandong’s Competing Offer For Cardinal
Cassini Resources (CZI AU) Mining0.1Scheme31%
Uniti/OptiComm: High-Fibre Diet
Cromwell Property (CMW AU) Property0.5Partial3.4%
Cromwell/ARA: A Festering Relationship
Onevue Holdings (OVH AU) Software0.1Scheme66.7%
OneVue-Iress: Australian Deal Trading Wide
Infigen Energy (IFN AU) Energy0.6Off-market45.8%

Infigen Energy Deal – Interesting Optionality

Infigen Gets Iberdrola As Overbidder.

Infigen’s White Knight on a Charger

OptiComm Ltd (OPC AU) Fibre network0.4Scheme3.6%
Uniti/OptiComm: High-Fibre Diet

 

China

Kingswood Enterprise  (600255 CH) Copper Alloy0.1Partial13%
Kingswood Enterprise (600255 CH): Partial Offer. Read more: https://skr.ma/NdWia

 

Hong Kong

Golden Meditech Holdings (801 HK) Hospitals0.1Scheme42%
Golden Meditech (801 HK): Prescription Renewal 
Huadian Fuxin Energy Corp (816 HK) Clean Energy1.0Merger by Absorption65.6%
Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play
Jinmao Hotel & Jinmao (China) (6139 HK) Hotels0.4Scheme30.4%
Jinmao Hotel (6139 HK): Priced To Check Out
Skyworth Group Limited (751 HK) Electronics0.2Partial32%
Skyworth (751 HK)’s Partial Buyback.

 

India

Adani Power Ltd (ADANI IN) Energy0.4DelistingN/A
Adani Power – The Next Delisting/Exit Offer?
Hexaware Technologies (HEXW IN) Info tech0.5DelistingN/A
Hexaware Delisting Proposal – This Could Go Higher
Hexaware:  Dips and Doodles in the Delisting Proposal Process
 
Japan
LIXIL VIVA (3564 JP) Houseware0.5Tender Offer0.5%
Lixil Viva (3564 JP) Takeout Tender Offer

Singapore

Accordia Golf Trust (AGT SP) Golf courses0.4Asset sale/divestment20%
Accordia Golf Trust Buyout… A Gimme But….
Perennial Real Estate Holdings (PREH SP) Real estate1.1Conditional Offer37.7%
Perennial Takeover – Disappointing Precedents Suggest “Fair” Even if Not Really

 

US

China Distance Education (ADR) (DL US) Online Education0.2Non-binding25.8%
China Distance Education (DL US): Takeover Proposal by the Founders

 

Europe

Masmovil Ibercom (MAS SM) Telco3.3Tender Offer20.1%
Masmovil: Target Shareholders Looking for a Bump
Mediawan (MDW FP) Media0.4Tender Offer42%
Mediawan Tender Offer: Trading Close to Terms
NetEnt AB (NETB SS) Casino2.0Public takeover43%
NetEnt-Evolution: Are People Betting on an Overbid?
Source: Smartkarma Insights
Because Indian delisting offers are what they are, Adani and Hexaware have no offer premium. They will be reverse book builds. Adani “price” of INR 33.82 is the floor price. It is a legal minimum which must be declared. It is not the price of the offer and nobody expects it there.

The average premium for the new deals announced in June was ~33% and the YTD average premium for all deals discussed on Smartkarma is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.


The charts below provide some colour of deals YTD discussed on Smartkarma.


Brief Summary of News in June of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in June, I’ve included a link, in bold, to that insight in italics.)

Australia

Comments (with links to announcements & insights)

16 June: VRL has extended its exclusivity with BGH to the 30 June:

29 June: Apex had joined PEP/Elemental’s proposed Scheme.
Zenith Energy: PEP Cuts In OPTrust and ICG

China

Comments 

No June update

No June update

Hong Kong

Comments (with links to announcements & insights)

18 June: The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair & reasonable.
Allied Props (56 HK)’s Scheme Document Despatched

29 June: An update to say there is no update.

15 June: This unconditional Offer was extended until the 29 June.
29 June: The Offer was extended until the 13 July.

16 June: In its monthly announcement in compliance with the Takeovers Code, Haier said the Offeror continues to explore a privatisation proposal.:

17 June. Offer closed.

18 June: Leyou has announced the “Potential Buyer” has commenced due diligence and “are in the course of discussing possible deal structures in respect of the New Possible Share Disposal“:

12 June. Deal approved. Shares have ceased trading

Done Deal As Li & Fung’s Offer Gets Up

16 June: The Scheme is approved. Timetable remains unchanged. Wharf and WREIC shares despatched on the 22 Jul, and first day of trading on the 23 Jul. Cheques to be despatched on the 3 August. 

