Daily BriefsMost Read

Most Read: Shinsei Bank, Orient Overseas International, Washington H. Soul Pattinson and Co. Ltd, Hong Kong Hang Seng Index, Busan City Gas and more

In today’s briefing:

  • Shinsei Looks To A Poison Pill, But Probably Not Really
  • HSCI Index Rebalance and Stock Connect: Potential Changes in December and March
  • Marvelous Milton and WHSP (SOL AU) Index Event Prepositioning Analysis
  • HK Washout Low Targets
  • Busan City Gas Tender Offer at a Whopping 40% Premium by SK E&S:

Shinsei Looks To A Poison Pill, But Probably Not Really

By Travis Lundy

On Thursday 9 September, SBI Holdings (8473 JP) announced a Tender Offer aimed at lifting its stake in Shinsei Bank (8303 JP) to 48% at a sharp premium (up 46%). It hadn’t warned Shinsei Bank of its intention to do so.

Kana Inagaki and Leo Lewis at the FT had a story early Thursday evening describing the situation – the most concise and accurate take I have seen. I followed up hours later with something wordier in SBI (8473) Launches a HOSTILE Tender Offer on Shinsei Bank (8303)! On Thursday night the ADRs rose to ¥1930/share equivalent. 

On Friday, the stock went limit up, Smartkarma held a Flash Webinar, and Mio Kato added Shinsei Bank – Valuations to the anthology. 

Over the weekend, articles were everywhere in the media, but they didn’t say much. Shinsei hadn’t told them what to say and SBI had already done the talking for its part. 

Trading resumed on Monday and the stock opened above the Tender Offer Price ¥2000/share before closing a bit lower. 

Yesterday saw articles suggesting Shinsei Bank would send SBI a list of questions to answer, would look at what they got back, and then would decide their opinion. 

But TODAY we see the real start of the game. 

The Nikkei reported in a short article a few hours ago that Shinsei’s board would meet this week to approve an “emergency” poison pill defence. 

How that would work might matter, but it might not. 

More below the fold.

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

By Brian Freitas

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.

The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.

We expect Brii Biosciences (2137 HK), Helen’s International Holdings (9869 HK), Medlive Technology (2192 HK), Keymed Biosciences Inc (2162 HK) and SCE Intelligent Commercial Management (606 HK) to be included in the index at the close of trading on 3 December.

For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.

Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.

Marvelous Milton and WHSP (SOL AU) Index Event Prepositioning Analysis

By Travis Lundy

The morning of the 16th of September 2021, Milton Corp Ltd (MLT AU) announced an expected A$0.37/share fully-franked special dividend (which should produce A$0.15857/share of franking credits) to go ex- on 21 September, which coincidentally should be the last day of trading for the stock.

Washington H. Soul Pattinson and Co. Ltd (SOL AU) shares fell more than 5% on the day, heading lower early, and staying low throughout the day.

It is not clear why, but one can make some guesses.

More below the fold.

And for the history on this…

HK Washout Low Targets

By Thomas Schroeder

Hong Kong has been top short and currently pressing on the key lows at HSI 24,600 with a target of 24,000 and risk of an undershoot. H share decline in line toward the 8,300-500 target.

Our primary downside target is at 24,000 and will then measure downside momentum for a low. Risk comes in near 23,200 after a bounce attempt from 24k. The recent bounce marks a corrective flat range with wave 5 downside risk on the back of policy pressure.

Busan City Gas Tender Offer at a Whopping 40% Premium by SK E&S:

By Sanghyun Park

This morning, SK E&S, the major shareholder of Busan City Gas, announced that it would conduct a tender offer to all remaining outstanding shares of Busan City Gas (2,595,597 shares, 23.60%). The tender offer price is 85,000 won per share, and the purchase period is from today to the 15th of the next month. SK E&S plans to apply for delisting of Busan City Gas.

The total number of issued shares of Busan City Gas is 11,000,000. SK E&S, the largest shareholder, owns 67.23%. And the number of treasury shares is 999,000 (9.08%). Therefore, the total remaining shares are 2,595,597 (23.60%), and SK E&S plans to purchase all of these shares through a tender offer.

Total shares11,000,000100.00%
SK E&S7,405,40367.32%
Treasury shares999,0009.08%
Other minority shareholders1,328,24312.07%
Source: FnGuide & KRX FIND

From today to the 15th of next month is the tendering period, and SK E&S pays cash. The cash payment date is October 20th. The tendering price is 85,000 won, a whopping 37.54% premium from yesterday’s closing price. This is a premium of over 40% compared to the average price for the past 1 month and 3 months.

Offering price₩85,000
Last close₩61,800
– Premium37.54%
1W average₩61,300
– Premium38.66%
1M average₩59,659
– Premium42.48%
3M average₩60,069
– Premium41.50%
Source: DART & KRX

SK E&S plans to pursue delisting after acquiring shares through a tender offer. According to the stock market listing regulations, if the largest shareholder owns more than 95% of the total issued stock of a target company, they can apply for voluntary delisting.

Before it’s here, it’s on Smartkarma