In today’s briefing:
- Link REIT (823) – Anchors Aweigh! Fair Weather Sailing Ahead
- Toshiba (6502) – Funding Possibly Re-Secured, Deal Possibly In Play,
- Anycolor (5032 JP) Shows Its Colours – Great Quarter Guys! and TOPIX-Bound
- AAG Energy (2686 HK): Full-Year Results Lay Bare Xinjiang Xintai’s Low-Balled Offer
- KOSDAQ150 Ad Hoc Index Rebalance: Lake Materials (281740) To Replace Kuk Il Paper (078130)
- Japan Post Bank (7182) – The Flow Calendar
- AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote
- An Increasing Probability of LG Corp Preferred Shares Cancellation
- CSI300 Index Rebalance Preview: Narrowing the Gap
- Liquid Universe of European Ordinary and Preferred Shares: March ‘23 Report
Link REIT (823) – Anchors Aweigh! Fair Weather Sailing Ahead
- The Link REIT (823 HK) rights offering caused some upset amongst investors. They got dilution where they did not need it, and de-leveraging from a REIT wanting to invest.
- The units fell in price, then fell some more. Then the rights started trading.
- Last week in Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades I said strategy was to be long by Tuesday or Wednesday. It’s Wednesday.
Toshiba (6502) – Funding Possibly Re-Secured, Deal Possibly In Play,
- Bloomberg has an article today after the close saying Toshiba Corp (6502 JP)‘s board will meet tomorrow to discuss the JIP bid, and the Special Committee will give its recommendations.
- The article suggests the Board may proceed with a vote. If they do, an announced bid could come as early as the afternoon.
- The world is quite volatile now, and funding is probably more precious today than yesterday. But a bid is too. All in all, I see no reason for a position.
Anycolor (5032 JP) Shows Its Colours – Great Quarter Guys! and TOPIX-Bound
- Anycolor (5032 JP) reported Q3 results today. 9mo Revenue is now above the lower end of original forecasts for the full-year. 9mo OP is 25% higher than the original mid-range.
- The net profit forecast is now up 51% from the original mid-range, and up 128% on the year. The stock has cratered. Badly.
- It is now 19x April 2023 earnings for 90% revenue growth and 150% Net Profit growth and 40% OPM in the last quarter. Go figure.
AAG Energy (2686 HK): Full-Year Results Lay Bare Xinjiang Xintai’s Low-Balled Offer
- On the 17 February, AAG Energy Holdings (2686 HK) announced an Offer of HK$1.85/share (declared final) by way of a Scheme from major shareholder Xinjiang Xintai Natural Gas (603393 CH).
- At a 10.1% premium to undisturbed and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year, the Consideration price was unreasonable.
- FY22 numbers are now out, which further illustrates the Offer price’s inadequacy. AAG’s trailing PER and EV/EBITDA are 3.6x and 1.4x. Net cash accounts for 41% of AAG’s market cap.
KOSDAQ150 Ad Hoc Index Rebalance: Lake Materials (281740) To Replace Kuk Il Paper (078130)
- Following Kuk Il Paper Mfg (078130 KS)‘s designation as an Administrative Issue, the stock will be deleted from the KOSDAQ 150 Index and replaced with Lake Materials (281740 KS).
- The timing of the index change is currently uncertain but will be implemented latest by the close of trading on 6 April.
- Lake Materials (281740 KS) was up today and is nearing its highs. There could be another leg higher on the inclusion but we’d be wary of chasing the stock higher.
Japan Post Bank (7182) – The Flow Calendar
- The near-term Supply/Demand Balance is helped or hurt – depending on how well the deal has been placed to retail, by overseas bank turmoil.
- Quality of placement to retail is tough to know from outside. We have near-term offsets with both index demand and dividend looming.
- The biggest near-term differentiator in possible supply/demand outcomes is, of course, in the hands of the TSE Index team. And we just don’t know.
AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote
- Aag Energy Holdings (2686 HK) released solid FY22 results which magnify the scheme risk of Xinjiang Xintai Natural Gas (603393 CH)‘s pre-conditional privatisation offer of HK$1.85 per share.
- The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.
- The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.
An Increasing Probability of LG Corp Preferred Shares Cancellation
- In this insight, we discuss an increasing probability of the cancellation of LG Corp preferred shares.
- We provide five major reasons as to why LG Corp should cancel its entire preferred shares and how this could have a positive impact on LG Corp’s share price.
- We believe a 5-10% buyback and cancellation of LG Corp’s preferred shares in the next 1-2 years is a higher probability.
CSI300 Index Rebalance Preview: Narrowing the Gap
- Over 85% of the way through the review period, we see 14 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 2.28% at the June rebalance leading to a one-way trade of CNY 5.95bn.
- The potential adds have outperformed the CSI 300 Index over the last two months but have underperformed the potential deletes. The gap has been narrowing recently.
Liquid Universe of European Ordinary and Preferred Shares: March ‘23 Report
- Since mid-February, spreads have generally tightened across our liquid universe (9 have widened, 10 tightened, 0 at same level).
- Trade preferences long ordinary / short preferred shares: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
- Trade preferences long preferred / short ordinary shares: Sixt, VW, Danieli, MFE-Media for Europe, Grifols, Atlas Copco, Ericsson.
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