In today’s briefing:
- Chip Eng Seng: Low-Balled MBO At $0.72/Share
- Trading Considerations on the OCI Demerger
- OCI Spin-Off: Trade Opportunities Post Relisting, Valuations, & Impact on KOSPI 200
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (25 November 2022)
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (25 November 2022)
Chip Eng Seng: Low-Balled MBO At $0.72/Share
- Conglomerate Chip Eng Seng Corp (CHIP SP) (CES) has announced a voluntary Offer of S$0.72/share from a Tang family-owned entity. The price is a 1.4% premium to last close.
- The Tang’s hold 38.23% and the Offer is conditional on a 50% acceptance condition.
- The Offer price is a 27.3% discount to CES’ NAV as of 30 June 2022 – no such mention in the announcement. The Offer price has not been declared final.
Trading Considerations on the OCI Demerger
- Value accretion by unlocking the voting eligibility of treasury shares won’t happen as the company holds no treasury share.
- But KOSPI 200 passive flows will pose a noteworthy trading point. PASSIVE’s selling outflow will be about 700-800K shares, 1.6x ADTV.
- Market cap imbalance, primarily driven by the tender offer dynamic and the split ratio that is excessively focused on Holdco, will likely exacerbate Holdco → Opco migration after re-listing.
OCI Spin-Off: Trade Opportunities Post Relisting, Valuations, & Impact on KOSPI 200
- After the spin-off and relisting of holdco/opco shares, we believe that there is a greater probability of OCI Co (opco) shares outperforming OCI Holdings (holdco).
- However, the degree of outperformance of OCI Co vs OCI Holdings is not likely to be similar to other recent spin-offs such as F&F Co and F&F Holdings.
- We have a long-term bullish view of OCI over the next one to two years. It is trading at P/E of 3.1x and P/B of 0.6x based 2022 earnings estimates.
Shanghai/Shenzhen Southbound Connect: Weekly Moves (25 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 inflow over the past week was ~HK$0.67bn, split (+HK$0.1bn) for Shanghai and (+HK$0.57bn) for Shenzhen.
- The largest inflows were in Tencent (700 HK) and Tracker Fund of Hong Kong Ltd (2800 HK). The largest outflows were in Meituan (3690 HK) and Li Ning (2331 HK).
Shanghai/Shenzhen Northbound Connect: Weekly Moves (25 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$0.83bn, split between Shanghai (+US$1.16bn) and Shenzhen (-US$0.32bn).
- The largest inflows were into Kweichow Moutai (600519 CH) and Shenzhen Mindray Bio-Medical (300760 CH). The largest outflows were in Yunnan Energy New Material (002812 CH) and BYD (002594 CH).
💡 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