In today’s briefing:
- ENN Energy (2688 HK): ENN Natural Gas’ Preconditional Cash/Scrip Offer
- ENN Energy (2688 HK) Privatization: Details & Index Implications
- Shinko Electric (6967) – Chicken and Logistics
- Domain (DHG AU): CoStar’s A$4.20/Share NBIO
- NIO HK Placement – Lots of Reasons to Avoid and Only One to Invest
- Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN
- FSS Surprisingly Halts Hanwha Aerospace’s Rights Offering Capital Raise Temporarily
- US Tariffs: No Fooling!
- The Hidden Play in Hanwha’s Noisy Stake Reshuffling: Hanwha Corp’s Rights Issue
- A/H Premiums and past A/H Listings Performance Data – Mixed Results but Size Matters
ENN Energy (2688 HK): ENN Natural Gas’ Preconditional Cash/Scrip Offer
- ENN Energy (2688 HK) announced a pre-conditional privatisation from ENN Natural Gas (600803 CH)/ENN-NG comprising HK$24.50 cash per share + 2.9427 ENN-NG H Shares per ENN share.
- The appraised offer value is HK$80.00 (HK$82.35, including the 2024 dividend), which is a tad optimistic. My calculations suggest a realistic offer value range of HK$71.47-76.32.
- The offer is final. The precondition satisfaction is low-risk. A high AGM minority participation is a risk, but the scheme vote should pass as the offer terms are reasonable.
ENN Energy (2688 HK) Privatization: Details & Index Implications
- ENN Natural Gas has made a pre-conditional proposal to privatise ENN Energy (2688 HK). For each ENN share, shareholders will receive 2.9427 ENN Natural Gas shares and HK$24.5 in cash.
- The ENN Natural Gas H-shares will be listed on the HKEX. The value received by ENN Energy shareholders depends on ENN Natural Gas stock performance and the H-share discount.
- The ENN Natural Gas (600803 CH) H-shares are likely to replace ENN Energy (2688 HK) in global indices and the Hang Seng Index (HSI INDEX).
Shinko Electric (6967) – Chicken and Logistics
- The Tender Offer closed end of last week. The bidder JICC-04 got 59.281mm shares. Most of what was left over – perhaps even more than 100%, was passive-owned.
- More than 100%? How does that work? It works because of how the logistics goes.
- And right now, the reason why the stock is trading well through terms is a matter of Chicken and Logistics.
Domain (DHG AU): CoStar’s A$4.20/Share NBIO
- Domain Holdings Australia (DHG AU), Australia’s number two player in the online real estate market, has announced a non-binding proposal, by way of a Scheme, from CoStar Group (CSGP US).
- CoStar is offering A$4.20/share, in cash. A A$0.02/share dividend declared on the 13th Feb will be added (but now ex). CoStar also acquired 16.9% of shares out, also at A$4.20/share.
- Domain is 60% owned by Nine Entertainment Co Holdings (NEC AU), and has been known to be scoping out a buyer. A firm offer will require FIRB to sign off.
NIO HK Placement – Lots of Reasons to Avoid and Only One to Invest
- NIO (9866 HK) is looking to raise around US$450m via a primary placement in Hong Kong.
- The shares haven’t done much this year or ever since they were listed.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN
- Hugely cash-rich Cookpad Inc (2193 JP) wouldn’t hit my radar except for two things. 1) it was the target of Melco Holdings (6676 JP) chairman Maki-san a few years ago…
- And 2) they did a huge buyback last year which pumped up the stock very bigly.
- Maki-San appears long gone from the shares, but now they are doing another big buyback. Just as bigly. But there are new nuances this year.
FSS Surprisingly Halts Hanwha Aerospace’s Rights Offering Capital Raise Temporarily
- After the market close on 27 March, the Financial Supervisory Service (FSS) surprisingly announced a temporary halt to the 3.6 trillion won rights offering capital raise of Hanwha Aerospace.
- The FSS has requested a correction report to the massive paid-in capital increase securities report submitted by Hanwha Aerospace on 20 March.
- While there could be a short term pop to Hanwha Aerospace’s stock tomorrow, we continue remain negative on Hanwha Aerospace over next 1 year mainly due to its stretched valuations
US Tariffs: No Fooling!
- The announcement of individual reciprocal tariff rates for US trading patterns on 2 April is a significant event for investors.
- This announcement is part of a drive to re-industrialise America.
- Despite its significance, this could merely represent the initial stages of a prolonged trade war.
The Hidden Play in Hanwha’s Noisy Stake Reshuffling: Hanwha Corp’s Rights Issue
- Hanwha Corp’s chances of raising 1T KRW without a capital call are slim, likely channeling Hanwha Energy’s 1.3T KRW into Hanwha Corp intead of Hanwha Aero.
- A shareholder-allotted rights issue from Hanwha Corp looks likely, and with short-selling resumption, it sets up a clean arbitrage play with low risk before the official announcement.
- Timing is key—Hanwha’s using debt for now, but likely won’t delay long. Expect Hanwha Corp’s rights issue to follow Hanwha Aero’s, probably between June and July.
A/H Premiums and past A/H Listings Performance Data – Mixed Results but Size Matters
- Given the slew of A/H offerings in the Hong Kong IPO pipeline, in this note, we talk about the overall A/H premiums currently.
- We also had a quick look at the past A/H listing performance, including subscription rates and A/H premiums at the time of listing.
- Overall, most of the A/H listings haven’t done much in the near term, with a few exceptions.
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