In today’s briefing:
- Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?
- Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?
- Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes Next Week
- Taiwan: Potential Global Index Changes; Last Review Day Today
- Henlius (2696)’s Fail Sets (Another) Bad Precedent
- Korea Zinc: Cross Shareholding Limitation System Loophole
- IDX30/LQ45/IDX80 Index Rebalance: Big Impact in Some Stocks with 4 Days to Implementation
- Shanghai Henlius Biotech (2696 HK) – About the Deal Break and the Valuation Outlook
- [Quiddity Index Jan25] MV Junior Gold Miners Index Mar 25 Rebal: Multiple Adds, 4.4% 1-Way Turnover
- Insignia Financial (IFL AU): Bain Matches CC Capital’s Terms. And Also Afforded DD
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.
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.
Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes Next Week
- Based on prices and turnover from 22 January, there could be one deletion from the index in January. Plus there will be capping and float changes.
- There are four stocks that meet the inclusion criteria, but all are non-pure play companies, and the index is already at the limit of 15 non-pure play companies.
- Estimated one-way turnover is 6.8% resulting in a round-trip trade of US$506m. There are many stocks with multiple days of ADV to trade.
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)’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.
Korea Zinc: Cross Shareholding Limitation System Loophole
- The proxy battle at the EGM for the control of Korea Zinc (010130 KS) is scheduled for 23 January.
- One day prior to the EGM, Korea Zinc’s Chairman Choi is trying to capitalize on the “cross-shareholding limitation system” in order to retain control of the company.
- In our view, it appears that the legal case regarding the cross shareholding limitation system is in favor of MBK/Young Poong alliance.
IDX30/LQ45/IDX80 Index Rebalance: Big Impact in Some Stocks with 4 Days to Implementation
- There are 2 constituent changes for the IDX30 Index, and 3 changes each for the LQ45 Index and IDX80 Index to be implemented at the close on 31 January.
- The largest passive flows are expected in Bank Central Asia, Indosat, Japfa Comfeed Indonesia, Indocement Tunggal Prakarsa, Dayamitra Telekomunikasi, MAP Aktif Adiperkasa, Bank Mandiri Persero, Ciputra Development and XL Axiata.
- With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.
Shanghai Henlius Biotech (2696 HK) – About the Deal Break and the Valuation Outlook
- Lin Lijun voted against the privatization, which is in line with our analysis.Lin and some other long-term investors expressed their “dissatisfaction” by opposing the privatization due to disappointing Cancellation Price.
- Due to deal break, Henlius’ share price could be under pressure in short term.Investors may need to wait until the implementation of biosimilar VBP in 2025 to see situation clearly.
- Despite biosimilar VBP, we remain optimistic about the outlook of Henlius, because its future development positioning will not be limited to just biosimilars, but will focus on internationalization.
[Quiddity Index Jan25] MV Junior Gold Miners Index Mar 25 Rebal: Multiple Adds, 4.4% 1-Way Turnover
- The MV Junior Gold Miners Index represents the performance of small-cap gold and silver mining companies listed around the world.
- This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
- Below we take a look at the latest lists of potential ADDs and DELs for the Index Rebal Event in March 2025.
Insignia Financial (IFL AU): Bain Matches CC Capital’s Terms. And Also Afforded DD
- On the 17th Jan, CC Capital lifted is indicative Offer for Insignia Financial (IFL AU) to A$4.60/share from A$4.30/share, a ~50% premium to undisturbed. Limited, non-exclusive due diligence was subsequently provided.
- As discussed in Insignia Financial (IFL AU): Bumpity Bumpity. Expect Bain To Match – Or Exceed – CC Capital’s Term, I expected Bain to match CC Capital’s terms.
- Today Bain did just that, tabling a NBIO at A$4.60/share. Bain was also provided with limited, non-exclusive due diligence.
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