In today’s briefing:
- Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved
- Orica (ORI AU): Acquisition and Equity Raise to Result in Passive Inflows
- AMTD Digital: The Biggest Bubble in 2022
- Orica Offering – Concentrated Active Holder Base Means Over-Raise Should Be OK – Index Implications
- BABA HK New Low Target Then Buy
- ResApp (RAP AU): Pfizer Bumps Offer
- Orica Limited Placement – Accretive Acquisition Coupled with Strong Momentum
- GIC Buying in LG Energy Solution? According to Hankyung
- TOPIX Inclusions: Who Is Ready (Aug 2022)
- Yashili: 16th August EGM To Vote On Three SPAs
Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved
- The data is largely unchanged since the Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out set of predictions published 15 days ago.
- The consultation results are out. They are as expected too. This has the hallmarks of a VERY well-signalled trade. But it’s a biggie. The funding trade alone is ¥600bn.
- Because of the data, market conditions, and the variability of choice at the edges, I believe that warrants particular strategy.
Orica (ORI AU): Acquisition and Equity Raise to Result in Passive Inflows
- Orica Ltd (ORI AU) have announced a fully underwritten A$650m institutional share placement at a price of A$16/share to fund the acquisition of Axis Mining Technology.
- Orica Ltd (ORI AU) are using the recent strength in the stock price to raise A$282m more than needed for the acquisition.
- The offering should result in an intra-quarter increase in shares in the MSCI, FTSE and S&P/ASX indices that should result in buying of 6.75m shares from passive trackers.
AMTD Digital: The Biggest Bubble in 2022
- AMTD Digital is the biggest bubble of 2022, which is ready to pop. AMTD Digital provides digital solutions platform in Asia.
- AMTD Digital currently has a market cap of US$371 billion (US$2,002 per ADS share) (as of 1:40PM NYC time). The company’s market cap is more than JPMorgan Chase & Co.
- No doubt, AMTD Digital is the biggest bubble in 2022 and the bursting of this huge bubble will also devastate (mostly) retail investors in the US.
Orica Offering – Concentrated Active Holder Base Means Over-Raise Should Be OK – Index Implications
- Orica Ltd (ORI AU) is launching an institutional offering of shares today to fund the purchase of Axis Mining Technology to expand the Digital [Mining] Solutions offering.
- Orica has launched an equity offering of >2x the size of the takeover (adds A$280mm of working capital). Both acquisition and placement are expected to be accretive in Year1.
- There will be a separate SPP on the follow. Expect this to be well-received and expect “fast money” to be rebuffed. There is significant passive buying to do.
BABA HK New Low Target Then Buy
- BABA HK is following Tencent’s path and pattern to new lows as BABA is pressing on pattern support after completing a counter trend rally and dual top (120).
- 100 near resistance and sell zone for a test on 80. New low projections at 66 and 60. Bear pressure to resume after an uptick attempt.
- On a new low the macro picture will begin to show bull divergence/support for a bullish Q4.
ResApp (RAP AU): Pfizer Bumps Offer
- ResApp Health (RAP AU) has entered into an amended and restated Scheme Implementation Deed concerning a proposed takeover by Pfizer Inc (PFE US).
- After a sensitivity/specificity cough trial fell short of a March pilot study, Pfizer Offered A$0.146/share on the 21 June. Shares have traded wide to terms since on possible retail pushback.
- The revised consideration of $0.208/share matches the preferred value and within the assessed value range of $0.146 – $0.279/share determined by the Independent Expert’s Report on 14 July 2022.
Orica Limited Placement – Accretive Acquisition Coupled with Strong Momentum
- Orica Ltd (ORI AU) is looking to raise US$450m (~A$650m) from issuing 40.6m primary shares at a 7% fixed discount to its last close.
- The proceeds will be used to fund the acquisition of Axis Mining Technology and the firm’s working capital needs.
- The deal is relatively large one to process, representing 22.3 days of three month ADV and 9.2% of current mcap.
GIC Buying in LG Energy Solution? According to Hankyung
- Hankyung, published an article that GIC (the Government of Singapore Investment Corp) is in the process of buying a stake in LG Energy from LG Chem.
- Hankyung is one of the two most well-established economic daily newspapers in Korea, along with Maekyung. So, we must see that this article has considerable credibility.
- GIC will likely close the deal before an additional passive flow event kicks in. LG Chem is also highly likely to prefer to close the deal as soon as possible.
TOPIX Inclusions: Who Is Ready (Aug 2022)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- In this insight, I have defined six key Segment Transfer requirements which prove to be decisive in this process.
- At present, there are 51 names that satisfy all of these conditions and there are more names that are close to being that group.
Yashili: 16th August EGM To Vote On Three SPAs
- On the 6 May, Yashili International Holdings (1230 HK) announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
- Pre-Conditions concern three sales and purchase agreements, including Danone selling, and Mengniu acquiring 25% of Yashili at HK$1.20/share. A 16 August EGM will enable shareholders to vote on the SPAs.
- Assuming the SPAs are approved, Mengniu will make an Offer at HK$1.20/share, a 161% premium to the undisturbed price.
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