In today’s briefing:
- Poon’s Underpriced Takeover. Minorities Deserve Better
- Betr’s “Superior Offer” For PointsBet (PBH AU) Is Questionable
- Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash
- Fujitsu General (6755) – Deal Starts Early, Trades Tight – Done Deal
- Hainan Drinda New Energy (A/H IPO) – Business Was Acquired for 1/3rd the Price, Three Years Ago
- PointsBet (PBH AU): Betr (BBT AU) Returns with Financing, a Blocking Stake, and Dubious Assumptions
- Asian Equities: Overvalued, Over-Leveraged, Low Growth – a Different Look
- Fonterra (FCG NZ)’s Consumer Ops Spin-Off (Potentially) Stumbles
- BYD (1211 HK): Top Trades Reflect Bearish Bias in HKEX Options Trading Strategies
- Eco-Shop IPO: Peers Have Shined Through Turmoil, Eco Still Cheaper
Poon’s Underpriced Takeover. Minorities Deserve Better
- Dickson Concepts (113 HK) (DC)’s Chairman, Dickson Poon (& relatives), holding 61.98%, have tabled an Offer by way of a Scheme for shares not held, at HK$7.20/share (best & final).
- That compares to DC’s net cash (as at 30 Sept 2024) of HK$7.44/share. Plus financial assets comprise an additional ~HK$2.16/share.
- The IFA will cite liquidity and DC’s historical discount to NAV, and opine “reasonable”, and perhaps even “fair”. It is neither. Minorities should vote this down. But probably won’t …
Betr’s “Superior Offer” For PointsBet (PBH AU) Is Questionable
- On the 26th Feb 2025, PointsBet (PBH AU), an Australian/Canadian online wagering platform, entered into a Scheme Implementation Deed with Mixi (2121 JP) at A$1.06/share, a 27.7% premium to undisturbed.
- PointsBet rebuffed key (smaller) rival Betr Entertainment (BBT AU)‘s (previously known as BlueBet) ostensibly higher non-binding cash/scrip; and refuted Betr’s claim that it’s Offer was fully funded.
- Betr has returned with, what appears to be, an all cash offer of A$1.20/share, fully-funded/underwritten. Betr’s Offer still requires confirmatory due diligence. Importantly, Betr has also acquired a 19.9% stake.
Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash
- Dickson Concepts Intl (113 HK) disclosed a Bermuda scheme offer from the controlling shareholder (Sir Poon) at HK$7.20, a 50.6% premium to the last close price.
- The offer is final. While the offer represents an all-time high and is attractive compared to historical trading ranges, it is below net cash.
- No disinterested shareholder holds a blocking stake, and retail seems supportive (lowering the risk of the headcount test). The offer, while light, will likely succeed.
Fujitsu General (6755) – Deal Starts Early, Trades Tight – Done Deal
- The Paloma-Rheem Tender Offer for Fujitsu General (6755 JP) was expected to start in early July but is starting 10 weeks earlier. Big win for arbs.
- This was going to be a done deal. It didn’t trade rich to terms and it’s tough to see why activists would push when they haven’t pushed for years.
- The deal is now trading tight. Long arbs should probably re-allocate. Those hiding their beta here should hide their beta elsewhere.
Hainan Drinda New Energy (A/H IPO) – Business Was Acquired for 1/3rd the Price, Three Years Ago
- Hainan Drinda Automotive Trim (002865 CH) plans to raise up to US$234m via its A/H listing.
- HDNET is a specialized manufacturer of PV cells which are used in making PV modules.
- In this note, we look at the company’s recent performance and other deal dynamics, as well as valuations.
PointsBet (PBH AU): Betr (BBT AU) Returns with Financing, a Blocking Stake, and Dubious Assumptions
- BETR Entertainment (BBT AU) has returned with a non-binding proposal for PointsBet Holdings (PBH AU), which it claims is worth A$1.20 to A$1.50+ per PBH share.
- Betr has also acquired a 19.9% stake, which can effectively block Mixi Inc (2121 JP)’s A$1.06 scheme offer. Betr’s offer is higher primarily due to questionable assumptions in the presentation.
- Betr has secured over A$260 million in cash funding. Mixi can either let the scheme fail or switch to an off-market takeover offer.
Asian Equities: Overvalued, Over-Leveraged, Low Growth – a Different Look
- We identified overvalued, over-leveraged, low growth stocks on EPS growth, high PEG, low ROE, high P/BV, high leverage. Clients opined that EBITDA is more stable earnings parameter for such stocks.
- Based on clients’ feedback we now screen the stocks using EBITDA growth as the earnings growth parameter and EV as the corresponding valuation parameter.
- Our screen yields 30 stocks – 20 from Japan (largely property/REIT) and 10 from HK/China. 7 stocks are common to the EPS-PE and EBITDA-EV lists – mostly from Japanese property.
Fonterra (FCG NZ)’s Consumer Ops Spin-Off (Potentially) Stumbles
- On the 16th May 2024, dairy co-operative Fonterra (FCG NZ) announced a possible partial/full divestment of its global Consumer business, in addition to its Oceania and Sri Lanka integrated businesses.
- Last November, Fonterra said it would proceed with the sale process of these business, via a trade dale or IPO. Market valuations were upward of NZ$4bn for the “Mainland Group”.
- However, the spin-off hit a snag after a NSW court ruled Fonterra may need to renegotiate a long-term branding agreement with Bega Cheese (BGA AU) should the divestment proceed.
BYD (1211 HK): Top Trades Reflect Bearish Bias in HKEX Options Trading Strategies
- Over the past five trading days, BYD (1211 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Popular Strategies: Call/Put Spreads account for 88% of all strategies, with a bias towards bearish views.
- Lottery Trades: a recent trend, observed in other stocks as well, manifests itself in BYD (1211 HK). A lotter trade bets on a low probability event with a high payout.
Eco-Shop IPO: Peers Have Shined Through Turmoil, Eco Still Cheaper
- Eco-Shop Marketing (ECO MY) is looking to raise up to US$241m in its upcoming Malaysia IPO.
- It is the largest dollar chain in Malaysia, as per the number of stores it operates, as of 31 October 2024.
- We have looked at the company’s past performance and provided our initial thoughts on valuations. In this note, we talk about the IPO pricing.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
