In today’s briefing:
- Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further
- OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP
- Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
- EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)
Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further
- Bajaj Holdings and Investment (BJHI IN) is expected to be included in the MSCI India Index at the November SAIR (Read more about the index inclusion here: https://skr.ma/xhbPx)
- Bajaj Holdings, a holding and investment company, with significant stakes in Bajaj Auto Ltd and Bajaj Finserv has historically traded at a steep discount to the market value of investments.
- Its Holdco discount has narrowed to around 53% and has the potential to narrow further with greater ownership and visibility post the likely index inclusion.
OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP
- OZ Minerals Ltd (OZL AU) has received a revised non-binding indicative offer from BHP Group Ltd (BHP AU) at A$28.25 per share, a 13.0% premium to the previously rejected offer.
- The Board has granted four weeks of due diligence and intends to recommend a binding offer at A$28.25 per share, in the absence of a superior proposal.
- While the offer is below the rumoured Board’s target of a A$30 offer, it is still attractive. At the last close, the gross spread to the offer is 3.3%.
Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
- Lifestyle International Holdings (1212 HK)’s vote on Mr Lau’s offer of HK$5.00 per share is at 10 am on Monday, 21 November. The wide spread of 6.6% reflects vote risk.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
- Ongoing weak Hong Kong retail sales and peers’ slightly de-rating should lower the vote risk. Headcount test not applicable. While light, we continue to expect the offer to succeed.
EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
- Alibaba unveiled an upsized buyback plan this week and stock rallied despite a revenue miss
- Sentiment in China is changing with tweaks to the Covid strategy and improving economic outlook
- Call buying has elevated upside vols providing trading opportunites for both directional and volatility traders
Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
- Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
- Overall, net inflow over the past week was ~US$5.7bn, split between Shanghai (+US$2.98bn) and Shenzhen (+US$2.8bn).
- The largest inflows were into Kweichow Moutai (600519 CH) and Midea Group (000333 CH). The largest outflows were in NARI Technology (600406 CH) and China Yangtze Power (600900 CH).
Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, the net outflow over the past week was ~HK$0.14bn, split (-HK$0.47bn) for Shanghai and (+HK$0.32bn) for Shenzhen.
- The largest inflows were in Tencent (700 HK) and Hang Seng H Share (2828 HK). The largest outflows were inMeituan (3690 HK) and Tracker Fund of HK (2800 HK).
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