In today’s briefing:
- CATL (300750 CH): Index Inclusion as Potential Listing Nears
- Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light
- [Japan M&A] NTT (9432) Overpays To Buy Out NTT Data (9613) Minorities
- East Buy Holdings (1797 HK): Potential KWEB Deletion in June
- Goldlion Holdings (533 HK): 9th May Vote On Tsang Family’s Offer
- SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- [Japan Activism] ISS Comes Out Supporting Orbis Against Tsuruha/Welcia Merger Ratio
- StubWorld: Geely Is (Mostly) Trading “Rich”; And May Still Bump Zeekr Terms
- Green Tea Group IPO – Peer Comp & Thoughts on Valuation
- HEW: Doves Disappointed By Patience
CATL (300750 CH): Index Inclusion as Potential Listing Nears
- Reports continue to indicate a US$5bn raise for CATL H-shares with a discount of up to 10% to CATL (300750 CH) and with cornerstone investors taking up half the deal.
- The company is currently gauging investor demand. The IPO could open next week and the H-shares could list later this month.
- Index Fast Entry largely depends on the cornerstone investor allocation. Float higher than 50%/60% is required for Fast Entry to global indices.
Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light
- Full circulation implementation at the beginning of April derailed Laopu Gold (6181 HK)‘s chances of global index inclusion in May.
- The company has now launched a US$300m primary placement that will significantly improve chances of inclusion in the same global index in August.
- Laopu Gold (6181 HK) will also be added to another global index in September, so there are a few index inclusions likely for the stock this year.
[Japan M&A] NTT (9432) Overpays To Buy Out NTT Data (9613) Minorities
- Pre-Open, we got a Nikkei article which suggested four different prices possible. We got something in the middle. I think NTT is probably overpaying here.
- There is a fair bit of transparency in the documents and valuation. That is encouraging. There are no synergies counted in the fair calculations. That is discouraging.
- This will not trade like a “normal” Japan risk arb situation. There will be nuances.
East Buy Holdings (1797 HK): Potential KWEB Deletion in June
- East Buy Holding (1797 HK) was deleted from the Hang Seng TECH Index in March and could be deleted from the KraneShares CSI China Internet ETF (KWEB US) in June.
- There are other ETFs that track the same index (and similar indices), and those trackers will be selling East Buy Holding (1797 HK) too.
- There has been some short covering in the stock recently, but short interest is pretty high as a percentage of float. Watch out for short covering that offsets passive selling.
Goldlion Holdings (533 HK): 9th May Vote On Tsang Family’s Offer
- On the 17th December 2024, Goldlion Holdings (533 HK), an apparel manufacturer/distributor, announced an Offer, by way of a Scheme, from the Tsang family (2.95% stakeholder), for shares not held.
- The Tangs are offerings $1.5232/share (declared final), a 24.85% premium to last price, but a 71% premium to undisturbed. Despite the very low price-to-book multiple, this transaction looks done.
- The Scheme Doc is now out, with a Court Meeting on the 9th May, with payment on or before the 10th July. The IFA (Altus Capital) says “fair & reasonable“.
SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- With the review period complete, there could be two changes for the S&P BSE SENSEX Index (SENSEX INDEX) at the June rebalance.
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are high probability inclusions while Indusind Bank (IIB IN) and Nestle India (NEST IN) are high probability deletions.
- Indusind Bank (IIB IN) is also a potential NIFTY Index (NIFTY INDEX) deletion in September and there will be continued pressure on the stock.
[Japan Activism] ISS Comes Out Supporting Orbis Against Tsuruha/Welcia Merger Ratio
- Large Tsuruha Holdings (3391 JP) investor Orbis Investments last month said they were against the Tsuruha/Welcia merger ratio. They wanted a cash takeover above Aeon’s Oasis buy price from 2024.
- Influential shareholder proxy advisor ISS has apparently come out recommending shareholders vote against. That’s a start, but the hard work needs to be Orbis talking to domestic passive managers.
- Getting 90% of foreign active managers as of end-February would make it a very close-run thing, but Orbis really needs some more to show up against the ratio.
StubWorld: Geely Is (Mostly) Trading “Rich”; And May Still Bump Zeekr Terms
- Geely Auto (175 HK)‘s discount to NAV is less than half its 12-month average. And Geely is generally trading tighter to listed PRC auto peers.
- Preceding my comments on Geely – and NTT Data Corp (9613 JP) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Green Tea Group IPO – Peer Comp & Thoughts on Valuation
- Green Tea Group (GTG) is looking to raise US$157m (HKD 1.2bn) in its upcoming Hong Kong IPO.
- GTG is the fourth largest Casual Chinese Cuisine player in Mainland China, it has been gaining market share historically and is likely to continue.
- GTG plans to accelerate its expansion of the restaurant network, focusing on expansion into tier two cities and below, with small restaurants rather than large ones.
HEW: Doves Disappointed By Patience
- The BoE and Fed decisions disappointed dovish hopes for action by sensibly waiting to see some signs that easing is appropriate. Caution reduces the risk of a policy mistake.
- Inflation in the US, plus unemployment and GDP in the UK, are the scheduled economic highlights for us next week. The UK data may prove more resilient than feared again.
- An absence of bad news can allow the good vibes to keep flowing from recent resilient data and trade policy progress, but investors seeking to sleep easy may wish to hedge.
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