Daily BriefsEvent-Driven

Event-Driven: Toshiba Corp, ENN Energy, Royal Dutch Shell, Tokyo Kikai Seisakusho, Hyundai Motor Co, Innovent Biologics Inc, Crown Resorts, Banco Bilbao Vizcaya Argentari and more

In today’s briefing:

  • Toshiba – Processing Things After Speaking to the Company
  • HSI Index Rebalance: Tiptoeing to the 80 Index Member Target
  • Thinking About the Royal Dutch Shell “Unification”
  • Tokyo Kikai Seisakusho (6335) Court Approved Poison Pill Stalemate Extended (Means Selling)
  • Hyundai Motor Share Buyback: Details & Trading Implications
  • HSCEI Index Rebalance: No Surprises Here as Evergrande Is Deleted
  • Blackstone Third-Time Lucky with Crown Resorts Bid?
  • BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

Toshiba – Processing Things After Speaking to the Company

By Mio Kato

  • Toshiba stock has been slightly weak since earnings and its official spinoff announcement. 
  • After speaking to the company, we came away more encouraged about the core business. 
  • However, we believe real buying will not come in until there is more clarity on its future and would thus target a lower entry point.

HSI Index Rebalance: Tiptoeing to the 80 Index Member Target

By Brian Freitas


Thinking About the Royal Dutch Shell “Unification”

By Travis Lundy

  • Earlier this week, Royal Dutch Shell (RDSA LN) announced a plan for ‘Unification’ of the A and B lines, to be put to shareholder vote in 3 weeks. 
  • The plan entails moving 10 execs to London, changing corporate and tax jurisdiction to the UK. 
  • The question investors should be asking themselves is… Is There A Trade Here?

Tokyo Kikai Seisakusho (6335) Court Approved Poison Pill Stalemate Extended (Means Selling)

By Travis Lundy

  • On 17 November, Tokyo Kikai Seisakusho (6335 JP) announced an agreement with ADC to hold off on issuing the rights against an ADC pledge to not call an EGM.
  • On 18 November, the Supreme Court handed down its rejection of the Asia Development Capital (9318 JP) appeals.
  • The immediate hostility is dialled back, the stalemate is extended. Every buyer from now on is a potential bagholder.

Hyundai Motor Share Buyback: Details & Trading Implications

By Sanghyun Park

  • If they buy back at equal daily weight, 1P and 2PB will be 0.08x and 0.09x ADTV, respectively. On the other hand, Ord and 3PB will be 0.05x and 0.04x.
  • I would not recommend trading on the possibility that this buyback will lead to a relative outperformance of 1P or 2PB versus Ord. Rather, I would pay attention to Ord.
  • I see it as a preemptive action to suppress the shareholder approval costs that may arise in consideration of various merger/spin-off scenarios ahead of the corporate restructuring.

HSCEI Index Rebalance: No Surprises Here as Evergrande Is Deleted

By Brian Freitas


Blackstone Third-Time Lucky with Crown Resorts Bid?

By Arun George

  • Blackstone Group (BX US) has returned for a third time with a A$12.50 cash per share offer, a marginal 1.2% bump to its last offer of A$12.35 on 10 May.
  • Crown Resorts (CWN AU) is at the start of a difficult reform agenda it needs to fulfil to maintain its gaming licenses. Nevertheless, Blackstone’s ongoing interest suggest inherent value.
  • Blackstone’s bid retains leeway for a bump and may draw out previous suitors. At the last close of A$11.54, the shares trade at an 8.3% gross spread to the offer.

BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

By Victor Galliano

  • BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive
  • The negative reaction to BBVA’s move reflects investor concerns surrounding macro-economics and politics in Turkey, and the weak Turkish Lira; we believe that Turkish monetary policy easing is largely done
  • BBVA shares provide exposure to its best-in-class return group emerging market banks at an attractive PBV ratio; in addition, BBVA shares are supported by its big share buy-back plan

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