Wheelock’s Scheme Approved

12 June: Bitauto announced it has entered into a definitive Merger Agreement with Tencent and Hammer at the previously-announced Offer price of US$16/ADS. 
Bitauto (BITA US): Done Deal. Keep An Eye on Yixin’s MGO

India

Comments (with links to announcements & insights)

19 June: According to SEBI’s weekly update on “PROCESSING STATUS OF DRAFT OFFER DOCUMENTS” (as on 12th June 2020), SEBI has sought clarification from the Merchant Banker (Nomura) regarding Carlyle’s Partial Tender Offer (PTO) for Sequent Scientific (SEQ IN). The PTO price is INR86.00. Sequent Scientific’s shares are currently trading at around INR88.25. 

4 June: Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?
22 June: Vedanta Delisting Offer: Opportunities and Timing

25 June: Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing

25 June: Shareholders approved the Vedanta Ltd (VEDL IN) delisting offer process.
It was 85/15 for those who voted amongst institutional investors and 75/25 for in terms of non-insto public. 
26 June: VED has said that it is in the process of arranging financing for the delisting and expects the financing to be completed in the ‘coming weeks’, at which point Vedanta Ltd (VEDL IN) will apply to the stock exchanges for approval to proceed with the delisting process.

Indonesia

Comments (with links to insights)

No June update…. Waiting….. Waiting…. Waiting….

Japan

Comments (with links to announcements & insights)

Shareholder approval to delist on 26 June, Delisting 30 July
No June update
Tender Offer successful, early exit. Delisting 29 July
No June update
No June update
No June update
No June update

12 June: An Activist Appears in Nichii Gakkan (9792): Good!

19 June:Thinking Through Nichii Gakkan Tender Strategy

22 June: BCJ-44 (the Bain entity which will include the family) conducting the Tender Offer MBO on Nichii Gakkan Co (9792 JP)announced that it would extend the Tender Offer deadline from 22 June to 9 July. 

No June update
No June update
No June update

Malaysia

Comments (with links to announcements)

3 June: Tthe SC has declined TA Enterprise (the Offeror)’s application to withdraw:

New Zealand

Comments (with links to announcements and insights)

8 June: A shareholders meeting to vote on the litigation will be held on the 10 July.

Metlifecare: Preparing For A Protracted Legal Stoush

Philippines

Comments (with links)

24 June: KKR’s Tender Offer closed at noon. KKR acquired 11.9% Pro-ration is 100%.

Taiwan

Comments 

11 June: Taiwan Fair Trade Commission has asked for public submissions in their review of the Qisda deal for Alpha. Submission deadline is the 16th. 
23 June: Qisda Corp (2352 TT) announced that the deal for Alpha was extended to 23 July 2020 3:30pm. Still waiting on word whether the Tender Offer will be lowered by TWD 0.44 to account for the dividend which is expected but for which there is no record date.
No June update

Thailand

Comments (with links)

June 24: Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder. 

4 June: Tender Offer doc out for  GOLD. The offer period is from 5 June to 8 August (45 biz days). Settlement is the 14 August.

Middle East

Comments (with links to announcements & insights)

4 June: DP World – Ticking Down To The Last Trade

17 June: And the trade is doneDP World (DPW DU) Scheme was sanctioned. 
Now you wait for your money. 

Europe

Comments (with links to announcements and insights)

No June update 

No June update

No June update 

5. GULF: Upside from Investment in INTUCH

P6

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
  • Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.

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Brief Utlilities: China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call
  2. ACE: Great Growth Opportunities, but the Stock Is Overpriced
  3. China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

1. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

2. ACE: Great Growth Opportunities, but the Stock Is Overpriced

Slide6

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.

Investment thesis:

  • Power producer with high growth potential, but already priced in
  • Long-term contracts and supply control drive high profitability
  • Government driven demand can pose a risk

Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

3. China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

Power

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world’s largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government’s clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.

Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

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Brief Utlilities: Beijing Jingneng Clean Energy’s Potential Privatisation Bid and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Beijing Jingneng Clean Energy’s Potential Privatisation Bid
  2. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?
  3. (Mostly) Asia M&A: June 2020 Roundup
  4. GULF: Upside from Investment in INTUCH
  5. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

1. Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Val

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – Huadian Fuxin Energy Corp (816 HK),  Huaneng Renewables Corp H (958 HK) and CP Clean Energy and the potential privatisation of CGN New Energy Holdings (1811 HK).

The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (<10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. 

2. Beijing Jingneng (579 HK): The Latest Clean Energy Privatisation?

Image 13411387621593827706009

Beijing Jingneng Clean Energy (579 HK), an SOE utility, was suspended Friday morning pursuant to the Code on Takeovers and Mergers. Should an Offer be tabled, this would be the fourth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in a little over a year – and sixth in which interested parties have been circling:

An Offer, should one unfold, would continue a clear directive to privatise clean energy plays. Now is the time to run a ruler over other peers, in addition to other SOE-controlled entities, potentially subject to a delisting proposal.

As always, more below the fold.

3. (Mostly) Asia M&A: June 2020 Roundup

Image 54895522921593479397888

For the month of June, 20 new deals were discussed on Smartkarma with an overall announced deal size of ~US$12bn.

Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow up discussions, or simply click on the insight link(s) below the name.

New Deals

Industry

Size (US$bn)

Type

Premium

Australia

Cardinal Resources (CDV AU) Mining0.2Off-market75%
Shandong’s Competing Offer For Cardinal
Cassini Resources (CZI AU) Mining0.1Scheme31%
Uniti/OptiComm: High-Fibre Diet
Cromwell Property (CMW AU) Property0.5Partial3.4%
Cromwell/ARA: A Festering Relationship
Onevue Holdings (OVH AU) Software0.1Scheme66.7%
OneVue-Iress: Australian Deal Trading Wide
Infigen Energy (IFN AU) Energy0.6Off-market45.8%

Infigen Energy Deal – Interesting Optionality

Infigen Gets Iberdrola As Overbidder.

Infigen’s White Knight on a Charger

OptiComm Ltd (OPC AU) Fibre network0.4Scheme3.6%
Uniti/OptiComm: High-Fibre Diet

 

China

Kingswood Enterprise  (600255 CH) Copper Alloy0.1Partial13%
Kingswood Enterprise (600255 CH): Partial Offer. Read more: https://skr.ma/NdWia

 

Hong Kong

Golden Meditech Holdings (801 HK) Hospitals0.1Scheme42%
Golden Meditech (801 HK): Prescription Renewal 
Huadian Fuxin Energy Corp (816 HK) Clean Energy1.0Merger by Absorption65.6%
Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play
Jinmao Hotel & Jinmao (China) (6139 HK) Hotels0.4Scheme30.4%
Jinmao Hotel (6139 HK): Priced To Check Out
Skyworth Group Limited (751 HK) Electronics0.2Partial32%
Skyworth (751 HK)’s Partial Buyback.

 

India

Adani Power Ltd (ADANI IN) Energy0.4DelistingN/A
Adani Power – The Next Delisting/Exit Offer?
Hexaware Technologies (HEXW IN) Info tech0.5DelistingN/A
Hexaware Delisting Proposal – This Could Go Higher
Hexaware:  Dips and Doodles in the Delisting Proposal Process
 
Japan
LIXIL VIVA (3564 JP) Houseware0.5Tender Offer0.5%
Lixil Viva (3564 JP) Takeout Tender Offer

Singapore

Accordia Golf Trust (AGT SP) Golf courses0.4Asset sale/divestment20%
Accordia Golf Trust Buyout… A Gimme But….
Perennial Real Estate Holdings (PREH SP) Real estate1.1Conditional Offer37.7%
Perennial Takeover – Disappointing Precedents Suggest “Fair” Even if Not Really

 

US

China Distance Education (ADR) (DL US) Online Education0.2Non-binding25.8%
China Distance Education (DL US): Takeover Proposal by the Founders

 

Europe

Masmovil Ibercom (MAS SM) Telco3.3Tender Offer20.1%
Masmovil: Target Shareholders Looking for a Bump
Mediawan (MDW FP) Media0.4Tender Offer42%
Mediawan Tender Offer: Trading Close to Terms
NetEnt AB (NETB SS) Casino2.0Public takeover43%
NetEnt-Evolution: Are People Betting on an Overbid?
Source: Smartkarma Insights
Because Indian delisting offers are what they are, Adani and Hexaware have no offer premium. They will be reverse book builds. Adani “price” of INR 33.82 is the floor price. It is a legal minimum which must be declared. It is not the price of the offer and nobody expects it there.

