In today’s briefing:
- Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
- SET50 Index Rebalance Preview: Four Potential Changes in December
- DTAC/True Merger to Proceed but Without the VTOs
- 2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target
- GoTo: Long-Term Profitability Is Worrying
- Kuaishou (1024 HK): 3Q22, Promising Live Streaming, Better Margin, 39% Upside
- GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
- Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?
Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
- Link Administration (LNK AU) has released the explanatory memorandum regarding the PEXA Group (PXA AU) in-specie distribution.
- Link shareholders will receive one PEXA share for every 7.52 Link shares. Shareholders will vote on the distribution on the 23 December. The IE, rightfully, deemed the process fair.
- If D&D buys Link’s BCM/CM ops for A$1.27bn, Link would be net cash of ~A$1.40/share versus an ex-entitlement price of ~A$1.58/share. And Link would still hold the lucrative RSS ops.
SET50 Index Rebalance Preview: Four Potential Changes in December
- The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ends in 6 trading days.
- Following the market consultation and reduction in the turnover ratio, there could be four changes to the index. The DTAC/TRUE merger could result in another inclusion in Q1 2023.
- Estimated one-way turnover at the December rebalance is 8.1% and will result in a one-way trade of THB 7.4bn. More than 1x ADV to trade on most stocks.
DTAC/True Merger to Proceed but Without the VTOs
- Telenor and CP Group will proceed with the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger but without the VTO due to missing the VTO conditions precedent deadline.
- The likely real reason for the VTO cancellation was the realisation that the VTO prices were too generous, particularly in the context of the NBTC’s harsh conditions.
- Completion is targeted for 1Q23. The current share price ratio of 8.750x vs the exchange ratio of 10.221x is attractive. Timing and potential tweaks to the exchange ratio are risks.
2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target
- Chindata Group (CD US)’s 3Q22 results beat both revenue and adjusted EBITDA consensus estimates. Chindata raised its full-year guidance for the second time this year.
- Chindata continues to attract rumours of takeover interest, most recently from China Merchants. Its track record of beating guidance, modest leverage and beaten-down rating make it a target.
- A forward EV/EBITDA multiple of 10.8x, in line with 21Vianet Group (VNET US)’s multiple implied by its founder’s offer (at US$8.20), would imply Chindata’s price of US$8 per ADS.
GoTo: Long-Term Profitability Is Worrying
- GoTo (GOTO IJ) reported 3Q2022 results on Monday. Gross revenue increased 30.4% YoY to IDR5.9trn while adjusted EBITDA (losses) dropped to 81.3% of net revenues vs 289% in 3Q2021.
- There has been notable improvement in the company’s earnings (decline in losses in particular) driven by huge cost cuts on promotions which helped reduce losses.
- However, cutting down promotions/marketing costs could lead to drop in top line growth and market share.
Kuaishou (1024 HK): 3Q22, Promising Live Streaming, Better Margin, 39% Upside
- There are three positive signs in online marketing despite the business slowed down.
- For living streaming, both active user base and time spent grew rapidly.
- The operating margin improved significantly to -13% in 3Q22 from -37% in 3Q21.
GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
- In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
- GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
- In this note, we will talk about the upcoming lockup expiry.
Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?
- Early disclosure of convocation notices and the use of electronic voting platforms, as specified in Corporate Governance Code, and electronic voting, which reduces the companies’ administrative burden, have also progressed.
- Although the provision of English-language convocation notices was included in the Corporate Governance Code, only a few companies still send all documents in English translation.
- More than 10 years after the regulatory-changes, few companies still file their annual securities reports prior to AGMs. Few companies take such a proactive approach by changing their company workflow.
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