Daily BriefsMost Read

Most Read: Asian Sea, Milton Corp Ltd, West Japan Railway Co, Lifestyle Communities, Bharti Airtel and more

In today’s briefing:

  • Smartkarma Corporate Webinar | Asian Sea: Pet Food and Frozen Sustainable Growth Drivers
  • Marvelous Milton Merger Mapping Mabbled: Ratio Done, Now For The Hard Part
  • JR West (9021 JP) New Issue: Index Implications
  • ASX100/200/300 Sep21 Index Rebalance: Some Surprises In Here + Same Way Flow
  • Bharti Airtel Partially Paid Rights Situation

Smartkarma Corporate Webinar | Asian Sea: Pet Food and Frozen Sustainable Growth Drivers

By Smartkarma Research

For our next Corporate Webinar, we are glad to welcome the CFO of Asian Sea (ASIAN TB), Akamon Prasoppolsujarit, and the CFO of Asian Alliance International, Varanratch Assanupong.

Asian Sea has been in the food manufacturing industry for over 40 years and distributes to customers around the world. Asian Sea continuously expanded and developed from a family-owned business to a listed company on the Stock Exchange of Thailand (SET) using the symbol “ASIAN”. ASIAN currently has four segments – Frozen Food, Pet Food, Tuna, and Aquaculture Feed.

In this upcoming webinar, Akamon and Varanratch will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Insight Provider Angus Mackintosh. This will be followed by a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 24 August 2021, 17:00 SGT

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Marvelous Milton Merger Mapping Mabbled: Ratio Done, Now For The Hard Part

By Travis Lundy

On 2 September at 7pm Australia time, the Marvelous Milton Merger Arb ratio was fixed, and just now it was announced

The ratio of Milton Corp Ltd (MLT AU) shares to Washington H. Soul Pattinson and Co. Ltd (SOL AU) shares has been decided at 0.1863. Entitlements will be rounded up or down to the nearest share.

Those who have been following on my model would have the NAV at A$5.622 on 2 Sep at the close, or A$5.702/share including the A$0.08 of dividend which went ex- on August 31. That delivered me a number of 0.1864 but they started with A$5.70 rather than A$5.702.

As reported in the AFR, both major proxy services came out in favor of the deal saying advantages outweighed disadvantages, and noting the IE’s “fair value” range said pricing was appropriate; in a good quote from the article, “there were no stones thrown”, which usually results in an approval at the Scheme Meeting.

The schedule reported in the filing is unchanged from the schedule in the Scheme Booklet.

Today’s announcement means the merger trade is “fixed” rather than floating and now the remaining “risks” are…

  • a small and eminently arb-able risk arb spread (which is 3.56% less comms and borrow fees as I type (excluding any franking credit benefit)
  • the risk of whether this gets voted through at the Scheme Meeting on the 13th, and
  • the index impacts

There is, as always, more below the fold.

JR West (9021 JP) New Issue: Index Implications

By Brian Freitas

On 1 September, West Japan Railway Co (9021 JP) announced an issuance of new shares and a secondary offering of shares amounting to US$2.7bn to fund strategic initiatives of the company and strengthen the financial position of the company.

A maximum of 52.667m shares will be issued and the price of the new issue and secondary placement will be determined between 13-15 September while settlement will take place between 20-23 September.

The current offering only covers 20% of the company’s bonds and loans outstanding and there could be more equity offerings if the COVID19 situation does not ease up significantly in the near future permitting the company to resume normal operations.

West Japan Railway Co (9021 JP) has underperformed its peers over the last 20 months and trades cheaper to the average of its peers.

Following the price drop yesterday and the passive buying that will emerge from the increased number of index shares, the stock could rebound in the near future.

The equity offering will increase the number of issued shares and the free float of the stock and will require MSCI, FTSE and Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) passive trackers to buy stock. This will provide near-term support for the stock with around 30% of the issue being bought up by passive trackers.

West Japan Railway Co (9021 JP) may be the first among its peers to raise additional capital and there could be more offerings from some of the other companies in the same sector.

