In today’s briefing:
- MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
- Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
- A Pair Trade Between Korean Air and Hanjin Kal
- Key Takeaways from the Updated Filing on Hanwha Aero’s Rights Offering
- Jiangsu Zenergy Battery Technologies IPO – PHIP Updates & Quick Thoughts on Peer Comp and Valuation
MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
- On 3 April mid-day, Mitsubishi Corp (8058 JP) announced its FY25 earnings guidance and new “Shareholder Return Strategy”, a ¥1 trillion buyback, and its “Corporate Strategy 2027” Mid-Term Management Plan.
- The FY25 forecast is for a third consecutive decline in underlying operating cashflow, but a hike in dividend from ¥100 to ¥110 and a ¥1trln share buyback, including ¥230bn tender.
- The combination of dividend and buyback should be 15% of market cap over the next 12mos. And I expect Warren Buffett will consider buying dips.
Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
- Mazagon Dock Shipbuilders (MAZDOCKS IN) has announced an Offer for Sale of 4.01% of the Government holding in the stock. That is INR 41bn (US$481m) at the last close.
- The increase in float brings the stock very close to inclusion in a global index at the May rebalance. However, that is dependent on how the stock performs from here.
- Inclusion in the index will bring around US$222m/ 2x ADV of passive inflows and could help support the stock.
A Pair Trade Between Korean Air and Hanjin Kal
- In this insight, we discuss a pair trade between Korean Air Lines (003490 KS) (go long) and Hanjin KAL Corp (180640 KS) (go short).
- In the past three months as well as 12 months, there has been a sharp increase in the gap of Korean Air Lines and Hanjin KAL Corp.
- It is uncertain how much longer Hoban Group will maintain its stake in Hanjin Kal. Hoban could reduce its stake in Hanjin Kal but increase its stake in LS Corp.
Key Takeaways from the Updated Filing on Hanwha Aero’s Rights Offering
- Hanwha shot down any merger talks between Hanwha Corp and Hanwha Energy, saying they’re just going to funnel Energy’s cash straight into Hanwha Aero via a third-party allotment.
- These confirm no price manipulation for Hanwha Corp; Hanwha Energy will inject cash into Aero at market value, likely driving bullish short-term price action for both Hanwha Corp and Aero.
- Despite tighter arb opportunities, doubts remain whether Hanwha Aero can raise the remaining KRW 1.6 trillion given a volatile market and the tight timeline.
Jiangsu Zenergy Battery Technologies IPO – PHIP Updates & Quick Thoughts on Peer Comp and Valuation
- Jiangsu Zenergy Battery Technologies (JSZENERGY CH) is looking to raise US$130m in its Hong Kong IPO.
- Zenergy is an EV and energy storage system battery manufacturer providing integrated battery solutions, encompassing battery cells, modules, packs and battery management systems dedicated to large-scale applications of electrochemical products.
- In our previous note, we looked at the firm’s past performance. In this note, we talk about the IPO valuations.
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