In today’s briefing:
- CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- CATL (3750 HK): Reassessing Index Fast Entry; Need Overallotment Exercised by Tomorrow
- KOSDAQ150 Index Rebalance Preview: Announcement Around the Corner
- Mayne Disagrees With Cosette On MAC
- [Japan M&A] Seven Bank (8410) – Seven & I Selldown, Itochu Buy-In, Not on My Bingo Card But Not Bad
- CATL (3750 HK): The Tail Wags the Dog
- Mayne Pharma (MYX AU): A Case of Buyer’s Remorse
- SET50 Index Rebalance Preview: Capping DELTA & Constituent Changes
- UK Inflation Flies Hawkish Pressures
- [Japan M&A] Shibaura in Limbo – “Neutral” On Minebea And “Reserves Opinion” On YAGEO Bid, Waiting…
CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
- CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.
CATL (3750 HK): Reassessing Index Fast Entry; Need Overallotment Exercised by Tomorrow
- CATL (3750 HK) is trading at a 6.9% premium to Contemporary Amperex Technology (CATL) (300750 CH) – if that is due to expectations of Fast Entry, that premium could drop.
- CATL (3750 HK) has not announced the overallotment option as exercised and that puts Fast Entry at risk. An announcement prior to the close tomorrow could lead to Fast Entry.
- The earliest inclusion could be at the close on 30 May while the other global index inclusion looks likely in December.
KOSDAQ150 Index Rebalance Preview: Announcement Around the Corner
- With the review period for the June rebalance complete, we highlight 11 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX).
- The estimated impact on the potential inclusions ranges from 0.2-7.5 days of ADV while the impact on the potential deletions varies from 0.2-5.8 days of ADV.
- The forecast adds have outperformed the forecast deletes over the last 6-7 months with a big move higher in the last month. Trim positions into strength.
Mayne Disagrees With Cosette On MAC
- As widely speculated, Cosette asserted to Mayne Pharma (MYX AU) on the 17th May a Material Adverse Change (MAC) has occurred.
- Mayne disagrees, and views the pre-requisites for a MAC, as defined in the SID, have not been established.
- What now? The Scheme is not terminated. Both parties remain in consultation. If those talks are not satisfactory (say, a price reduction [my guess]), Cosette said it will walk.
[Japan M&A] Seven Bank (8410) – Seven & I Selldown, Itochu Buy-In, Not on My Bingo Card But Not Bad
- Seven Bank Ltd (8410 JP) has been the ugly duckling of Japan e-banks since it got competition in the form of Rakuten Bank (5838) and SBI Sumishin (7163).
- Last year, it was posited, and then confirmed, that Seven & I Holdings (3382 JP) wanted to sell down to de-consolidate. NTT Docomo wanted to buy a bank.
- I thought it a good match but no deal has been done. So now we get a different deal – it’s weird for Itochu, but bodes well for Seven Bank
CATL (3750 HK): The Tail Wags the Dog
- The buying in Contemporary Amperex Technology (3750 HK) over the last couple of days has dragged Contemporary Amperex Technology (CATL) (300750 CH) higher as the arbs trade the AH spread.
- The Fast Entry into a global index could keep CATL (3750 HK) supported over the next few trading days, but reality will take hold pretty soon.
- Short CATL (3750 HK) / long CATL (300750 CH) offers great risk/reward, while an outright CATL (3750 HK) short offers higher return albeit at a much higher level of risk.
Mayne Pharma (MYX AU): A Case of Buyer’s Remorse
- Mayne Pharma (MYX AU) disclosed that Cosette asserts that a material adverse change has occurred due to its trading performance, litigation and FDA untitled letter.
- Cosette has not quantified the impact, and Mayne disputes the assertion. Mayne’s trading performance is likely the largest contributor to Cosette’s MAC-related claims.
- Precedent schemes suggest a lower offer is the best-case scenario. An unwilling bidder looking for angles, contractually, to exit suggests the likely outcome is a scheme termination.
SET50 Index Rebalance Preview: Capping DELTA & Constituent Changes
- With 8 trading days left in the review period, we forecast 3 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in June.
- Capping changes for Delta Electronics Thailand (DELTA TB) will result in big passive selling in the stock and funding inflows for the other index constituents.
- The forecast adds have drifted lower over the last 6 months and outperformed the SET 50 Index while the deletes have dropped a lot and underperformed the index.
UK Inflation Flies Hawkish Pressures
- Our above-consensus forecast was exceeded by UK inflation flying higher in April amid administered price rises and postponed price increases due to the late Easter in 2025.
- Airfares still soared 10pp more than the norm for a late Easter, and 20pp above the April average. This stoked service and core inflation, although the median was steadier.
- We expect inflation to grind up until October, whereas the consensus assumes stability until then. Persistently excessive inflation should discourage the BoE from cutting again.
[Japan M&A] Shibaura in Limbo – “Neutral” On Minebea And “Reserves Opinion” On YAGEO Bid, Waiting…
- Yageo Corporation (2327 TT) approached Shibaura Electronics (6957 JP) for a takeover at ¥4300. Shibaura dismissed them and asked Minebea Mitsumi (6479 JP) to overbid. They did at ¥4500.
- Then Yageo overbid Minebea at ¥5400, who then overbid Yageo at ¥5500, who then re-overbid at ¥6200. Despite not having its FEFTA Approval in place, YAGEO overbid and launched.
- The Minebea CEO objected. We don’t know status. Now the Shibaura Special Committee has paused, supporting but not recommending the Minebea bid and Neutral on Yageo. We are in limbo.
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