In today’s briefing:
- Merger Arb Mondays (07 Jul) – Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang
- HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace J&T Global (1519 HK)
- ECM Weekly (7 July 2025) – IFBH, HDB, Anjoy, FWD, Lens, Fortior, NTT DC, Daehan, Kanzhun, Nykaa, NH
- Fengxiang (9977 HK): Composite Doc Out. 24th July H-Class Meeting
- Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms
- Pre-IPO Three Squirrels – Pain Points of the Business Model and the Performance Outlook
Merger Arb Mondays (07 Jul) – Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads:Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities And (1428 HK), Hainan Meilan International Airport (357 HK), New World Resources (NWC AU), Humm Group (HUM AU), Avjennings Ltd (AVJ AU).
HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace J&T Global (1519 HK)
- The review period for the September rebalance of the HSCEI INDEX ended on 30 June, the results will be announced on 22 August and will be implemented on 5 September.
- Pop Mart International Group L (9992 HK) could be added to the index while J&T Global Express (1519 HK) could be deleted from the index.
- There is a possibility of Pop Mart International Group L (9992 HK) being added to the Hang Seng Index (HSI INDEX) as well.
ECM Weekly (7 July 2025) – IFBH, HDB, Anjoy, FWD, Lens, Fortior, NTT DC, Daehan, Kanzhun, Nykaa, NH
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, next week will see a large number of listings across the region.
- On the placements front, given the HK and US holidays and approaching earnings season, there were only a few deals in the past week.
Fengxiang (9977 HK): Composite Doc Out. 24th July H-Class Meeting
- After the Offeror for Shandong Fengxiang (9977 HK) fulfilled pre-cons on the 3rd July, the Composite was dispatched on the 4th July (but dated 5th July).
- The EGM/H-share class meeting will take place on the 24th July. Settlement should be on ore around the 11th August, well ahead of my prior estimate.
- Trading at a gross/annualised spread off 4.2%/49.6%. Get involved if illiquid arbs are your bag.
Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms
- Takeover defenses peaked in 2008 and have been gradually declining. The direct cause of the difficulty in maintaining advance warning-type takeover defenses is the increase in the foreign shareholding ratio.
- Even companies that don’t have preemptive anti-takeover may take countermeasures when the risk of takeover increases, but with the publication of “Guidelines on Takeover Defense Measures,” transparent practices are expected.
- Not only parent-subsidiary listings, but companies that cannot transform management to generate more cash from holding cash on hand and assets will be unable to continue in their current situation.
Pre-IPO Three Squirrels – Pain Points of the Business Model and the Performance Outlook
- As the traffic dividend of e-commerce fades, Three Squirrels is facing challenges.The offline predicament is essentially a conflict between the online traffic thinking mode and the logic of physical retail.
- Three Squirrels hasn’t built a true moat, and the high selling expenses would continue to erode the transformation space, leading to rely more on online channels and quick customer traffic.
- We have concerns on the expansion outlook and growth sustainability. Our forecast is CAGR could be 15% in 2025-2027. Valuation may not meet expectations if growth continues to slow down.
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