In today’s briefing:
- Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
- Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading
- Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads
- Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation
- Merger Arb Mondays (28 Apr) – Seven & I, Shibaura, Makino, Bright Smart, ENN Energy, Tam Jai
- Deliveroo’s Special of the Day: A DoorDash Takeover
- Singapore Retail Sector: Will It Be Impacted by Improved Connectivity with Malaysia?
- May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress
- Ather Energy IPO: Expensive and No Immediate Index Inclusion
- China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B
Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
- On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP).
- The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies.
- ¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.
Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading
- Over the past five trading days, Alibaba Group Holding (9988 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Diagonal Spreads account for nearly 30% of all strategies. Many of these strategies sell short term risk to finance longer term protection.
- Several structures hedge against low probability tail events. One such strategy traded 100 contracts.
Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads
- Alibaba Group Holding (9988 HK) one-month implied volatility has decreased from recent peaks but remains above the 70th percentile, while realized volatility exceeds 80% (96th percentile).
- A relatively flat term structure and skew render Calendar and Diagonal Spreads interesting strategies.
- Open interest extends to March 2026, with balanced call and put interest across all expiries.
Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation
- Laopu Gold (6181 HK) was on track to be added to a global index given its large H-share market cap and a free float that was close to 20%.
- Completion of the full circulation in April pushed H-share market cap higher while free float market cap remained the same. Crucially, free float dropped below 15%.
- Laopu Gold (6181 HK) could miss index inclusion in May, while inclusion in August will need some selling from non-float investors following lock-up expiry in June.
Merger Arb Mondays (28 Apr) – Seven & I, Shibaura, Makino, Bright Smart, ENN Energy, Tam Jai
- We 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: Oneconnect Financial Technology (6638 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Smart Share Global (EM US).
- Lowest spreads: Shibaura Electronics (6957 JP), Makino Milling Machine Co (6135 JP), Sinarmas Land (SML SP), Millennium & Copthorne Hotels Nz (MCK NZ).
Deliveroo’s Special of the Day: A DoorDash Takeover
- DoorDash has proposed a cash offer of 180p per share for Deliveroo, representing a 22.7% premium. Deliveroo’s Board is supportive, and the offer values the company at 11.5x EV/NTM EBITDA.
- Regulatory risk appears low given limited market overlap between DoorDash and Deliveroo, with a 3–6 month estimated closing timeline; shareholder approval and standard antitrust clearances remain the key conditions.
- The deal could trigger a competitive bidding war, particularly from Amazon, a 14% shareholder in Deliveroo, potentially raising valuations towards 13–14x EV/NTM EBITDA and extending the timeline into 2026.
Singapore Retail Sector: Will It Be Impacted by Improved Connectivity with Malaysia?
- The upcoming Johor Bahru-Singapore Rapid Transit System and the ease of cross-border movements could impact Singapore’s retail sector as more consumers may choose to spend across the border.
- DFI Retail CEO cited this as rationale for exiting Singapore based grocery retail business under Cold Storage and Giant’s brands. Sheng Siong group said it will carefully monitor this development.
- Singapore retail prices for branded consumer discretionary and staples are between 30%-50% higher than in Malaysia. With greater ease of commute and shipping, this price differential may not be sustainable.
May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress
- Crucial US “de minimis” imports exemption will end this Thursday night, May 1st
- Beginning May 2nd, low-value direct-to-US consumer imports subject to duties, reporting
- For US consumers, buying from SHEIN et al set to become more expensive, more onerous
Ather Energy IPO: Expensive and No Immediate Index Inclusion
- Ather Energy is looking to raise INR 30bn (US$349m) in its IPO, valuing the company at INR 120bn (US$1.4bn). The company appears to be expensive compared to peers.
- Ather Energy could be added to one global smallcap index in August/November and to another in December/March. Small Cap classification for AMFI and no major local index inclusion.
- The continued selloff in Ola Electric will give investors pause, especially given Ather Energy‘s stagnant market share and continued losses. There is supply in Ola Electric with PE/VC investors selling.
China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B
- China New Higher Education (2001 HK)‘s gearing (including contract liabilities) has come down to 61.2% in 1H25, from 69.9% in FY24 and 84.1% in FY23 – an encouraging trend.
- Net profit grew 8.6%, even faster than the full-year consensus forecast of 3.5% growth. There are multiple drivers that support its medium-term outlook.
- CNHE trades on 1.7x PER and 0.3x P/B, but the FY25 ROE is a solid 16.6%. Should the payout ratio remain unchanged, its yield will reach 28.4%.
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