In today’s briefing:
- Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?
- Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
- CATL (300750 CH): Index Inclusion Post H-Share Listing
- Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?
- Taiwan: Potential Global Index Changes; Last Review Day Today
- Henlius (2696 HK): Deal Break as HKEx Merger Arb Rulebooks Are Rewritten
- GAPack (468 HK): Now What As XJF’s Offer Gets Up
- Profit Targets for SoftBank Group (9984 JP) After Stargate AI Project Announcement
- Henlius (2696)’s Fail Sets (Another) Bad Precedent
- StubWorld: Sun Corp (6736 JP) Trading Cheap to Cellebrite (CLBT US)
Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?
- You might have to go all the back to Guoco Group Ltd (53 HK)‘s 2012/2013 unconditional cash offer, which was ostensibly blocked by First Eagle AND Elliott Advisors.
- Otherwise, it’s slim pickings. Past Schemes or Tender Offers arguably failed as minorities were simply not supportive. There are exceptions, like Soho China (410 HK) and TCM (570 HK)
- IF LVC wish to remain active in this space/region, they appear to be going about it in a counterproductive way. I still don’t understand why they would want to block.
Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
- The lock-up on KKR HKE ends next week, Kokusai Electric (6525 JP) should be deleted from a global index end-February and could be added to the NKY INDEX in March.
- There has been a buildup of shorts in Kokusai Electric (6525 JP) as the stock has underperformed the Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) by a lot.
- The global index deletion in February could provide an entry point into a long position ahead of the announcement of the Nikkei 225 (NKY INDEX) changes in March.
CATL (300750 CH): Index Inclusion Post H-Share Listing
- Contemporary Amperex Technology (CATL) (300750 CH) has announced plans for an H-share listing with media reports indicating a raise of at least US$5bn. Shareholders have approved the issuance.
- CATL (300750 CH) was designated as a Chinese Military Company earlier this year by the U.S. Department of Defense but is still not on the NS-CMIC list.
- The CATL (300750 CH) H-shares should get Fast Entry to the global indices and iShares China Large-Cap (FXI US) ETF. Inclusion in the HSCEI and HSI will take longer.
Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?
- JIC gave an official statement yesteday about the expected start of its Shinko Electric Industries (6967 JP) Tender Offer. A later-than-expected start has people asking questions.
- It has traded tighter since the SAMR approval news (I warned on 16 Dec it was coming and the next day it closed 6.6% gross).
- Below I discuss the language of the Conditions Precedent which would allow a MAC.
Taiwan: Potential Global Index Changes; Last Review Day Today
- There could be 2 adds and 2 deletes for Taiwan in a global index in February. Today is the last trading day ahead of the CNY holidays.
- Passive trackers will need to trade between US$76m to US$370m of the stocks and impact will vary between 3.2x-7x ADV to trade.
- Shorts are small in the potential adds and there has been short covering recently, while there has been a big increase in shorts for one of the potential deletes.
Henlius (2696 HK): Deal Break as HKEx Merger Arb Rulebooks Are Rewritten
- Shanghai Henlius Biotech (2696 HK) shareholders have voted against Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
- The China Traditional Chinese Medicine (570 HK) and Henlius deal breaks have rewritten the HKEx merger arb rulebook. The Henlius deal break offers several lessons.
- The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares remain vulnerable and could touch HK$15.
GAPack (468 HK): Now What As XJF’s Offer Gets Up
- Shandong Xinjufeng Technology Packaging (301296 CH)‘s (XJF) Offer for Greatview Aseptic Packaging (468 HK) (GAPack) turning unconditional was well telegraphed ahead of yesterday’s first close in light of CCASS movements.
- My bet is China Mengniu Dairy Co (2319 HK), after surprisingly selling below 5%, also tendered.
- With 73.51% now in the bag and the Offer extended to the 4th February, what happens now? What are Jeff Bi and/or Gong Hong’s options?
Profit Targets for SoftBank Group (9984 JP) After Stargate AI Project Announcement
- Softbank Group (9984 JP) went up >10% on Wednesday 22nd of January, after announcing a 500B USD venture with OpenAI and Oracle to build US AI infrastructure
- Based on our model reading, the stock is now overbought, but it could go higher rallying on the current frenzy
- Check the QUANTCHART below to find out how high the stock could go before stalling or pulling back.
Henlius (2696)’s Fail Sets (Another) Bad Precedent
- The question was asked in Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal? Well, now we have one as LVC inexplicably blocked.
- It didn’t appear to make economic rationale for LVC to crash the party – knowing they would do so, and not bother to reduce their position accordingly.
- In tandem with the TCM (570 HK) debacle, it sets another bad precedent for future/existing Hong Kong events. Expect spreads for HK arbs to widen. And Henlius to crater.
StubWorld: Sun Corp (6736 JP) Trading Cheap to Cellebrite (CLBT US)
- Sun Corp (6736 JP) has retraced ~15% in the past month. Its 43.8% stake in Cellebrite (CLBT US) is worth ~186% of its market cap, an all-time high.
- Preceding my comments on Sun Corp 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%.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
