Brief Event-Driven: TPV Tech’s Full Offer From CEIEC/CEC and more

In this briefing:

  1. TPV Tech’s Full Offer From CEIEC/CEC
  2. CMA CGM – Understanding the Strategy

1. TPV Tech’s Full Offer From CEIEC/CEC

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Last Friday, TPV Technology (903 HK) TPV’s shares were suspended pending the release of an announcement pursuant to The Hong Kong Code on Takeovers and Mergers.

There have been some large CCASS movements recently, which I flagged in my weekly last month  – Last Week in Event SPACE: Chiyoda, Bandai, Unizo, Ascendas, Villa World, Avon, SIA Engineering – with 18.2% of shares out moving out of Citibank into Zhongrong Securities. This is/was Mitsui’s stake.

In my insight TPV Halted – A New Offer From CEC/Mitsui?, I concluded CEC/CEIEC will make another Offer – this time to potentially delist the company. 

And so they have.

CEIEC has launched a $3.86/share Offer for TPV, a 41.39% premium to last close, by way of a Scheme. The Offer Price is Final. The headcount test applies.

CEIEC and concert parties hold 1.15bn shares or 49.04% of shares out. Therefore, the blocking stake at the Court Meeting will be 119.5mn shares or US$54mn at the current price.

The Offer falls short of the $5.20/share MGO in 2010. However, that was the high watermark for the stock after which TPV’s earnings collapsed with four of the last seven years in the red. 

Currently trading at a gross/annualised spread of 9%/37%, assuming late November completion. That appears an attractive risk/reward here.

2. CMA CGM – Understanding the Strategy

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With their 2Q 2019 results expected to be released on Friday 6th September 2019, after market close, we thought it timely to highlight a framework to assess CMA CGM’s management’s ability in executing on their strategic transformation program.

CMA CGM, global shipping, and logistics company are in the process of integrating its acquisition of CEVA, an asset-light logistics company, into its business. As part of this process, CMA CGM has changed its strategic direction with a goal to now being a global leader in the transport and logistics sector.

Key to the successful integration of the two businesses and the longer-term success of the firm will be their ability to grow and optimize/realize scale efficiencies as a combined entity enabling them to increase profitability and maintain a market leadership position.

Key to being able to successfully monitor their implementation of the strategy will be identifying key KPI’s, both quantitative and qualitative, that the analyst can use to track progress. In this note, we suggest a set of financial KPI’s as well as a couple of key qualitative/subjective measures.

We see a good reason for long-term optimism, primarily as a result of consolidation, leading to cost optimization, and digitization efforts, both identified as KPI’s within this note.

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