In today’s briefing:
- Zijin Mining (2899 HK): This Is A Short
- Mori Hills REIT (3234) – Large Sponsor Buy in Market as % of Max Real World Float
- Key Findings on When to Enter Long-Short in the SKT Foreign Room Trade
- Soft99 Corp (4464 JP): Effissimo Sheds More Light on Its Hostile Offer
- Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens
- SK Innovation’s Subsidiary SK Geo Centric to Sell Its Entire 35% Stake in Sinopec-SK Petrochem JV
- Kraft Heinz (Nasdaq: KHC) To Separate into Two Businesses Via a Tax-Free Spin-Off
- Ørsted: State-Backed DKK 60bn Rights Issue | IPO-Scale, Heavy Dilution
Zijin Mining (2899 HK): This Is A Short
- In my June note, Zijin Mining Group (2899 HK) appeared fully valued; but I (thankfully) stopped short of being outright bearish. Its share price is up 48% since!
- A basket of peers is also up 37% since that note. Gold is up~8%, and 41% YTD. On the 14th September, Zijin released Zijin Gold’s PHIP. 1H25 numbers were solid.
- However, Zijin Gold’s earnings are by no stretch an outlier. Zijin’s Mining’s current share price is now baking in exceptional (unrealistic?) metrics for the gold play spin-off.
Mori Hills REIT (3234) – Large Sponsor Buy in Market as % of Max Real World Float
- In the past 24 months, J-REIT sponsors have bought units in their REITs at sharp discounts to PNAV to raise PNAV and reduce overhang pressure.
- The goal is, basically transparently, to get PNAV to a level at which the REIT can buy more properties from the sponsor, who carries them at a much higher WACC.
- Mori Building has announced a 4.99% buy on Mori Hills REIT Investment Corporation (3234 JP) which is a Very Big portion of Max Real World Float. This should influence price.
Key Findings on When to Enter Long-Short in the SKT Foreign Room Trade
- SKT’s foreign stake drop sparked early divergence vs KT—long SKT/short KT paying off, though KT’s hacking risk muddies how much is pure event-driven.
- This isn’t an add/delete, just a weight bump—flows lag until announcement. Aug ’20 SKT doubling factor is the cleanest comp for today’s setup.
- SKT vs KT spread widened post-screening; SKT outperformed 12%. Weight bumps lag vs ins/outs, so expect similar flow—timing long-short entry matters to avoid bleeding carry.
Soft99 Corp (4464 JP): Effissimo Sheds More Light on Its Hostile Offer
- Effissimo has formally launched its hostile tender offer for Soft99 Corp (4464 JP) at JPY4,100, which is 66.3% higher than the MBO price of JPY2,465.
- The Board stonewalled Effissimo’s attempts to negotiate a friendly offer. The huge premium of Effissimo’s offer relies on lower WACC assumptions compared to the target/special committee IFA.
- Management’s initial approach will be to rely on the Board to oppose the Effissimo offer. There is a good chance that Soft99 will remain listed with two large shareholders.
Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- Chery Automobile Co. Ltd. (9973 HK)‘s IPO range is HK$27.75-HK$30.75/share and will raise up to HK$10bn (US$1.3m) if the oversubscription option is exercised, valuing the company at HK$169bn (US$21.7bn).
- The stock should be added to the HSCI Index in December and that will make the stock eligible for inclusion in Southbound Stock Connect.
- There will be no inclusion in global indexes for the next year, but there is a possibility of inclusion in the Hang Seng TECH Index (HSTECH INDEX) in December.
Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens
- On 12 September, Shenyang SASAC increased its Shengjing Bank Co Ltd H (2066 HK) offer by 21.2% from HK$1.32 to HK$1.60. The IFA opines it is fair and reasonable.
- The revised terms should ensure the support of key shareholders. However, the IFA analysis is flawed, and the revised offer is light.
- While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares) poses a challenge.
SK Innovation’s Subsidiary SK Geo Centric to Sell Its Entire 35% Stake in Sinopec-SK Petrochem JV
- On 16 September, it was reported in the local media that SK Innovation’s subsidiary SK Geo Centric plans to sell its entire 35% stake in the Sinopec-SK Petrochem JV.
- The transaction is expected to be priced closed to its book value of about 819 billion won. Sinopec is a leading potential buyer.
- From 2020 to 2024, SK Geo Centric generated cumulative operating profit of 695 billion won, accounting for 12.7% of SK Innovation’s cumulative operating profit in this period.
Kraft Heinz (Nasdaq: KHC) To Separate into Two Businesses Via a Tax-Free Spin-Off
- Kraft Heinz will separate into two independent publicly-traded companies via a tax-free spin-off expected to close in H2 2026
- The two entities : Global Taste Elevation Co. focusing on sauces, spreads, seasonings, shelf-stable meals and North American Grocery Co. centered on staples sold in North America
- The move is designed to disentangle distinct brand portfolios, so each can pursue clearer growth, margin and capital-allocation strategies.
Ørsted: State-Backed DKK 60bn Rights Issue | IPO-Scale, Heavy Dilution
- Ørsted launches a large, DKK 60bn, fully underwritten rights issue, backed by the Danish State, to repair funding after U.S. disruptions and restore balance-sheet flexibility. Dilution is ~68%.
- Scale is akin to an IPO placing by market volume, with substantial dilution for non-participants. Fully underwritten and state-backed, likely strong institutional take-up; expect volatility into allocation and listing.
- Post-Announcement, shares reset lower yet still trade well above theoretical value, leaving mispricing pockets. Expect active flow, volatility through subscription, and potential listing-day pressure.
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