Daily BriefsEvent-Driven

Event-Driven: Wilmar International, Shanghai Prime Machinery H, Showa Corp and more

In today’s briefing:

  • Wilmar Is A Buy After YKA’s Listing
  • Shanghai Prime (2345 HK): Delisting Offer From Parent
  • Honda Tenders Done – Now For The Residuals

Wilmar Is A Buy After YKA’s Listing

By David Blennerhassett

Yesterday, Wilmar International (WIL SP)‘s Yihai Kerry Arawana Holdings Co Ltd (YKA CH) (YKA) commenced trading on the Shenzhen Stock Exchange (ChiNext Board). Priced at RMB25.70/share, shares closed at RMB56/share. Shares are currently changing hands at RMB49.  That backs out a trailing PER of ~59x.

And Wilmar’s reaction yesterday? Down 6.4% in what appears to be a “sell the news” trade.

I see Wilmar’s discount to NAV at 55%. Shares haven’t retested near-term highs since Archer Daniels Midland Co (ADM US)‘s placement in August. But since that placement, uncertainty over YKA’s IPO has been removed. Wilmar is cheap here.

As always, more below the fold.

For some background history on YKA’s IPO, please refer to past insights below:


Shanghai Prime (2345 HK): Delisting Offer From Parent

By David Blennerhassett

Shanghai Prime Machinery Company, a manufacturer of turbine blades, bearings, fasteners, has announced a pre-conditional privatisation Offer from its parent, SOE-Shanghai Electric Group Company (2727 HK) / Shanghai Electric Group Company (601727 CH).

The cancellation price is HK$1.60/share, a 68.4% premium to last close. The price will not be increased. 

Pre-conditions include PRC regulatory approvals – NDRC, MOFCOM, and SAFE.

As Shanghai Prime is PRC incorporated, this delisting proposal is by way of a merger by absorption, which involves a Scheme-like vote from disinterested shareholders. There is no tendering acceptance condition attached to this delisting.

This is a pretty clean deal. Timing is the only unknown. The Long Stop date is the 3 June 2021, but this should be completed well before. The recent privatisation of Huadian Fuxin Energy Corp (816 HK), also a pre-conditional merger by absorption, was wrapped up in four and a half months.


Honda Tenders Done – Now For The Residuals

By Travis Lundy

Today after the close, Honda Motor (7267 JP) announced the successful completion of the three tender offers for subsidiary/affiliates Keihin Corp (7251 JP), Showa Corp (7274 JP), and Nissin Kogyo (7230 JP).

The resulting ownership changes are as follows:

The State of the Honda Sub Residuals

Stock Announcement 
(click on the ogre to read the doc)
Tender Doc TOB Price Pre-Tender
Ownership
Post-Tender
Ownership
Fast-Track
Delisting
Residual
Keihin (7251)

👹

👹

¥2600/shr 25.30% 93.57%

Yes

¥12.36bn
Showa Corp (7274)

👹

👹

¥2300/shr 33.14% 92.13% Yes ¥13.75bn
Nissin Kogyo (7230)

👹

👹

¥2250/shr 31.61% 92.44% Yes ¥11.07bn

The results are a little surprising in that all the names managed to get to 92+%. This indicates that some of the passive-tracking TOPIX holders sold into the tender, or their shares were tendered by being borrowed. 

This leaves a setup trade.


Before it’s here, it’s on Smartkarma