In today’s briefing:
- CCASS: Why Large Moves Still Mattered in 2021
- MSCI Korea IR: Rise of Meritz Fire, Wemade Gone, Kakao Pay Still Tricky, & SK Square Certainty
- The Citic Securities Rights Offering – Dilution Against Timing
- HK&S Hotels (45 HK): Kadoories Mop Up Someone Else’s Mess
- Vedanta ADR Clean-Up Offering
- Porsche Automobil Holding SE: Double Discount
- Microsoft Got Game! Plans to Buy Activision Blizzard for $95/Share or $68.7 Billion
- Microsoft to Buy Activision Blizzard for $69 Billion: Impact on NCsoft, Krafton, & Netmarble
- Yorkey Optical (2788 HK): Court Meeting On 22 Feb. IFA Says Fair
- Citi’s Mexican Exit; Our Thoughts on “new Banamex”
CCASS: Why Large Moves Still Mattered in 2021
- In this latest installment in a series dating back to March 2018, I’ve analysed 4,400 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks.
- The data continues to bear out the overall underperformance of stocks that exhibit large CCASS moves.
- But it also serves to illustrate that when a certain % move takes place in tandem with a certain market capitalisation, there is a tendency for outperformance.
MSCI Korea IR: Rise of Meritz Fire, Wemade Gone, Kakao Pay Still Tricky, & SK Square Certainty
- Additions: Meritz Financial Group and Meritz Fire (with a YTD price gain of over 40%) are very likely, and Kakao Pay is still the trickiest one.
- Deletions: Shinpoong Pharm is the most likely one, but the others remain a slim possibility.
- Float rate changes: SK Square is a certainty with the most significant impact, and SKIET and HMM deserve our attention.
The Citic Securities Rights Offering – Dilution Against Timing
- Citic Securities has launched a Rights Offering for H Shares and A Shares. The price is basically the same, which means a very big discount for A holders.
- The timing is different, and the H share Rights Issue process is drawn out past Chinese New Year. This may affect takeup rates and bullishness.
- The difference in capital approach between Dual H/A-share listed SOEs like Citic Securities and like China Mobile is stark. The dichotomy may expand.
HK&S Hotels (45 HK): Kadoories Mop Up Someone Else’s Mess
- The Kadoorie family, Hongkong & Shanghai Hotels (45 HK)‘s major shareholder, is paying HK$2.63bn to increase its holding to 72.43% from 59.98%.
- The price under the SPA is $12.80/share, a 92.5% premium to the undisturbed price. Shares promptly gained 19.5% yesterday. No Offer was triggered.
- What is conveniently left out of the announcement, and in media articles, is the original owner of these shares – Tai United Holdings (718 HK).
Vedanta ADR Clean-Up Offering
- Vedanta Limited decided to delist its ADRs last autumn. They were delisted but the process of unwinding them comes down to selling the unconverted ADR underlying shares.
- Citi is conducting an offering to sell those underlying shares. This will aid in setting the unwind price for existing but unsettled listed ADR derivatives (yay).
- The offering itself is just over 1% of shares out, 4% of float, and 12% of foreign portfolio investor holdings. Not huge, but the trend vs peers gives one pause.
Porsche Automobil Holding SE: Double Discount
- Porsche Automobil Holding Se (PAH3 GR) is a listed holding company whose main asset is a 53.3% stake of Volkswagen ordinary shares (worth c. €43,243 million).
- The combination of holding chain and dual-class structure allows the Porsche-Piëch families to control Volkswagen with just a 15.7% economic interest. The discount of Porsche SE is a massive 38.2%.
- The discount is above the 9-year average, 30.2%. I recommend long 1 PAH3 GR/short 0.5136 VOW GR.
Microsoft Got Game! Plans to Buy Activision Blizzard for $95/Share or $68.7 Billion
- Microsoft’s largest-ever acquisition provides boost for cloud gaming and metaverse ambitions.
- Deal comes as Activision Blizzard’s been mired in gender pay disparity and sexual harassment storm.
- Controversial CEO Bobby Kotick to continue in his role as head of Activision Blizzard, though WSJ says otherwise.
Microsoft to Buy Activision Blizzard for $69 Billion: Impact on NCsoft, Krafton, & Netmarble
- On 18 January, Microsoft Corp (MSFT US) announced that it will acquire Activision Blizzard (ATVI US) for $68.7 billion all-cash deal.
- The acquisition of Activision Blizzard by Microsoft is likely to have a positive impact on the entire global game sector including in Korea.
- This major acquisition of Activision Blizzard by Microsoft could rejuvenate the entire global game sector as it could signal greater M&A interest in high-quality game companies.
Yorkey Optical (2788 HK): Court Meeting On 22 Feb. IFA Says Fair
- Yorkey Optical International Cayman (2788 HK)‘s Scheme Document is now out, with the Court Meeting to be held on the 22 February.
- Asia Optical (3019 TT) is offering HK$0.999/share, a 75.3% premium to the undisturbed close. David Webb has given an irrevocable undertaking to vote his shares in favour of the Scheme
- This transaction is all stitched up. The Independent Financial Advisor considers the terms to be fair and reasonable.
Citi’s Mexican Exit; Our Thoughts on “new Banamex”
- Citi is to sell its Mexican retail and SME banking operations, which we call new Banamex; it is an attractive banking franchise that needs investment and a focus on costs
- Based on peer group valuations, and on new Banamex’s disclosed parameters, we estimate that the disposal entity’s valuation range could range from USD7bn to USD10bn, and we identify potential bidders
- We believe that our new Banamex valuation range emphasizes BanBajio’s attractive valuations, we stick with our positive view on mid-cap BanBajio; we believe that Banorte is fully valued
Before it’s here, it’s on Smartkarma
