In today’s briefing:
- Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
- What if China ADRs Are Delisted from US Exchanges?
- Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
- Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- Weekly Deals Digest (13 Apr) – Suzuki, Canvest, Fengxiang, HKBN, Goldlion, Tsuruha/Welcia, Shibaura
- Chagee IPO: Luckin X Starbucks of Tea. Pricing, Valuation, Key Facts & Financials
- Fengxiang (9977 HK): PAG’s Pre-Con Offer
- Pre-IPO Chagee Holdings – IPO Pricing Is Attractive, But Share Price May Underperform
- Weekly News & Views
- Adastria: ¥500 Billion Through New Brands – Signs UK’s Karrimor
Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
- On Friday, Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced the Tsuruha/Welcia merger and Partial Tender to get Aeon to 50+% of NEWCO.
- The scrip ratio short-changes Tsuruha shareholders. The subsequent partial offer to raise Aeon’s stake above 50% is low too. 9.7% shareholder Orbis is already out with a complaint.
- But… all is not lost. There are some interesting angles here to complain.
What if China ADRs Are Delisted from US Exchanges?
- We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
- If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
- PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.
Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
- Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
- Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX).
- With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.
Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- Midea Group (300 HK) went public on HKEX on 17 September 2024 and achieved fast-entry in both global indices due to high free float and a market cap of ~$4.5bn.
- The 6-month lockup on cornerstone investors expired on 17 March 2025.
- The free float is forecasted to increase from ~65% to ~75% for both global indices in May and June 2025 following the lockup expiry.
Weekly Deals Digest (13 Apr) – Suzuki, Canvest, Fengxiang, HKBN, Goldlion, Tsuruha/Welcia, Shibaura
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Suzuki Motor (7269 JP) secondary offering; DN Solutions (298440 KS), Chagee Holdings (CHA US) and LG Electronics India (123D IN) IPOs.
- Event-Driven developments: Canvest, Shandong Fengxiang (9977 HK), HKBN Ltd (1310 HK), Goldlion Holdings (533 HK), Tsuruha Holdings (3391 JP), Shibaura Electronics (6957 JP), Abacus Storage King (ASK AU).
Chagee IPO: Luckin X Starbucks of Tea. Pricing, Valuation, Key Facts & Financials
- Chagee Holdings (CHA US) is offering 14.68 million shares for USD26 to USD28 each to raise upto USD411 million in its initial public offering in the US.
- Chagee’s premium branded teahouses blend traditional tea culture with modern, tech-driven service, distinctly setting itself apart from bubble tea kiosks.
- Chagee’s IPO is priced at a discount to forward valuations of recently listed (in HK) China-based freshly brewed drinks players and leading Cafe companies.
Fengxiang (9977 HK): PAG’s Pre-Con Offer
- When Shandong Fengxiang (9977 HK) was suspended last month due to the Takeovers Code, I expected PAG to launch an Offer by way of a Merger by Absorption at ~HK$2.00.
- And that is exactly what unfolded. The price, which is a 33.33% premium to last close is final. 42.35% of independent H-shareholders are supportive. A scrip alternative is afforded.
- PAG was permitted to take control of Fengxiang, via the domestic shares, late 2022. There will be no regulatory roadblock as PAG now seeks to privatise Fengxiang.
Pre-IPO Chagee Holdings – IPO Pricing Is Attractive, But Share Price May Underperform
- Chagee is seeking up to US$411 million by offering nearly 14.7 million ADS priced between US$26 and US$28 each, with market value to reach about US$4.8-US$5.1 billion.
- Chagee is facing performance headwinds. Whether the current high growth of Chagee is sustainable in the future is uncertain. This makes us tend to be conservative in Chagee’s valuation expectations
- Based on our forecast, P/E is about 11.5-12.3x if based on 2025 net profit. Such valuation is attractive, but “valuation discount” may occur due to market turmoil and geopolitical conflicts.
Weekly News & Views
- Argentina Secures US$20bn IMF Deal with Currency Controls Eased / Argentina: March CPI Surprise Adds Pressure
- Initiating Coverage on Telecom Argentina: Solid Market Position but Uncertain Outlook / Mercado Libre Expands Regional Footprint with $9 Billion in 2025 Investments Across Brazil, Argentina, and Chile
- Minerva Announces Capital increase Backed by Sponsors / Mercado Libre Expands Regional Footprint with $9 Billion in 2025 Investments Across Brazil, Argentina, and Chile
Adastria: ¥500 Billion Through New Brands – Signs UK’s Karrimor
- Adastria (soon to be And ST) is Japan’s biggest multi-chain clothing retailer and fourth largest overall.
- As well as investing in core brands like Global Work, the former wholesaler is now expanding through new segments – including Forever 21 despite its US bankruptcy
- In a sign of further diversification, it will now move into the very buoyant outdoor market having just acquired the Asian rights to UK outdoor brand, Karrimor.
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