In today’s briefing:
- Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
- Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid
- FnGuide Top10 Index Rebalance Preview: Big Flow in Large Cap Stocks
- Shibaura Elec (6957) – Minebea Overbids Yageo’s Overbid of Minebea’s Overbid of Yageo – ¥5,500
- Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62
- Hainan Meilan Intl Airport (357 HK): Hainan SASAC’s Left/Right Pocket MGO
- Quiddity Leaderboard CSI All Share Semiconductors Jun25: Final Expectations
- Hanwha Aerospace Rights Offering – Third Time Is a Charm?
- UK: Tax Hikes Disrupt Housing Market
- Shibaura Electronics (6957 JP): MinebeaMitsumi Outbids Yageo for a Second Time
Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
- On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP).
- The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies.
- ¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.
Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid
- Toyota Industries is a relatively complicated business. It owns lots of shares of Toyota and other companies. It has a financing business, and runs ¥500+bn of EBITDA.
- As of 31 March 2025, the “Enterprise Value” of the Operating and Financing Business together was about ¥2.2trln. The “Asset Ownership Business” was at ¥2.8trln (1yr ago it was ¥4trln).
- If you think buying the Operating Business at 6x EBITDA is appropriate, that means the Asset Ownership Business block buy gets done at 31-March-2025 prices. Worth thinking about.
FnGuide Top10 Index Rebalance Preview: Big Flow in Large Cap Stocks
- The Mirae Asset Tiger Top 10 ETF (292150 KS) tracks the FnGuide Top 10 Index and has an AUM of around US$660m.
- We currently forecast two potential changes at the next rebalance in June – both are high probability changes.
- The trade has performed well historically with positive performance till implementation followed by reversion post implementation in most cases.
Shibaura Elec (6957) – Minebea Overbids Yageo’s Overbid of Minebea’s Overbid of Yageo – ¥5,500
- A Nikkei article today suggested Minebea Mitsumi (6479 JP) would overbid Yageo’s dramatic 20% overbid of Minebea’s early ¥4,500 overbid of Yageo’s initial ¥4,300 bid for Shibaura Electronics (6957 JP).
- Now the news is out. MinebeaMitsumi has bid ¥5,500. Shibaura Electronics has endorsed. This is bang-in-line with the expected path. The question is now YAGEO’s overbid, expected 7 May.
- If I were YAGEO, I would wait for Shibaura’s earnings a couple of days later, then overbid by ¥100-150 and go for 35 days. There’s optionality there.
Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62
- Haikou Meilan International Airport Company entered an SPA with Hainan Island Construction (600515 CH) to sell its Hainan Meilan International Airport (357 HK) 50.19% stake at RMB9.85 per share (HK$10.62).
- The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.
- Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.
Hainan Meilan Intl Airport (357 HK): Hainan SASAC’s Left/Right Pocket MGO
- Hainan Meilan International Airport (357 HK) has announced a potential change of control, via the domestic shares.
- Haikou Meilan’s major shareholder, Hainan Airport Industrial, has entered into a SPA with Hainan Island (600515 CH) to sell its 50.19% stake, the completion of which triggers an unconditional MGO.
- The H-share Offer price will be HK$10.62/share. That’s not compelling; but it’s not meant to be as Hainan Airport Industrial and Hainan Island Construction are ultimately controlled by Hainan SASAC.
Quiddity Leaderboard CSI All Share Semiconductors Jun25: Final Expectations
- CSI All Share Semiconductors & Semiconductor Equipment Index represents the largest and most-liquid stocks in the Semiconductor Industry Group from the Shanghai, Shenzhen, and Beijing Exchanges.
- In this insight, we have presented our final expectations for ADDs and DELs for the upcoming semiannual index rebal event in June 2025.
- We expect up to four ADDs and six DELs for the CSI All Share Semiconductors index during this index review based on the latest available data.
Hanwha Aerospace Rights Offering – Third Time Is a Charm?
- Hanwha Aerospace (012450 KS) has once again provided a revised rights offering prospectus following another request from the Financial Supervisory Service (FSS).
- Rights offering amount remains the same at 2.3 trillion won. Expected rights offering price is 539,000 won which is subject to change. New shares listing date is 21 July 2025.
- Hanwha Aerospace reported sales of 5.5 trillion won (14.3% better than consensus) and operating profit of 560.8 billion won (11.7% better than consensus) in 1Q 2025.
UK: Tax Hikes Disrupt Housing Market
- Domestic tax hikes are more substantial than US tariffs in April, so the impact should not be forgotten, even if the UK government wants to blame any damage on Trump.
- Frontrunning April’s stamp duty increases stoked transactions and lending, and may take at least a few months to recover afterwards. Resilient approvals are reassuring.
- Higher transaction costs probably won’t break expectations into a downwards spiral, but are now widely cited as a major hurdle, contributing to slower UK activity growth.
Shibaura Electronics (6957 JP): MinebeaMitsumi Outbids Yageo for a Second Time
- Minebea Mitsumi (6479 JP) has revised its tender offer for Shibaura Electronics (6957 JP) to JPY 5,500, representing a 1.9% premium over Yageo Corporation (2327 TT)’s JPY 5,400 hostile offer.
- There are factors supporting Yageo again outbidding Minebea, and Yageo calling it quits. A revised Yageo could potentially touch JPY6,000, 40% higher than its first offer.
- The shares are trading 7.1% above Minebea’s offer, factoring in a fair chunk of the upside from an ongoing bidding war. Take profits as risk/reward looks unattractive.
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