Daily BriefsEvent-Driven

Event-Driven: Singapore Press Holdings, Royal Dutch Shell Plc (Adr), Hang Lung, KakaoBank, SK IE Technology and more

In today’s briefing:

  • Huat Ah Redux! Cuscaden Revises Offer for SPH, SPH Deems It Superior
  • Shell Plc – No Longer Royal Post Simplification
  • StubWorld: Scion Adriel Likes Hang Lung Group Shares
  • Cuscaden’s Revised Offer Options to End the Battle for SPH
  • MSCI Korea: Constituents Subject to Index Weight Increase – Watch Kakao Bank
  • SK IE Technology – Block Deal Sale by Second Largest Shareholder Premier Partners
  • Royal Dutch Shell Share Structure Unification

Huat Ah Redux! Cuscaden Revises Offer for SPH, SPH Deems It Superior

By Travis Lundy

  • Shortly after Keppel revised their Offer to S$2.35-ish and FINAL, Cuscaden has come over the top with a NEW Offer with either cash (S$2.36/share) or cash and stock S$2.401=ish)
  • This complicates things because of the SPH/Keppel Agreement on timing.
  • The structure of the deal and its impact on components ALSO complicates the choice. This will be somewhat strange to trade.

Shell Plc – No Longer Royal Post Simplification

By Brian Freitas

  • Royal Dutch Shell (RDSA NA)/ Royal Dutch Shell (RDSA NA) has announced a simplification of its share structure resulting in an increase in the speed and flexibility of capital actions.
  • The name of the company will change from Royal Dutch Shell plc to Shell plc.  It’s expected that the company will no longer meet conditions to use the ‘Royal’ designation.
  • The proposed structure will help in conducting buybacks and there could be a quick shareholder payout following the US$7bn sale of Shell’s Permian assets in the US.

StubWorld: Scion Adriel Likes Hang Lung Group Shares

By David Blennerhassett

  • Hang Lung (10 HK) is coming up “expensive” on my monitor, yet remains one of the cheapest property plays in Hong Kong on a P/B metric.
  • Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market cap – >20%.

Cuscaden’s Revised Offer Options to End the Battle for SPH

By Arun George

  • Cuscaden is offering an all-cash offer of S$2.36 or cash & units offer to comprise S$1.602 in cash and 0.782 SPH REIT (SPHREIT SP) units per SPH share (worth S$2.40).
  • SPH independent directors preliminarily recommend to shareholders to vote against the Keppel scheme and vote in favour of the Cuscaden scheme. Cuscaden’s offer will be implemented by February 2022. 
  • Cuscaden’s revised offer options are attractive in the context of SPH’s long-term multiples/share prices and Keppel Corp (KEP SP)’s final offer. Cuscaden’s revised offer seems like a done deal. 

MSCI Korea: Constituents Subject to Index Weight Increase – Watch Kakao Bank

By Sanghyun Park

  • The following four stocks are likely to increase their respective index weight at the MSCI November rebalancing: Kakao Bank, SK Bioscience, HYBE, and Doosan Heavy.
  • Except for Kakao Bank, we shouldn’t expect a significant impact on the others, but it is worth paying attention to this as the implementation date approaches.
  • Kakao Bank will face 3.61x ADTV. But the market may overlook it because it takes some time for the market to fully absorb MSCI’s modified float calculation practices.

SK IE Technology – Block Deal Sale by Second Largest Shareholder Premier Partners

By Douglas Kim

  • SK IE Technology’s second largest shareholder Premier Partners is selling its shares through a block deal worth between 465 billion won to 538.9 billion won.
  • We would AVOID this block deal due to lack valuation merits coupled with additional overhang from the remaining shares by Premier Partners post this block sale. 
  • SK IET, which is trading at 51.7x P/E and 5.3x P/B consensus 2022 earnings estimates, appears to be fully valued at current levels. 

Royal Dutch Shell Share Structure Unification

By Jesus Rodriguez Aguilar

  • The unification should deliver multiple benefits, such as facilitating greater flexibility regarding portfolio actions, streamlining corporate decision making,  and a greater pool of liquidity.
  • With a single share class, not subject to Dutch withholding tax considerations, Shell will be able to execute share the $9 bn buyback programme more quickly.
  • The spread is too tight to set up a convergence trade, therefore I recommend monitoring the share prices in case any line trades at a higher discount vs. the other.

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