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Event-Driven Archives | Page 136 of 187 | Smartkarma

Feb 08
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Event-Driven: Toshiba Corp, Bapcor Ltd, China Mobile, Meitetsu Transport, Daimler Truck Holding, ADVA Optical Networking SE, Mitsubishi Estate Logistics, Senex Energy and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
  • Bapcor (BAP AU): Potential Suitors Kicking Tyres
  • China Mobile (941 HK) Buyback Period Starts
  • Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book
  • DAX Index: Quiddity Leaderboard for March 2022 (2.0)
  • ADTRAN/​ADVA Optical Networking: Additional Acceptance Period
  • Mitsubishi Estate Logistics (3481 JP): Offering Could Trigger Outperformance Vs Peers
  • Senex Energy: Scheme Booklet Out. Meeting On The 15 March

Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t

By Mio Kato

  • Another quarter, another Toshiba Medium Term Plan as activist investors keep sending management back to the drawing board until they come back with a privatisation. 
  • Except there is still no sign of any significant appetite among buyers and no sign that they would be allowed to go through with it even if there was. 
  • So Toshiba management shuffled a few deck chairs and the market yawned.

Bapcor (BAP AU): Potential Suitors Kicking Tyres

By David Blennerhassett

  • Automotive aftermarket parts provider Bapcor Ltd (BAP AU) has reportedly recently received two buyout proposals.
  • This follows the sudden departure of former CEO Darryl Abotomey in December. 
  • Confirmation of these approaches may be clarified when 1H22 results are released on the 9 February. 

China Mobile (941 HK) Buyback Period Starts

By Travis Lundy

  • China Mobile (941 HK) announced an H-share buyback program which had as its upper limit the purchase of 37% of the H-share CCASS position. 
  • After that, the SOE parent announced a plan to buy RMB shares in Shanghai. 
  • The virtuous cycle of shareholder return starts today. Today is the first day China Mobile can start buying its H-shares. 

Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book

By Travis Lundy

  • This should come as no surprise. Nagoya Railroad (9048 JP) is buying out minorities in logistics unit Meitetsu Transport (9077 JP).  
  • Given the shareholder structure, this can be done and squeezed out with not a single share tendered, but it’s ugly. 
  • Logistics REITs trade at 1.3-1.5x book. This is being done at 0.55x book where just 1.0x book for the warehouse assets would be more than the EV at Takeover Price.

DAX Index: Quiddity Leaderboard for March 2022 (2.0)

By Janaghan Jeyakumar, CFA

  • DAX is a German blue-chip index that currently tracks the 40 largest companies listed on the Regulated Market of the Frankfurt Stock Exchange. 
  • The DAX Index is reviewed on a quarterly basis in March, June, September, and December. 
  • In this insight, we take a look at the potential constituency changes that can happen in the March 2022 review.

ADTRAN/​ADVA Optical Networking: Additional Acceptance Period

By Jesus Rodriguez Aguilar

  • Adtran lowered the minimum acceptance threshold from 70% to 60%; the condition was thus fulfilled by the end of the initial acceptance period. Additional acceptance period runs until 14 February. 
  • The consummation of the offer continues to be subject to closing conditions not yet fulfilled, especially foreign direct investment approval in Germany.
  • A 15% increase in the ADVA share price since the threshold condition was fulfilled has caused the spread to become negative (-3.4%). If you were already long, recommendation is tender.

Mitsubishi Estate Logistics (3481 JP): Offering Could Trigger Outperformance Vs Peers

By Janaghan Jeyakumar, CFA

  • After the close on 7th February 2022, logistics JREIT Mitsubishi Estate Logistics (3481 JP) (“MEL”) announced a follow-on equity offering to fund part of their recently announced property acquisition. 
  • The primary offer quantity is 56,000 units. In addition, there will also be an over-allotment quantity of 2,800 units. The total size of this offering could be roughly ¥24.5bn (~US$213mn). 
  • Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

Senex Energy: Scheme Booklet Out. Meeting On The 15 March

By David Blennerhassett

  • Senex Energy (SXY AU)‘s Scheme Booklet is now out. The Scheme Meeting will be held on the 15 March. 
  • The Independent Expert has concluded this US$600mn Offer is fair and reasonable and in the best interest of Senex shareholders.
  • The Offer price is full. And trading tight to terms.

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Feb 07
0

Event-Driven: Mapletree Commercial Trust, Singapore Press Holdings, Ping An Insurance Group Co Of China, Shinsei Bank, Seibu Holdings, Huchems Fine Chemical, Shanghai Medicilon Inc, LG Energy Solution, Seven & I Holdings and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Mapletree Commercial Trust – Heads I Win Tails I Win?
  • SPH Shareholders – A Good Deal For Waiting (After a Good Deal of Waiting)
  • Ping An A/H: At Parity Now; Position for Premium Expansion
  • 2022 High Conviction – Shinsei Bank Update
  • Seibu Holdings – Asset Heavy To Asset Lighter if Not Fully Asset Light
  • Short Selling Full Resumption Schedule & Immediate Candidates Filtering
  • STAR50 Index Rebalance Preview (March 2022): Falling Knives
  • LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9
  • Seven & I: Selling Sogo Seibu Is Just the Start

Mapletree Commercial Trust – Heads I Win Tails I Win?

By Travis Lundy

  • Then-Underperforming Mapletree Commercial Trust (MCT SP) and Mapletree North Asia Commercial Trust (MAGIC SP) announced a merger on the last day of 2021. Then it underperformed some more.
  • The price uplift for MAGIC unitholders was lost. FYQ3 Earnings announced in late January were good for both (better for MNACT), but MCT is still underperforming the sector.
  • That seems to set MCT buyers up for a Heads I Win Tails I Win scenario.

