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Most Read: Ant Financial, Snowflake Inc, Softbank Group, Huazhu Group, Allied Properties (H.K.) and more

By September 11, 2020 No Comments

In today’s briefing:

  • Ant Group – Index Inclusion Possibilities & Timeline
  • Snowflake IPO – Approved by the Oracle of Omaha
  • Softbank Group – Funding Secured by Masayoshi Musk?
  • Huazhu HK Secondary Listing – Needs the Money but Looks Toppish
  • Allied Props (56 HK). Stalled At The Finish

Ant Group – Index Inclusion Possibilities & Timeline

By Brian Freitas

Ant Financial (1051260D CH) is looking to complete a dual listing on the Shanghai Stock Exchange’s STAR Market and the HKEX (388 HK). Media reports have indicated that the company is looking to raise US$30bn, with US$20bn being raised in China on the STAR Market and US$10bn in Hong Kong. In a filing, Ant said that it plans to sell no less than 10% of its enlarged share capital.

FTSE has started a market consultation to include the STAR Market to the list of eligible market segments within the non Stock Connect indices, and to introduce Fast Entry rules for China A-shares listed on the STAR Market where there are no pricing limits for the first 5 trading days.

In this Insight, we take a look at the timeline for inclusion of the A-shares and the H-shares in various indices and what it would take for the HK listed line to be included in the Hong Kong Hang Seng Index (HSI INDEX) and Hang Seng China Enterprises Index (HSCEI INDEX)

Snowflake IPO – Approved by the Oracle of Omaha

By Douglas Kim

In this insight, we provide a valuation analysis of Snowflake which has set its IPO price range of $75 to $85 per share. At these prices, Snowflake’s market cap would range between $20.9 billion and $23.7 billion. Snowflake could raise more than $2.7 billion in this IPO and this would be one of the biggest IPOs in the U.S. stock market this year. The valuation range is a big jump from the valuation the company received earlier this year when it was valued at about $12.5 billion (raising $479 million in its Series G funding round).

It was also announced that Berkshire Hathaway will invest $573 million in the Snowflake IPO, which is likely to have a big positive impact on this IPO, especially among the value-oriented investors globally. Salesforce.Com Inc (CRM US)also plans to invest $250 million in the Snowflake IPO. The private placement investments by Berkshire Hathaway and Salesforce.com will be equal to the IPO price. For Berkshire Hathaway, it plans to purchase 3.125 million new shares of the company’s Class A common stock (assuming $80 per share, this would represent $250 million) and an additional 4.042 million shares of the company’s Class A common stock from one of the existing shareholders (assuming $80 per share, this would represent $323 million).

Our valuation analysis suggests an EV of $37.1 billion, a market cap of $40.4 billion, and a target price of $145 per share for Snowflake. The IPO price range is from $75 to $85 per share and assuming the IPO is completed at the high end of the IPO price range, our target price would represent a 70% upside to this price level. We used fully diluted shares outstanding of 278.8 million post IPO and this resulted in a target price of $145 per share. Given the strong upside, we would take this IPO deal. In fact, we are including Snowflake in our model portfolio.

Softbank Group – Funding Secured by Masayoshi Musk?

By Mio Kato

The Japanese language Nikkei had an article out yesterday after the close discussing the possibility of a Softbank MBO. Of course, with Softbank you really never know, but to us this smells like an attempt to drive a short squeeze. We discuss why below.

Huazhu HK Secondary Listing – Needs the Money but Looks Toppish

By Sumeet Singh

Huazhu Group (HTHT US) plans to raise around US$900m in its secondary listing in Hong Kong.

I have covered the background of the deal in my earlier note, Huazhu HK Secondary Listing – Early Look – Needs the Cash More than Most Secondary Candidates.

In this insight, I’ll talk about the deal dynamics and what to do with the ADR while waiting for the completion of the Hong Kong listing.

Allied Props (56 HK). Stalled At The Finish

By David Blennerhassett

Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  The Scheme Doc was despatched on the 19 June. The Court Meeting was held on the 15 July and the resolutions to approve the Scheme was approved. Shares continue to trade until the 14 August (inclusive). Cheques were supposed to be despatched on or before the 8 Sept.

Then something went awry. 

The sanctioning of the Scheme has now thrice been delayed by the High Court. At the last session on the 7 September, submissions from APL were made to the Court “whether the Scheme was approved by a majority in a number of APL Shareholders present and voting in person or by proxy at the Court Meeting“.

Huh? The headcount test doesn’t apply to Hong Kong-incorporated companies like APH.

As always, more below the fold.

(Shares are currently suspended, so there is no trade here. Look away now if this is not your thing – it will save you time).

Before it’s here, it’s on Smartkarma