In today’s briefing:
- A/H Premium Tracker (To 27 June 2025): “Beautiful Skew” Continues as SB Buys, AH Premia Fall Back
- Merger Arb Mondays (30 June) – Toyota Industries, Santos, Pointsbet, Dickson, HKBN, OneConnect
- HKBN (1310 HK): China Mobile Inches Closer Toward Precondition Satisfaction
- HK Connect SOUTHBOUND Flows (To 27 June 2025); Volumes Up, Net Buying Up, Banks Bought, SOEs Sold
- HEC ChangJiang Pharma (1558 HK): Finally a Vote, but the Offer Value Is Wrapped in Uncertainty
- BBVA/Sabadell: Potential BBVA Bump, TSB Dividend Catalyst, and Positioning Via Equity and Options
- VIOL (335890 KS): VIG Partners’ Tender Offer And DMS’ Strategic Exit
A/H Premium Tracker (To 27 June 2025): “Beautiful Skew” Continues as SB Buys, AH Premia Fall Back
- AH premia gives back previous week gains but the “beautiful skew” of wide premia converging more than narrow premia continues. It has paid to be long wide H discounts.
- It has paid to be long the H on those H/A pairs with the biggest H discounts. I would continue to ride that trend.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers. Technical issue delayed this week’s Monitor.
Merger Arb Mondays (30 June) – Toyota Industries, Santos, Pointsbet, Dickson, HKBN, OneConnect
- 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), Insignia Financial (IFL AU), ENN Energy (2688 HK), Santos Ltd (STO AU), Seven & I Holdings (3382 JP), Ainsworth Game Technology (AGI AU).
- Lowest spreads: Bright Smart Securities And (1428 HK), New World Resources (NWC AU), Avjennings Ltd (AVJ AU), Hainan Meilan International Airport (357 HK), Toyota Industries (6201 JP).
HKBN (1310 HK): China Mobile Inches Closer Toward Precondition Satisfaction
- China Mobile (941 HK) has secured all PRC regulatory approvals for its HKBN Ltd (1310 HK) offer. The remaining precondition is approval from the HK Communications Authority.
- I Squared, while technically still in the race, is rapidly running out of time. It needs to announce an offer before China Mobile opens its offer for acceptance.
- Despite the HKBN CEO’s comments that the China Mobile offer is not good enough, China Mobile has no pressing need to bump if a competing offer fails to materialise.
HK Connect SOUTHBOUND Flows (To 27 June 2025); Volumes Up, Net Buying Up, Banks Bought, SOEs Sold
- Gross SOUTHBOUND volumes up to US$17+bn a day this past 5-day week. Net buying strong at +US$700mm a day.
- Among the top buys as a percentage of volume, FINANCIALS stood out, dramatically. Again. Neither INFO TECH nor Tencent were the big sells this week.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers. Technical issue delayed this week’s Monitor.
HEC ChangJiang Pharma (1558 HK): Finally a Vote, but the Offer Value Is Wrapped in Uncertainty
- The precondition for Sunshine Lake Pharma’s privatisation of HEC Pharma was satisfied on 27 June. The offer is 0.263614 new offeror H Share per HEC share and HK$1.50 special dividend.
- The vote on 21 July is low-risk as no independent H Shareholder comes close to the blocking stake, which is 4.61% of the outstanding shares (6.20% of H Shares).
- The appraised value is HK$19.36, but this is a finger-in-the-sky valuation as it marginally increased from HK$19.30 despite the offeror’s weak 2024 results and limited progress on commercialising its pipeline.
BBVA/Sabadell: Potential BBVA Bump, TSB Dividend Catalyst, and Positioning Via Equity and Options
- Abadell trades above BBVA’s offer, implying market expectations for either a bid bump or dividend windfall (€0.12–€0.24/share in one-off distributions) from the upcoming TSB sale.
- Long SAB / short BBVA remains an attractive pair trade to capture deal asymmetry while hedging beta and political risk.
- September options at €2.70 strike offer tactical setups: long calls for convex upside, puts for hedge, or synthetic longs for capital-efficient exposure.
VIOL (335890 KS): VIG Partners’ Tender Offer And DMS’ Strategic Exit
- VIG Partners, a PE-outfit, is seeking to delist VIOL (335890 KS), an aesthetic medical devices manufacturer, whose major shareholder, DMS (068790 KS), faces allegations of unfair internal transactions.
- VIG first acquired 7% of DMS (068790 KS)’s 34.76% controlling stake in VIOL, following which, DMS contributed the remaining 27.76% in-kind to VIG’s SPV at a valuation of ₩12,500/share.
- VIG’s SPV’s tender offer launched on 18th June, also at ₩12,500/share, and runs until the 7th July 7. The Offer is conditional on a minimum acceptance threshold of 20.76%.
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