In today’s briefing:
- Celltrion Merger Swap Event: Trading Dynamics Post-Merger Approval
- Merger Arb Mondays (23 Oct) – Eoflow, Celltrion Healthcare, JSR, Origin, Lithium Power, Poly Culture
- Intuitive Surgical (ISRG US): Mixed Q3 Result; Encouraging Procedure Growth Is the Key Positive
- Companies with over 50% Independent Directors Have High Profitability and Stock Valuations
Celltrion Merger Swap Event: Trading Dynamics Post-Merger Approval
- Celltrion Chairman Seo made a public statement, affirming that they are prepared to bear the entire cost, even if it exceeds the ₩1T ceiling, and proceed with the merger.
- The relatively substantial cost risk associated with Celltrion Inc. due to the involvement of NPS is causing the merger swap spread to widen once more in comparison to Celltrion Healthcare.
- If the prices persist above the appraisal rights exercise prices, the relative cost risk for Celltrion Inc. could escalate, leading to a significant widening of the swap spread.
Merger Arb Mondays (23 Oct) – Eoflow, Celltrion Healthcare, JSR, Origin, Lithium Power, Poly Culture
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Haitong International Securities Group (665 HK), Lithium Power International (LPI AU).
- Lowest spreads – Healius (HLS AU), Pact Group Holdings (PGH AU), Origin Energy (ORG AU), T&K Toka Co Ltd (4636 JP), Kenedix Retail REIT (3453 JP), Chindata Group (CD US).
Intuitive Surgical (ISRG US): Mixed Q3 Result; Encouraging Procedure Growth Is the Key Positive
- In 3Q23, Intuitive Surgical (ISRG US) recorded 12% YoY revenue growth to $1.74B, driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
- 3Q23 procedure growth was 19%, versus 20% in 3Q22 and 22% in 2Q23. Systems revenue declined 11%, due to higher number of systems placed under lease and lower China demand.
- The company now expects 2023 procedure volume growth of 21–22%, up from previous estimates of 20–22%. Significant material supply chain disruptions or hospital capacity constraints are not expected.
Companies with over 50% Independent Directors Have High Profitability and Stock Valuations
- While the number of companies with majority of independent directors is still small (15.7% of the Metrical Universe as of September 2023), the number of those companies is steadily increasing.
- The group of companies with over 50% independent director are superior in market capitalization, ratio of foreign shareholders, ratio of female board members, ROE, ROA, Tobin’s Q, and Metrical Score.
- Given that the presence of overseas investors remains high, profitability, share price valuation, and corporate governance practices such as independent director ratios will continue to improve in the future.
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