The average premium for the new deals announced in June was ~33% and the YTD average premium for all deals discussed on Smartkarma is 32%.  The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.


The charts below provide some colour of deals YTD discussed on Smartkarma.


Brief Summary of News in June of Arb Situations On Smartkarma’s Radar

(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation. Where a new insight was written on these names in June, I’ve included a link, in bold, to that insight in italics.)

Australia

Comments (with links to announcements & insights)

16 June: VRL has extended its exclusivity with BGH to the 30 June:

29 June: Apex had joined PEP/Elemental’s proposed Scheme.
Zenith Energy: PEP Cuts In OPTrust and ICG

China

Comments 

No June update

No June update

Hong Kong

Comments (with links to announcements & insights)

18 June: The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair & reasonable.
Allied Props (56 HK)’s Scheme Document Despatched

29 June: An update to say there is no update.

15 June: This unconditional Offer was extended until the 29 June.
29 June: The Offer was extended until the 13 July.

16 June: In its monthly announcement in compliance with the Takeovers Code, Haier said the Offeror continues to explore a privatisation proposal.:

17 June. Offer closed.

18 June: Leyou has announced the “Potential Buyer” has commenced due diligence and “are in the course of discussing possible deal structures in respect of the New Possible Share Disposal“:

12 June. Deal approved. Shares have ceased trading

Done Deal As Li & Fung’s Offer Gets Up

16 June: The Scheme is approved. Timetable remains unchanged. Wharf and WREIC shares despatched on the 22 Jul, and first day of trading on the 23 Jul. Cheques to be despatched on the 3 August. 

Wheelock’s Scheme Approved

12 June: Bitauto announced it has entered into a definitive Merger Agreement with Tencent and Hammer at the previously-announced Offer price of US$16/ADS. 
Bitauto (BITA US): Done Deal. Keep An Eye on Yixin’s MGO

India

Comments (with links to announcements & insights)

19 June: According to SEBI’s weekly update on “PROCESSING STATUS OF DRAFT OFFER DOCUMENTS” (as on 12th June 2020), SEBI has sought clarification from the Merchant Banker (Nomura) regarding Carlyle’s Partial Tender Offer (PTO) for Sequent Scientific (SEQ IN). The PTO price is INR86.00. Sequent Scientific’s shares are currently trading at around INR88.25. 

4 June: Failed Exit Offers in India: Lessons for VEDL, ADANI, and HEXW?
22 June: Vedanta Delisting Offer: Opportunities and Timing

25 June: Vedanta Buyout Loan = HUGE Hindustan Zinc Div But May Change Vedanta RBB Timing

25 June: Shareholders approved the Vedanta Ltd (VEDL IN) delisting offer process.
It was 85/15 for those who voted amongst institutional investors and 75/25 for in terms of non-insto public. 
26 June: VED has said that it is in the process of arranging financing for the delisting and expects the financing to be completed in the ‘coming weeks’, at which point Vedanta Ltd (VEDL IN) will apply to the stock exchanges for approval to proceed with the delisting process.

Indonesia

Comments (with links to insights)

No June update…. Waiting….. Waiting…. Waiting….

Japan

Comments (with links to announcements & insights)

Shareholder approval to delist on 26 June, Delisting 30 July
No June update
Tender Offer successful, early exit. Delisting 29 July
No June update
No June update
No June update
No June update

12 June: An Activist Appears in Nichii Gakkan (9792): Good!

19 June:Thinking Through Nichii Gakkan Tender Strategy

22 June: BCJ-44 (the Bain entity which will include the family) conducting the Tender Offer MBO on Nichii Gakkan Co (9792 JP)announced that it would extend the Tender Offer deadline from 22 June to 9 July. 

