In today’s briefing:
- Link Admin (LNK AU): ACCC Approval & Index Changes
- Link Admin Gets ACCC Nod. Woodford Condition Outstanding
- Link’s Scheme in the Home Stretch by Securing ACCC and CBI Approval
- Matrimony.com (MATRIM IN) | Poor Quality Growth & Perplexing Operations
- Tyro in Play as It Rejects Potentia’s A$1.27 Offer
- Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence
- Circles.Life: A Fully Virtual Mobile Operator Targeting APAC’s Digital Natives
- WCP: First Day IPO Trading Strategy
- Reneging on Job Offers Underscores Sea’s Retrenchment
- Bilibili (9626 HK): 2Q22, Game Fell, But to Reduce Expense
Link Admin (LNK AU): ACCC Approval & Index Changes
- The ACCC will not oppose the proposed acquisition of Link Administration (LNK AU) by Dye & Durham removing a major hurdle. Other regulatory approvals are still pending.
- If regulatory clearances are received in the next week and the Court approves the Scheme, Link Administration (LNK AU) will stop trading at the close on 15 September.
- We estimate passive trackers across all indices will need to sell 35.53m shares (A$153m; 18 days of ADV) of Link Administration (LNK AU) at the close on 15 September.
Link Admin Gets ACCC Nod. Woodford Condition Outstanding
- Link Administration (LNK AU) has announced the Australian Competition and Consumer Commission will not oppose Dye & Durham’s proposed acquisition.
- The next step is the rescheduled second court hearing on the 15 September.
- The key outstanding condition concerns the “Woodford Matters”, and whether D&D potentially waives this condition, or digs in its heels.
Link’s Scheme in the Home Stretch by Securing ACCC and CBI Approval
- Dye & Durham/DND’s proposed acquisition of Link Administration (LNK AU) at A$4.81 per share has received approvals from the ACCC and the Central Bank of Ireland.
- Key conditions precedent remaining are FIRB, UK FCA and Luxembourg approvals. The second court hearing date has been adjourned to 15 September.
- The transaction is in the home stretch and will likely complete. At the last close, the gross and annualised spread for a 27 September payment is 4.8% and 151%, respectively.
Matrimony.com (MATRIM IN) | Poor Quality Growth & Perplexing Operations
- Matrimony.com (MATRIM IN) is a leading player with the highest market share in the Indian matchmaking market.
- A close examination of the marketing expenses and subscriber additions reveals poor quality growth.
- Employee remuneration is perplexing and so is the decision that leads to a reduction in PP&E.
Tyro in Play as It Rejects Potentia’s A$1.27 Offer
- Tyro Payments (TYR AU) rejected an indicative proposal from the Potentia consortium at A$1.27 per share as it was highly conditional and materially undervalued the business.
- Grok, the largest shareholder will vote for a Potentia scheme unless there is a rival scheme which is A$0.25 per share higher than the value of the Potentia proposal.
- Potentia’s move puts Tyro in play, and Grok’s involvement will force the Board to get an improved offer and/or flush out a competing bidder. There is another round to go.
Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence
- Elan Microelectronics (2458 TT) will be removed from the FTSE Taiwan Mid Cap 100 Index on September 16th. As a result, it could see 12+ days of volume of selling.
- We had a call with management. Guidance and product performance implies the company has relative strength vs. its end-market demand weakness.
- The stock has already underperformed notebook-related peers by a wide margin, hence a further underperformance caused by passive selling could open up a rebound opportunity,
Circles.Life: A Fully Virtual Mobile Operator Targeting APAC’s Digital Natives
- A fully virtual mobile operator which leases its 4G/5G networks to provide digital mobile services targeting mainly young digital natives.
- Circles.Life is known for offering very flexible plans with highly competitive pricing; it also offers its proprietary tech platform, Circles Global, as a B2B SaaS product.
- It was reported to be in early talks with a SPAC for a potential merger in July this year.
WCP: First Day IPO Trading Strategy
- The IPO book building for WCP starts on 14 September. We have updated our earnings estimates following the company’s 2Q 2022 results.
- Our base case target price of WCP is 78,317 won per share, which is 2% lower than the low end of the IPO price range of 80,000 won.
- To derive our target price, we used 22.4x EV/EBITDA in 2023, which is the average multiple of its peers in 2023.
Reneging on Job Offers Underscores Sea’s Retrenchment
- Southeast Asian conglomerate Sea Ltd. has pumped the brakes on its e-commerce unit Shopee’s expansion, resorting to measures such as reneging on jobs offers to Chinese employees at the last minute.
- The strategy shift came as the Singaporean company backed by Chinese tech giant Tencent Holdings Ltd. tries to slash costs to shore up its bottom line amid widening losses.
- The red ink has followed several years of aggressive expansion by Shopee, which has piled pressure on its balance sheet this year, just as challenges raising money abroad mounted.
Bilibili (9626 HK): 2Q22, Game Fell, But to Reduce Expense
- In 2Q22, the revenue growth rate was lower than we expected, especially in the game business.
- We believe the May layoff will reduce operating expenses in following quarters.
- We set an upside of 8.3% and a price target of HK$197.
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