In today’s briefing:
- [Japan M&A] Seven Bank (8410) – Seven & I Selldown, Itochu Buy-In, Not on My Bingo Card But Not Bad
- ESR Group (1821 HK): Done Deal as Scheme Vote on 13 June
- Canara Bank (CBK IN) Vs. Punjab National Bank (PNB IN): A Relative Value Opportunity
- IndusInd Bank Crisis: More Discrepancies, Losses, Suspected Fraud
- ESR (1821 HK): 13th June Vote On Starwood/Warburg’s Offer
- [Zeekr Group (ZK US, BUY, TP US$35) TP Change]: Buy in to Geely Doesn’t Help Either’s Competency
- MOO: Positive Ore Sorting Results on Endako Mine Material
- Fintech Alpha: Unlocking Hidden Value as Corpay Circles
- Lucror Analytics – Morning Views Asia
[Japan M&A] Seven Bank (8410) – Seven & I Selldown, Itochu Buy-In, Not on My Bingo Card But Not Bad
- Seven Bank Ltd (8410 JP) has been the ugly duckling of Japan e-banks since it got competition in the form of Rakuten Bank (5838) and SBI Sumishin (7163).
- Last year, it was posited, and then confirmed, that Seven & I Holdings (3382 JP) wanted to sell down to de-consolidate. NTT Docomo wanted to buy a bank.
- I thought it a good match but no deal has been done. So now we get a different deal – it’s weird for Itochu, but bodes well for Seven Bank
ESR Group (1821 HK): Done Deal as Scheme Vote on 13 June
- ESR Group (1821 HK)’s IFA opines that the consortium’s HK$13.00 offer is fair and reasonable. The vote is on 13 June.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
- This is a done deal due to the substantial irrevocables. At the last close and for the 10 July payment, the gross/annualised spread is 1.3%/9.12%.
Canara Bank (CBK IN) Vs. Punjab National Bank (PNB IN): A Relative Value Opportunity
- The Canara Bank (CBK IN) vs. Punjab National Bank (PNB IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- The relative value opportunity has a target return of approximately 6% and can be implemented through stocks, derivatives, or as relative over-/underweights in a long only context.
- Trade setup, statistical properties, factor exposure, risk management strategies, and key events are discussed.
IndusInd Bank Crisis: More Discrepancies, Losses, Suspected Fraud
- Indusind Bank (IIB IN) faces significant accounting discrepancies, leadership resignations, and suspicions of fraud, with the bank announcing a net loss of Rs 2,329Crs in Q4 FY25 due to this.
- The escalating situation, involving fraud suspicions and leadership resignations, raises concerns about the bank’s internal controls, financial reporting, and governance.
- IndusInd Bank’s path forward hinges on transparent investigations, fixing internal control systems, and restoring leadership accountability. Investors should closely monitor the regulatory response and management’s corrective actions.
ESR (1821 HK): 13th June Vote On Starwood/Warburg’s Offer
- On the 4th December 2024, the Starwood/Warburg Pincus Consortium announced a firm pre-conditional Offer for ESR Group (1821 HK) at HK$13/share (best & final), by way of a Scheme.
- There was a raft of pre-cons, however processing went like clockwork, and all were satisfied by the 15th May.
- The Scheme Doc is now out, with a Court Meeting on the 13th June, and payment on or before the 10th July. The IFA (Anglo Chinese) says “fair & reasonable“.
[Zeekr Group (ZK US, BUY, TP US$35) TP Change]: Buy in to Geely Doesn’t Help Either’s Competency
- The combined Zeekr (ZK)/Lynk reported C1Q25 top line 11% below our estimates, due to sharper than expected price erosions,
- Despite ASP missing our estimates by 6.3% for ZK and 16% for Lynk, ZK managed to beat our gross margin estimate by 3.7ppt and consensus by 4.0ppt,
- With Geely and related persons controlling 78% of ZK and Geely’s H-share stock rising in value, we see the chance for the go-private deal to succeed as high.
MOO: Positive Ore Sorting Results on Endako Mine Material
- Moon River announced that it received positive results from an ore sorting study performed on material from the Endako Mine Complex.
- MOO plans to also perform these tests on the Davidson Project as well.
- We provide an overview of the Endako Project below.
Fintech Alpha: Unlocking Hidden Value as Corpay Circles
- PUSU deadline looms on May 30, giving Corpay limited time to submit a firm bid or walk away—raising the stakes for investors monitoring deal certainty and potential upside.
- Alpha’s valuation remains compelling, with a blended takeover value of ~3,795p vs. a current share price of 3,050p, implying ~24% upside on deal completion.
- Synergies estimated at ~99p per share could lift deal terms; I see a 65% probability of a formal bid, recommending accumulation around 3,000p for event-driven investors.
Lucror Analytics – Morning Views Asia
- US treasuries ended mixed yesterday, with the curve steepening materially amid concerns over the US budget deficit and President Donald Trump’s impending tax-cut bill.
- The yield on the 2Y UST fell 1 bp to 3.97%, while the yield on the 10Y UST rose 4 bps to 4.49%.
- US equities retreated after a six-day rally, with the S&P 500 and Nasdaq both declining 0.4% to 5,940 and 19,143, respectively.
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