Daily BriefsMost Read

Most Read: Ping An Insurance (H), Japan Post Holdings, WH Group, MatsukiyoCocokara, PHC Holdings and more

In today’s briefing:

  • Ping An A/​H: Discount Turns to a BIG Premium
  • Japan Post – Post Office Business Delivers a Perfect Setup
  • WH Group (288 HK) Now Cheapest Vs Peers in Yonks
  • MatsuKiyoCocokara Merged – Interesting Implications Indeed
  • PHC Holdings IPO Trading – Needs to Start Acting like One Company to Move Higher

Ping An A/​H: Discount Turns to a BIG Premium

By Brian Freitas

The Ping An A-shares Ping An Insurance Group Co Of China (601318 CH) are trading at a 11% premium to the H-shares Ping An Insurance (H) (2318 HK). This continues the cycle of premiums and discounts going back to 2015.

The last time the A-shares traded at a premium this large to the H-shares was in December last year. By mid to late January, the A-shares were trading near parity versus the H-shares.

With Ping An Insurance Group Co Of China (601318 CH) trading at a 11% premium to Ping An Insurance (H) (2318 HK) the risk/reward is favourable to setting up a premium contraction trade. The current premium lies at the 95th percentile over the last 5 years and the premium has widened faster than that of the HSAHP Index.

Northbound and Southbound Stock Connect holdings of Ping An Insurance Group Co Of China (601318 CH) and Ping An Insurance (H) (2318 HK) have dropped sharply over the last couple of months, though there has been an uptick over the last couple of weeks.

In this Insight, we look at the historical premium for Ping An and compare it to the premium on the AH index and other large caps, and look at some catalysts that could lead to an contraction of the premium.


Japan Post – Post Office Business Delivers a Perfect Setup

By Mio Kato

As Japan Post Holdings’ government sell-down to the magic 33.4% mark gets underway, we examine the prospects for the stock once this major overhang is out of the way. We begin by examining the actual post office and logistics businesses.


WH Group (288 HK) Now Cheapest Vs Peers in Yonks

By Travis Lundy

Post WH Group Tender Offer buyback, there is a fair bit of good news. 

  • A month ago, WH Group (288 HK) was near its cheapest vs peers in years on a forward earnings basis.
  • Lean hog prices are finally making a rebound in China after a multi-month cull and NDRC intervention
  • Hog prices in the US remain strong-ish. 
  • Forward earnings estimates are up. 

But since the strength in WH Group shares immediately post-tender, when people sold the overhang, the stock has fallen sharply. HK and China-listed peers are up an average of 15% in the past month while global-listed peers are down 4%. WH Group resembles a mix of those two baskets but is down 12% in the same period vs +5% for an equal-weighted basket.

The shares are now scraping on 4-year lows despite recent 15% accretion, and on an accretion-adjusted basis have underperformed by 30% in bit over a month. 

That is probably overdone.


MatsuKiyoCocokara Merged – Interesting Implications Indeed

By Travis Lundy

Nearly 21 months after starting talks to merge when a rival had made a bid for Cocokara Fine (3098 JP), Cocokara and Matsumoto Kiyoshi Holdings (3088 JP) announced a merger in February 2021 which undervalued Cocokara, to the chagrin of my earlier ratio guesstimates and activist investors disappointed with how cheaply Matsumoto Kiyoshi acquired control. 

I discussed the merger in MatsukiyoCocokara & Co – The Merger and then MatsuKiyoCocokara Merger and Implied Forward Forecasts then the activist noise in Matsukiyo-Cocokara Situation Gets Its Activist Noise Started. The activist noise – as expected in this case – came to nothing, but the shares gained, lost ground, and have since regained some ground as the merger date came closer. The two companies merged and became Matsumotokiyoshi Holdings Co., Ltd. (3088 JP).

I was, at the time, quite bullish on the prospects for the combined entity. And there were interesting events to come, associated with the deal. The stock has done well-ish.

I think that is not the end of the story. There is more to come.

More below the fold. 


PHC Holdings IPO Trading – Needs to Start Acting like One Company to Move Higher

By Sumeet Singh

PHC Holdings and its shareholders raised around US$645m, via selling a mix of primary and secondary shares in its Japan IPO. The company is backed by KKR (48.7% stake pre-listing), Mitsui (21.5%), Life Science Institute (13.4%) and Panasonic (11.5%).

We have covered the various aspects of the deal in our earlier notes:

Before it’s here, it’s on Smartkarma