ASX100/200/300 Sep21 Index Rebalance: Some Surprises In Here + Same Way Flow

By Brian Freitas

Post market close today, S&P Dow Jones Indices announced the list of changes to the S&P/ASX 200 (AS51 INDEX), S&P/ASX 100 and S&P/ASX 300 indices as part of the September index review that will be effective after the close of trading on 17 September.

For the S&P/ASX 100, Virgin Money Holdings Uk (VM/ LN) (VUK AU) has been added , while Boral Ltd (BLD AU) and Beach Energy (BPT AU) have been deleted.

For the S&P/ASX 200 (AS51 INDEX), there are four inclusions: Pinnacle Investment Management (PNI AU), Tyro Payments (TYR AU), Sealink Travel (SLK AU) and Lifestyle Communities (LIC AU), and there are four deletions: Nuix Limited (NXL AU), Westgold Resources (WGX AU), NRW Holdings (NWH AU) and G8 Education (GEM AU).

For the S&P/ASX 300, there are 13 inclusions and 9 deletions. The inclusions are Imugene Ltd (IMU AU), Paladin Energy (PDN AU), Liontown Resources (LTR AU), BetMakers Technology Group (BET AU), Novonix Ltd (NVX AU), Dubber Corp Ltd (DUB AU), Johns Lyng (JLG AU), Strike Energy (STX AU), Australian Strategic Materials (ASM AU), HomeCo Daily Needs REIT (HDN AU), PPK Group Ltd (PPK AU), Sezzle (SZL AU) and Vulcan Energy Resources Ltd (VUL AU). The deletions are Medical Developments International (MVP AU), Humm Group (HUM AU), Synlait Milk (SML NZ) (SM1 AU), Integrated Research (IRI AU), MACA Ltd (MLD AU), Jupiter Mines (JMS AU), Alkane Resources (ALK AU), Avita Medical (AVH AU) and Bubs Australia (BUB AU).

There is quite a lot of volume to trade on quite a few of the stocks across the FTSE GEIS and FTSE EPRA Nareit indices and there will likely be some big moves over the next couple of weeks.

Bharti Airtel Partially Paid Rights Situation

By Travis Lundy

After the relative success of last year’s Partially Paid Rights Offer conducted by Reliance Industries (RIL IN) discussed in basics in The Reliance Industries [RIL] Rights Offering then in gory detail in Reliance Rights Offer Detailed – Big. $7bn Big. And Interesting, Bharti Airtel (BHARTI IN) has decided to conduct a Partially Paid Offering of its own. 

Bharti Airtel, of course, also raised money in a 19 for 67 rights offering in May 2019 followed by a straight equity raise announced in December 2019 and executed in January 2020. 

On 30 August, Bharti Airtel announced that its board had met and approved a Rights Issue to fully-paid up shares which works with a construct called Partially Paid Shares. 

There are no details yet for the issue period, trading period, and record date but what we do know is that investors

  • will get 1 Right for every 14 Shares held
  • will be entitled to purchase 1 Share at Rs 535/share (vs ~Rs 620/share on the 30th of August) for every Right (or Rights Entitlement (“RE”)) that they receive
  • will only have to put up 25% of the funds in the initial stage (i.e. 25% of Rs 535 or Rs 133.75/share), then there will be subsequent capital calls over the following 36 months (vs 18 months for the Reliance version of the same.
  • will be able to subscribe for over-allotments to take up the rights of those who let theirs lapse.

When will we know all the other important things like record date, trading period, etc?

I expect it may not take long.

Last year’s Reliance Rights Entitlement to Partially Paid Shares saw the announcement on 30 April, with more details on the 13th of May 2020 and a record date the 14th, more details on Friday the 15th, then full details out on Sunday the 17th of May with Rights Issue Opening Date on the 20th of May, 6 days after Record Date. 

These Rights Entitlements situations are funkier than people think. And while they are going to be a tiny portion of one’s portfolio, at receipt, there are some really cool aspects.

As always, there is more below the fold. 

Before it’s here, it’s on Smartkarma