In today’s briefing:
- BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
- Hanwha’s Surprise Gift Disclosure: Three Major Takeaways
- Skyworth (751 HK): Another Buyback
- Fat Inheritance Taxes for Hanwha Group Chairman Kim’s Three Sons Post Receiving Hanwha Corp Shares
- A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- HK Connect SOUTHBOUND Flows (To 28 Mar 2025); Banks and Divs Bought Again
- (Mostly) Asia M&A, Mar 2025 Wrap: ENN Energy, Gold Road, Spartan, Aeon Delight, Sinarmas, Topcon
- Danish or Not, UniCredit’s Consolidation Appetite Is Intact
- Exploring Active Portfolio Ideas: Company Sales, Strategic Reviews, Buyouts and More
- ANGI Spin-off Deep Dive
BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
- BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
- Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
- With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.
Hanwha’s Surprise Gift Disclosure: Three Major Takeaways
- The chances of a Hanwha Corp-Hanwha Energy merger just dropped significantly. With the brothers now owning 43%, the merger’s effectively off.
- The three brothers face a KRW 200B gift tax bill and need liquidity. They’ll raise cash via Hanwha Energy’s IPO, with the youngest brother set to sell a 10% stake.
- Hanwha Corp will likely fund its Hanwha Aerospace rights issue through a rights offering, using KRW 1.3 trillion from Hanwha Energy, after shutting down merger rumors.
Skyworth (751 HK): Another Buyback
- On 27 March, Skyworth Group Limited (751 HK) launched a conditional buyback to acquire a maximum of 350.0m shares (15.67% of outstanding) at HK$3.11, a 15.2% premium to undisturbed price.
- Unlike the previous buybacks, the controlling shareholder can vote. Therefore, while the buyback offer is unattractive, the shareholder vote will pass.
- Based on the irrevocables, a 100% share minority participation rate implies a minimum proration of 37.84%. The actual proration was around twice the minimum proration for the previous two.
Fat Inheritance Taxes for Hanwha Group Chairman Kim’s Three Sons Post Receiving Hanwha Corp Shares
- Hanwha Group Chairman Kim Seung-youn (born in 1952) made a major move to give 11.32% of his shares in Hanwha Corporation (000880 KS) to his three sons.
- It is estimated that the three sons will need to pay nearly 222 billion won in inheritance taxes associated with receiving additional stakes in Hanwha Corp.
- Because the three sons need to pay for the high amounts of inheritance taxes, Hanwha Corp is likely to raise the dividend payout in the next several years.
A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- AH Premia bounce higher. Spread curve torsion was as expected. Narrow spreads saw Hs suffer more. Wide spreads saw H outperformance.
- The last few weeks I said warning signs were flashing and spreads could widen. This week they widened despite big SOUTHBOUND buying.
- I expect the right thing to do is hunker down and be flat H/A risk.
HK Connect SOUTHBOUND Flows (To 28 Mar 2025); Banks and Divs Bought Again
- Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. This week was +HK$37bn.
- That’s decent net buying still. Keeping that pace would mean a new record. It IS possible this excess flow is state-managed (or state-insisted as insurers up equity investment ratios).
- Included is a summary of important China Stocks-relevant news as I saw it this week, but tariffs, retaliation, US growth prospects, etc will all matter more.
(Mostly) Asia M&A, Mar 2025 Wrap: ENN Energy, Gold Road, Spartan, Aeon Delight, Sinarmas, Topcon
- For the month of March 2025, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$14bn.
- The average premium for the new transactions announced (or first discussed) in March was ~53%, with a year-to-date average also of 55%.
- The average premiums for transactions in 2024 (129 transactions), (2023 (117), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) were 43%, 39%, 41%, 33%, 31%, and 31% .
Danish or Not, UniCredit’s Consolidation Appetite Is Intact
- Despite losing access to favorable capital treatment under the Danish Compromise, Banco BPM is proceeding with its Anima acquisition, leveraging mitigation measures to maintain a CET1 ratio above 13%.
- UniCredit’s €14B all-share offer for Banco BPM moves forward despite ECB rejecting the Danish Compromise, with capital strength and shareholder backing keeping the deal on a strong trajectory.
- CEO Andrea Orcel’s dealmaking expertise and UniCredit’s 42.9% share price rise since the bid increase confidence in the bank’s ability to complete the acquisition and extract long-term value.
Exploring Active Portfolio Ideas: Company Sales, Strategic Reviews, Buyouts and More
- Lifeway Foods anticipates a sale to Danone, with AGM negotiations expected; SpringWorks Therapeutics in buyout talks with Merck KGaA.
- Sage Therapeutics rejected Biogen’s offer, initiating strategic review; Kronos Bio undergoes strategic review post-trial discontinuation.
- Microstrategy trades at NAV premium; OCI N.V. plans asset sales and dividends; Liquidia prepares for drug commercialization.
ANGI Spin-off Deep Dive
Angi Inc. (“Angi”) is set to be spun off from IAC Inc. (IAC owns 85% of the company) on March 31, 2025 following a multi-year turnaround that restored profitability and improved cash flow.
The first day of regular way trading will be April 1, 2025.
Angi operates the largest digital marketplace for home services in the U.S., connecting homeowners with contractors across Angi’s Ads and Leads platform (formerly HomeAdvisor/Angie’s List) and Services (pre-priced jobs fulfilled via Angi’s network), with an international segment spanning Europe and Canada.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
