In today’s briefing:
- Golden Eagle Retail (3308 HK): Controlling Family’s Privatisation Offer at HK$6.88
- CES China Semiconductor Chips Index Rebalance: Six Changes in June
- Assessing the Canon Buyback and Follow-On Performance
- CSI500 Index Rebalance: Adds Starting to Outperform
- Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way
- Golden Eagle (3308 HK): Wang Family Delisting Offer
- Circling Uponor
Golden Eagle Retail (3308 HK): Controlling Family’s Privatisation Offer at HK$6.88
- Golden Eagle Retail (3308 HK) disclosed a scheme privatisation offer from the controlling family at HK$6.88 per share, a 40.4% premium to the undisturbed price (HK$4.90 on 22 May).
- Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The shareholder with a blocking stake has provided an irrevocable.
- The offer price is final. The offer is reasonable particularly as the sentiment on the department store sector remains weak. This looks like a done deal.
CES China Semiconductor Chips Index Rebalance: Six Changes in June
- There are 6 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 June.
- All the inclusions are also additions to the CSI 500 Index and the passive flows will come from multiple trackers.
- The adds have outperformed the deletes over the last couple of weeks and there could be further outperformance over the next two weeks.
Assessing the Canon Buyback and Follow-On Performance
- 10 days ago Canon Inc (7751 JP) announced its 18th ¥50bn buyback in 15yrs. They have a pattern, both in execution and outperformance.
- Historically, they are reasonably aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles.
- Here I look at both – buyback cycle performance and cycle outperformance. Good so far, and now I see a tactical trade but it’s not overwhelming.
CSI500 Index Rebalance: Adds Starting to Outperform
- There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 June.
- One way turnover at the rebalance is estimated at 9.45% leading to a one-way trade of CNY 5.93bn. The IT and Industrials sectors gain the most index spots.
- 8 adds to the CSI 500 Index are deletes from the CSI 300 Index while 3 deletes from the CSI 500 Index are adds to the CSI 300 Index.
Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), HKBN Ltd (1310 HK), Hailan Holdings (2278 HK), Origin Energy (ORG AU).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Silk Laser Australia (SLA AU), Lian Beng (LBG SP), SBI Shinsei Bank (8303 JP), Penguin International (PBS SP).
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
Golden Eagle (3308 HK): Wang Family Delisting Offer
- PRC department store play Golden Eagle (3308 HK) has announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close. The price is final.
- The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable.
- Apart from shareholder approval, there are no key regulatory approvals to be obtained.
Circling Uponor
- Aliaxis SA (ALIVP BB) seeks market expansion and by offering a 55% premium (€25.75/share,10.0x EV/Fwd EBITDA) it’s quickly accumulated a 20% stake in Uponor OYJ (UNR1V FH), whose Board isn’t engaging.
- The shares trade c.7% above the offer on expectations of others suitors, but the stake already owned by Aliaxis should act as a deterrent. My fair value estimate (EV/EBITDA) is €27.09/share.
- The share price implies 6.6% perpetuity growth (in a mature industry) on a conservative 11.5% WACC. Oras (25% stake) isn’t giving into temptation. Aliaxis’d be happy with another 30%.
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