In today’s briefing:
- Now Link Admin Takes A Bath – Time To Buy
- Woodside/BHP And the Timing Of The Trade Flows Vs Peers
- Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In
- Ricoh (7752) Buyback – Big, But Not. But Not Small.
- Chukyo (8530) + Aichi (8527) Bank to Create Aichi Fin’l Group – Interesting Structure Adds Value
- BEW Bumps Effective Stake In BEURG (3718 HK)
- FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com
- KOSPI 200 Rebalancing: Shorting Event for Additions
- Axiata’s EGM in Relation to the Link Net MTO Set for 26 May
- FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold
Now Link Admin Takes A Bath – Time To Buy
- Link Administration Holdings (LNK AU) cratered this morning ahead of a pause in trading.
- Link said it is unaware of the reason for the decline; however, the unfortunate timing of the ACCC delay and the MAC disconnect between Offeror and Target are not helping.
- Break price fair value has emerged. Separately, Link is coming up “cheap” versus its holding in PEXA Group (PXA AU).
Woodside/BHP And the Timing Of The Trade Flows Vs Peers
- BHP Group Ltd (BHP AU) and Woodside Petroleum (WPL AU) announced a merger of BHP Petroleum with Woodside late last year, to be implemented in Q2 2022
- The vote is in a week, and BHP is expected to trade ex- WPL share spinoff on 24 May 2022, with delivery a week later.
- The trade so far has worked well, and there has been a slight additive flow pattern in the last several days. It is worth thinking closely about timing.
Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In
- Link Administration Holdings (LNK AU) claims to be not aware of any reason for today’s -15% share collapse. The market seems nervy that DND will exhibit buyer’s remorse.
- The scheme consideration is now 2.6x DND’s market cap. The ACCC delayed review and the contract renewal MAC clause could be DND’s get-out-of-jail-free card for a lower price/walk-away.
- Our “deal-break” SoTP valuation suggests a valuation of A$4.24 per share, which is broadly in line with the last close price. The next catalyst is DND’s results tomorrow.
Ricoh (7752) Buyback – Big, But Not. But Not Small.
- Ricoh Company Ltd (7752 JP) announced earnings disappointed, but guidance is above forecast as some Q4 business was pushed back.
- The company also announced a buyback. The headline at 7.5% of shares out is big. Reality is lower.
- This sets up a somewhat complex dynamic of flows in near space and far space, and relative to peers. But we look at it anyway.
Chukyo (8530) + Aichi (8527) Bank to Create Aichi Fin’l Group – Interesting Structure Adds Value
- Chukyo Bank (8530 JP) and Aichi Bank (8527 JP) have decided to join forces to become the largest regional lender in the Nagoya area.
- This is probably driven by MUFJ’s efforts to rid itself of non-core assets, but in doing so, it is allowing for an accretive structure for minorities.
- This ends up being a cheap bank on a slightly complicated pro-forma basis.
BEW Bumps Effective Stake In BEURG (3718 HK)
- Beijing Enterprises Water Group (371 HK) (BEW) has effectively increased its stake in Beijing Enterprises Urban Resources (3718 HK) (BEURG) after entering into Acting In Concert agreements (AIC).
- Parties to the AICs “irrevocably and unconditionally” undertake to vote in the same manner as BEW in BEURG shareholder meetings.
- There was no update on the timing of the MGO, which is expected to open for tendering on the 20 May.
FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com
- The next FTSE TWSE Taiwan 50 Index review will use data from 23 May. The changes will be announced on 3 June and implemented at the close on 17 June.
- Momo.Com Inc (8454 TT) is a potential deletion from the index, while SinoPac Holdings (2890 TT) should be included as the highest ranked non-index constituent.
- SinoPac Holdings (2890 TT) has over 3.5 days of ADV to buy from passive funds and trades cheaper than its peers. The stock could outperform over the next few weeks.
KOSPI 200 Rebalancing: Shorting Event for Additions
- There is a clear correlation between the resumption of short selling and the overvaluation of stock prices, which was actively reflected when short selling resumed.
- So, in this rebalancing as well, we need to target those who have seen a significant share price rise recently while looking at the increasing trend of the loan balance.
- The stocks to watch are Meritz Fire and Hana Tour as their recent share price has been the most solid. In particular, Hana Tour is conducting a capital increase.
Axiata’s EGM in Relation to the Link Net MTO Set for 26 May
- The Axiata Group (AXIATA MK) EGM to approve the ordinary resolution relating to the proposed acquisition of Link Net (LINK IJ) shares and the proposed MTO is on 26 May.
- The proposed acquisition is targeted to be complete by 2Q and the subsequent MTO at IDR4,800 per share will complete by 3Q.
- At the last close, the gross and annualised spread to the MTO price for a 3Q completion is 7.1% and 11.7%, respectively.
FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold
- The next FTSE EPRA Nareit Index review will use data from 23 May. The changes will be announced on 1 June and implemented at the close on 17 June.
- Potential inclusions at the review include Frasers Hospitality Trust (FHT SP) and Ichigo Inc (2337 JP), though both are very close to the basis point threshold for inclusion.
- Digital Core REIT (DCREIT SP) has still not published an audited annual report in English and is unlikely to be included in the index at the June rebalance.
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