No June update
No June update
No June update

Malaysia

Comments (with links to announcements)

3 June: Tthe SC has declined TA Enterprise (the Offeror)’s application to withdraw:

New Zealand

Comments (with links to announcements and insights)

8 June: A shareholders meeting to vote on the litigation will be held on the 10 July.

Metlifecare: Preparing For A Protracted Legal Stoush

Philippines

Comments (with links)

24 June: KKR’s Tender Offer closed at noon. KKR acquired 11.9% Pro-ration is 100%.

Taiwan

Comments 

11 June: Taiwan Fair Trade Commission has asked for public submissions in their review of the Qisda deal for Alpha. Submission deadline is the 16th. 
23 June: Qisda Corp (2352 TT) announced that the deal for Alpha was extended to 23 July 2020 3:30pm. Still waiting on word whether the Tender Offer will be lowered by TWD 0.44 to account for the dividend which is expected but for which there is no record date.
No June update

Thailand

Comments (with links)

June 24: Bangkok Dusit Medical Services (BDMS TB) has scrapped its plan to take over Bumrungrad Hospital Pub Co (BH TB) and has no plans to do so in the future according to the Founder. 

4 June: Tender Offer doc out for  GOLD. The offer period is from 5 June to 8 August (45 biz days). Settlement is the 14 August.

Middle East

Comments (with links to announcements & insights)

4 June: DP World – Ticking Down To The Last Trade

17 June: And the trade is doneDP World (DPW DU) Scheme was sanctioned. 
Now you wait for your money. 

Europe

Comments (with links to announcements and insights)

No June update 

No June update

No June update 

4. GULF: Upside from Investment in INTUCH

P6

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.

Story:

  • Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
  • Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.

5. China Gas Holdings (384 HK): Key Takeaways from Post-Result Investor Call

Pb%20 %2028jun2020

China Gas Holdings (384 HK) reported a marginally behind result with a 11.7% increase in reported profit to HK$9.19bn, primarily due to the negative impact of the COVID-19 on gas sales growth. Full-year DPS of HK$0.50 represents a 27.6% payout ratio.

In terms of outlook, the company guided for good gas volume recovery in Apr-Jun, expansion of dollar margin, improvement in receivable recovery and LPG micro pipeline network as key initiative in FY20/21. However, our concerns are continued high gearing, downtrend on connection fees, possibly slow receivable recovery and uncertainties on LPG micro pipeline.

Despite undemanding valuations (12x PER and 3.3x P/B), we still prefer our top two picks as analysed in China Infrastructure Deep Dive: Gas Utilities H & A SharesENN Energy (2688 HK) and China Resources Gas (1193 HK)

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Brief Utlilities: Quiddity M&A: Australia Foreign Investment Reforms and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Quiddity M&A: Australia Foreign Investment Reforms
  2. Infratil Placement – Better Balance Sheet Flexibility with Focus on Existing Assets

1. Quiddity M&A: Australia Foreign Investment Reforms

Image 54874371831591765670743

On the 5 June 2020, the Treasury of the Australian Government released a 34-page document titled Foreign investment reforms, outlining the “most comprehensive” reform to Australian foreign investment review framework since the Foreign Acquisition and Takeovers Act (FATA) was introduced in 1975.

The new powers afforded the government – a draft legislation for consultation will be released next month –  will primarily address:

  • A new national security test that will require foreign investors (government or private), to inform the Foreign Investment Review Board (FIRB) if they are preparing to acquire a direct interest in a “sensitive national security business.
  • Streamlining the approval processes for certain privately controlled institutional investment funds that hold purely passive foreign government funds, alongside private capital in non-sensitive sectors.
  • Stronger penalties and enforcement powers to ensure greater compliance.

This new draft legislation makes an important distinction between national security sensitive investments and others, and also makes a clear delineation between foreign government investment (FGI) which is passive and which is active.

It also may alleviate the burden on private equity firms as a result, but this proposed reform is clearly a framework for greater scrutiny on FGI and its strategic implications.

Further comments below the fold …

For more on M&A in Australia, please see the Quiddity Australia M&A Guide 2019 which is part of a series including… 2019 insights on JapanTaiwanIndia, Singapore, Hong Kong, Indonesia, Thailand, Korea, and the Philippines designed to be used as references. Updated versions will be made available from time to time, and can be found by searching for “Quiddity M&A Guide” (or clicking that link).

2. Infratil Placement – Better Balance Sheet Flexibility with Focus on Existing Assets

Image 54531659541591661382475

Infratil Ltd (IFT NZ) is looking to raise US$197m (A$300m) in its fully underwritten institutional placement to strengthen its balance sheet.

In this note, we will look at the placement details, impact of the equity raise, and pipeline assets. We will also run the deal through our framework. 

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