In today’s briefing:
- Ganfeng Lithium (1772 HK): Global Index Inclusion, Outperformance & The A/H Trade
- Mandarin Oriental (MAND SP): Jardine Matheson’s Attractive Scheme Offer
- Final Samsung Electronics Stake Sale: Overhang Risk, Control Optics, & Clean Pref Reversion Trade
- Kioxia (285A JP): Toshiba Selling Leads to Passive Buying & Removes Overhang
- Block Deal Sale of 1.7 Trillion Won Worth of Samsung Electronics
- Barito Renewables Energy (BREN IJ): Potential Index Inclusion in Nov (Finally?)
- Zijin Mining – Structural Re-Rate Underway; Q3 Results Validate Copper–Gold Flywheel + Spin Unlock
- Mandarin Oriental (MAND SP): Matheson’s Full Offer
- Merger Arb Mondays (20 Oct) – ENN Energy, Joy City, Kangji, Mandarin, Soft99, Mandom, Makino
- Sany Heavy (6031 HK) IPO: Big Cornerstone Allocation to Delay Global Index Inclusion
Ganfeng Lithium (1772 HK): Global Index Inclusion, Outperformance & The A/H Trade
- Ganfeng Lithium (1772 HK)‘s stock price has surged over the last 6 months, and the higher free float market cap should result in global index inclusion in November.
- Ganfeng Lithium (1772 HK) has outperformed its peers and is trading at higher valuations on most metrics. Tianqi Lithium (9696 HK) is trading a lot cheaper.
- The Jiangxi Ganfeng Lithium (002460 CH) / Ganfeng Lithium (1772 HK) premium has drifted lower and there could be a move higher as we near index inclusion.
Mandarin Oriental (MAND SP): Jardine Matheson’s Attractive Scheme Offer
- Mandarin Oriental International (MAND SP) disclosed a privatisation offer from Jardine Matheson Holdings (JM SP) at US$3.35 (US$2.75 cash + US$0.60 special dividend), a 39.6% premium to the last close.
- The special dividend represents the majority of the proceeds from the sale of the top thirteen floors of One Causeway Bay (OCB) to Alibaba and Ant Group for US$925 million.
- The offer is final. The scheme is conditional on the completion of the OCB sale and Mandarin shareholder approval. This is a done deal due to an attractive offer.
Final Samsung Electronics Stake Sale: Overhang Risk, Control Optics, & Clean Pref Reversion Trade
- Near‑term flow looks muted: Shinhan likely drips ~0.3% SO stake into liquid tape, not a block. With ₩2tn daily turnover, market easily absorbs without price shock.
- Top‑holder stake dips 20.14→19.84% post‑sale, but ₩10tn buyback cancels ~1.5ppt float, restoring 20.14%. The 0.3% selldown’s pre‑calculated; no real trading juice, flow impact minimal.
- Inheritance‑tax overhang done, buyback cycle fading. Gov’t pressure plus family’s last selldown point to dividend ramp. Prefs at 23% discount vs 10% target set up clean reversion trade.
Kioxia (285A JP): Toshiba Selling Leads to Passive Buying & Removes Overhang
- Toshiba Corp (6502 JP) has sold over 5% of shares outstanding in Kioxia Holdings (285A JP) over the last month as the stock has run up.
- The increased market cap and higher float should result in index inclusion and passive buying for Kioxia Holdings (285A JP) in November. Then an upweight in another index in December.
- Toshiba Corp (6502 JP)‘s selling could also lead to Kioxia Holdings (285A JP) meeting JPX’s tradable share ratio and removes an overhang for the stock.
Block Deal Sale of 1.7 Trillion Won Worth of Samsung Electronics
- It was reported that Hong Ra-hee, Lee Boo-jin, and Lee Seo-hyun will be selling a combined 1.7 trillion won worth of Samsung Electronics to pay for inheritance taxes.
- This stake sale by the Lee family will represent 0.3% of Samsung Electronics outstanding shares.
- Samsung Electronics still trade at low multiples and its valuations remain attractive. Its recent strategic partnership with OpenAI regarding the Stargate project also remain a major positive catalyst.
Barito Renewables Energy (BREN IJ): Potential Index Inclusion in Nov (Finally?)
- Barito Renewables Energy (BREN IJ)‘s stock price has been buffeted by expectations of index inclusion and then an unwind of that positioning a few times over the last year.
- With selling from some big shareholders, free float appears to have increased to a point where the stock could be added to a global index in November.
- There is also a possibility of being added to another global index in March, but that is a question for the next year.
Zijin Mining – Structural Re-Rate Underway; Q3 Results Validate Copper–Gold Flywheel + Spin Unlock
- Earnings momentum accelerating driven by gold volume +20% and mine margin expansion to 60.6%, supported by disciplined cost control and strong operating cash flow.
- Copper–gold dual exposure provides structural upside with spot torque to Cu ~US$10,800/t and Au ~US$4,200/oz, reinforcing earnings visibility into FY26–27.
- Zijin Gold spin-off unlocks value via clean asset separation, improved capital efficiency, and SOTP rerating potential to HK$41–42/sh under spot scenario.
Mandarin Oriental (MAND SP): Matheson’s Full Offer
- A sale – partial or otherwise – of Mandarin Oriental International (MAND SP)‘s One Causeway Bay (OCB) was always on the cards. But I didn’t see an Offer coming.
- Concurrent with the sale of 13 floors of OCB to Alibaba (9988 HK), Jardine Matheson (JM SP) is seeking to take out MAND’s minorities at US$3.35/share by way of a Scheme.
- That’s a 52.3% premium to undisturbed, and a 53.7% premium to NAV. Unlike the 2021 Jardine Strategic (JS SP) Offer, Matheson is required to abstain from voting on this takeover.
Merger Arb Mondays (20 Oct) – ENN Energy, Joy City, Kangji, Mandarin, Soft99, Mandom, Makino
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mandarin Oriental International (MAND SP), Smart Share Global (EM US), Soft99 Corp (4464 JP), ENN Energy (2688 HK), Mayne Pharma (MYX AU), Dongfeng Motor (489 HK).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Mandom Corp (4917 JP), Humm Group (HUM AU), Seven West Media (SWM AU), Toyota Industries (6201 JP).
Sany Heavy (6031 HK) IPO: Big Cornerstone Allocation to Delay Global Index Inclusion
- Sany Heavy Industry (600031 CH) could raise up to HK$16.35bn (US$2.1bn) in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the already small possibility of Fast Entry inclusion to global indexes.
- Sany Heavy (6031 HK) should be added to Southbound Stock Connect from the open of trading on 24 November following the end of the Price Stabilisation period.
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