In today’s briefing:
- Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness
- Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers
- Henlius (2696 HK): Musings on the Deal Break Price
- AVJennings (AVJ AU): Ho Bee Emerges with a Competing Offer
- [JAPAN Activism] Murakami Buying Mitsui Matshima (1518 JP) BIGLY – Now At 38% Aiming at Control?
- Hyundai Motor (HYUNDAI IN): Anchor Lock-Up Expiry Increases Float; Index Inclusions Near
- Delta Electronics (DELTA TB / 2308 TT): Off the Peak; SET50 Deletion Risk Increases
- Funds in Focus Q4 2024 & 2024: A Better Quarter & Year for Active SA Equity Managers
- Sunrise Communications (SNRE): Dividend Initiation to Drive Upside
Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness
- A group of 7 shareholders are looking to sell 61.3m shares in Murata Manufacturing (6981 JP) to raise JPY 143.8bn (US$916m). That is 3.3% of shares outstanding.
- The shares are being offered at a price range of JPY 2296-2345.5/share, a discount of 5-7% to the last close of the stock.
- With the offering less than 5% of shares outstanding and less than US$1bn in size, there is no immediate passive buying and there could be further weakness in the stock.
Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers
- Today after the close, Murata Manufacturing (6981 JP) announced an equity offering worth roughly US$870mm if the stock prices 10% below last.
- Unlike “regular” secondary offerings, this is available only to overseas investors, and bookbuilding is very quick. This “increases the size” relative to its headline (no retail uptake).
- At 11 days of ADV and 3.3% of shares out, it has a certain size, but the stock is well-owned by foreigners, and not terribly volatile vs Peers.
Henlius (2696 HK): Musings on the Deal Break Price
- Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is heading for a deal break. LVC has not changed its shareholding since amassing a blocking stake.
- In the absence of a last-ditch effort by Shanghai Fosun Pharmaceutical (Group) (2196 HK) to rescue the deal, the key question is the potential deal break price.
- Based on four methods, the potential deal break price is HK$17.28, 12% below the last close price of HK$19.58.
AVJennings (AVJ AU): Ho Bee Emerges with a Competing Offer
- Avjennings Ltd (AVJ AU) disclosed a competing non-binding proposal from Ho Bee Land Ltd (HOBEE SP) at A$0.70, a 4.5% premium to AVID’s A$0.67 offer.
- The potential for a Ho Bee competing offer was discussed in AVJennings (AVJ AU): Competing Offer Brewing.
- Despite the hefty premium to the undisturbed price, the Ho Bee offer is below NTA. Therefore, there is headroom for a bidding war as an offer at NTA implies A$0.81.
[JAPAN Activism] Murakami Buying Mitsui Matshima (1518 JP) BIGLY – Now At 38% Aiming at Control?
- I wrote about this stock in May 2024. At the time, Japan activist Murakami-san had gone from 5% to 20% in a hurry. Shortly after, he was at 29%.
- Then he fiddled/sold/bought/waited/sold. The stock fell in late 2024 as a quant fund sold. Murakami-san started buying again. In 3 weeks to 7 January bought from 27.02% to 34.51%.
- By my calculation, as of last week he has 38.4% of votes. This is worth a closer look again. It’s a discount to BVPS but ask yourself why this big.
Hyundai Motor (HYUNDAI IN): Anchor Lock-Up Expiry Increases Float; Index Inclusions Near
- The lock-up on the second half of the anchor investor allocation for Hyundai Motor India (HYUNDAI IN) ends after market close today and the shares will be available for sale tomorrow.
- The lock-up expiry further increases free float for the stock and there will be multiple index inclusions over the next few months.
- The largest index inclusion will be in February, followed by smaller inclusions in March and June. In total, passives will mop up around 16% of the float.
Delta Electronics (DELTA TB / 2308 TT): Off the Peak; SET50 Deletion Risk Increases
- Delta Electronics Thailand (DELTA TB) is trading at a huge valuation premium to Delta Electronics (2308 TT), though that has narrowed over the last couple of months.
- Delta Electronics Thailand has already been on the Market Surveillance list for 2 months and inclusion for another 2 months will mean SET 50 Index deletion in June.
- A placement by Delta Electronics (2308 TT) is not out of the question and that further increases the downside risk for Delta Electronics Thailand (DELTA TB).
Funds in Focus Q4 2024 & 2024: A Better Quarter & Year for Active SA Equity Managers
- During the last quarter of 2024, 55% of active SA equity funds outperformed their benchmarks.
- This is ahead of preceding quarter where 48% of active funds outperformed.
- It is also interesting to note that for the year up to the end of Q3 2024, 22% of funds outperformed their benchmarks.
Sunrise Communications (SNRE): Dividend Initiation to Drive Upside
- Sunrise Communications (SNRE) is a recent spin-off from Liberty Global (LBTYA).
- Since the time of the spin-off, Sunrise has performed relatively well (+7% vs. S&P 500 +1%)
- Nonetheless, I believe there is substantial upside ahead. Sunrise has committed to pay a 240CHF annual dividend.
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