In today’s briefing:
- FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time
- Woolies Moves On MyDeal (MYD AU)
- Irongate (IAP AU): 29th June Shareholder Vote On Charter Hall/PGGM Offer
- HSI Index Rebalance: Four Weddings & A Funeral
- MyDeal.com.au Gets a A$1.05 Offer from Woolworths
- SK Telecom: Historical Price Analysis of Reaching 100% Foreign Ownership Limit
- Brookfield/HomeServe: Agreed 1200p Offer
- Irongate’s Scheme Meeting on 29 June, IE’s Opinion
FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time
- Celltrion Inc (068270 KS)’s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.
- Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).
- In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.
Woolies Moves On MyDeal (MYD AU)
- Woolworths Ltd (WOW AU) proposes to acquire all shares in MyDeal.com.au Ltd (MYD AU) other than those held by Sean Senvirtne and other key management personnel.
- MyDeal shareholders will receive $1.05/share in cash, a punchy 62.8% premium to last close, but just 5% above its 2020 IPO price.
- This proposal is being done by way of a Scheme with expected completion in Q3/Q4 2022.
Irongate (IAP AU): 29th June Shareholder Vote On Charter Hall/PGGM Offer
- Irongate Group (IAP AU) has convened a Scheme Meeting on the 29 June to vote on the proposal from Charter Hall and PGGM.
- The vote, for all intent and purposes, appears a formality. The Independent Expert considers the Offer to be fair and reasonable.
- Trading at a gross/annualised spread of 2.1%/14.5%, assuming mid-July completion. Get involved.
HSI Index Rebalance: Four Weddings & A Funeral
- The inclusion of Orient Overseas International, Zhongsheng Group, Semiconductor Manufacturing International Corp (SMIC) and China Hongqiao plus the deletion of AAC Technologies Holdings takes us to 69 index stocks.
- Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover is 3.43% and will result in a one-way trade of HK$7,444m.
- There is huge short interest on Zhongsheng Group (881 HK) and China Hongqiao (1378 HK) and there could be some short covering from now to implementation.
MyDeal.com.au Gets a A$1.05 Offer from Woolworths
- MyDeal.com.au Ltd (MYD AU) entered a SID with Woolworths Ltd (WOW AU) to acquire an 80.2% interest. Shareholders will receive A$1.05 per share, a 62.8% premium to the unaffected price.
- The three largest shareholders, representing 76.0% of outstanding shares, will vote in favour of the deal. The scheme meeting is set for 3Q.
- This is a done deal. At the last close price, the gross and annualised spread for an October implementation date is 4.5% and 10.1% respectively.
SK Telecom: Historical Price Analysis of Reaching 100% Foreign Ownership Limit
- In this insight, we analyzed the different share price movements of SK Telecom relative to KOSPI from 2005 to 2022 when foreign ownership remained above 99%.
- Once MSCI announces the potential deletion of SK Telecom from MSCI Korea Index in the next several weeks, there could be some short term temporary weakness on SK Telecom.
- Over a longer period, SK Telecom is well poised to outperform the market amid the market’s rotation into value stocks and the company’s strong earnings and cash flow growth.
Brookfield/HomeServe: Agreed 1200p Offer
- HomeServe has reached an agreement on a 1,200p cash offer (vs. my 1,206 TP), 71% premium and an implied EV of £4,706 million; 13.3x EV/Fwd EBITDA, 25.7x Fwd P/E.
- While the deal is highly likely to close (15.3% IRR by year 8) and the founder will bag £490 million, HomeServe could still attract interest from other parties.
- Gross spread as of today’s close is 3.4% and the estimated annual return would be 7.9% assuming settlement on 30 October. Reiterate long HSV LN.
Irongate’s Scheme Meeting on 29 June, IE’s Opinion
- Unsurprisingly, the independent expert (IE) considers the offer for Irongate Group (IAP AU) to be fair and reasonable. We think that IE’s valuation approach is sound.
- The key condition is approval from shareholders and regulatory authorities (FIRB, OIO, SARB). The scheme meeting is scheduled for 29 June.
- We continue to think that offer is attractive. At the last close price and for the 15 July implementation date, the gross and annualised spread is 1.4% and 9.2%, respectively.
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