SPH Shareholders – A Good Deal For Waiting (After a Good Deal of Waiting)

By Travis Lundy

  • The Combination Cuscaden – Keppel Scheme Offer Meetings for Singapore Press Holdings (SPH SP) shareholders should come imminently.
  • Time has passed and that should be worth something. Astute shareholders have likely already made their feelings known. Everyone should. 
  • In the meantime, there is a good spread, with a put option on a portion of it, and the possibility of a little upside. 

Ping An A/H: At Parity Now; Position for Premium Expansion

By Brian Freitas

2022 High Conviction – Shinsei Bank Update

By Travis Lundy

  • Shinsei Bank (8303 JP) is/was my High Conviction call for 2022. 
  • SBI went to 47.77% in the Tender and is higher as Shinsei has bought back stock. Shinsei has more to go and could get funkier to buy back more.
  • 8 February is the EGM to approve a new board and explicit SBI control. Delisting expectations will rise after that, but practically it will take time.

Seibu Holdings – Asset Heavy To Asset Lighter if Not Fully Asset Light

By Travis Lundy

  • Seibu Holdings created a new Medium Term Management Plan in May 2021 including what it called Big, Hairy, Audacious Goals, or BHAGs.
  • That goal was to move a longtime asset-heavy business to an asset-light model by selling hotel and leisure assets, securitising others, and undergoing a Whole Business Restructuring.
  • Seibu Construction was sold in January and now it looks like 30 out of 40-odd Japan hotel and leisure facilities are nearly a done deal with a sale to GIC.

Short Selling Full Resumption Schedule & Immediate Candidates Filtering

By Sanghyun Park

  • The local regulators will likely announce a full resumption of short selling within this month, and it will likely be implemented either next month or at the latest within April.
  • Immediate candidates filtering on KOSPI (outside KOSPI 200): Huchems Fine Chemical, Hana Tour, Samyang Foods, and Douzone Bizon.
  • Immediate candidates filtering on KOSDAQ (outside KOSDAQ 150): UniTest and Kolon Life Science.

STAR50 Index Rebalance Preview (March 2022): Falling Knives

By Brian Freitas

  • The review period ended last week. There will either be 4 or 5 changes to the SSE STAR50 (STAR50 INDEX) depending on the minimum listing history period used.
  • Shanghai Medicilon Inc (688202 CH) is a high probability inclusion while there are 4 high probability deletions, irrespective of the minimum listing history period used.
  • The potential inclusions have continued to drop and have underperformed the potential deletions. The next couple of weeks could see a reversal in that trend.

LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9

By Sanghyun Park

  • There is recently a growing view that the ETF operators (KODEX and TIGER) will conduct most of the rebalancing trading on February 9 to avoid excessive tracking errors.
  • LG Chem will face an outflow of ₩0.38T (0.8% of SO and 1.37x ADTV). LG Energy would be 0.36x ADTV and 0.31% of SO, assuming a DTV of 2M shares.
  • This is definitely a clear long/short setup opportunity: LG Energy LONG/LG Chem SHORT position. Alternatively, we can also consider approaching this event with Battery ETFs LONG/LG Chem Short setup.

Seven & I: Selling Sogo Seibu Is Just the Start

By Michael Causton

  • Numerous reports indicate that Seven & I is preparing its Sogo Seibu department store subsidiary for sale. 
  • This follows years of calls from major investors to dispose of underperforming assets at Japan’s second largest retail conglomerate.
  • Seven & I still has many problems to solve in its domestic business. Ito-Yokado remains the biggest problem but perhaps won’t be disposed of while the company’s 98-year old founder lives.

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Feb 06
0

Event-Driven: Goo Chemical, BHP Group, LG Energy Solution, Sydney Airport and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Goo Chemical (4962 JP) MBO – Super Illiquid Kyoto-Based Specialty Chems Maker – A Done Deal
  • Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral
  • Index Rebalance & ETF Flow Recap: MSCI, HSI, NIFTY 50/100/BANK, ASX200, PCOMP, KRX New Deal
  • Asia-Pac Weekly Risk Arb Summary: Irongate, Virtus, ICar Asia, Aventus, Sydney Airport, CLPH

Goo Chemical (4962 JP) MBO – Super Illiquid Kyoto-Based Specialty Chems Maker – A Done Deal

By Travis Lundy

  • This is a PE Fund-sponsored MBO of a small Kyoto-based specialty chemicals manufacturer.
  • It is far less liquid than the market cap would suggest, which tells you something about the very un-transparent shareholder register. 
  • This is theoretically an “independent” deal with a majority-of-minority but it will get done at a slightly too low price because of huge friendly shareholder base.

Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral

By David Blennerhassett

Index Rebalance & ETF Flow Recap: MSCI, HSI, NIFTY 50/100/BANK, ASX200, PCOMP, KRX New Deal

By Brian Freitas

  • The big event in the coming week is the MSCI Feb QIR announcement. Sydney Airport (SYD AU) will be deleted from indices after the close of trading on 9 February.
  • There are quite a few changes expected across the NIFTY Index (NIFTY INDEX), Nifty Bank Index (NSEBANK INDEX) and NIFTY100 Indices. The PCOMP INDEX rebalances on 11 February.
  • There were large inflows to Australia focused ETFs during the week, while Japan saw some pretty chunky outflows from a few ETFs.

Asia-Pac Weekly Risk Arb Summary: Irongate, Virtus, ICar Asia, Aventus, Sydney Airport, CLPH

By David Blennerhassett

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Feb 05
0

Event-Driven: Monde Nissin Corp, Time Interconnect Technology, China Logistics Property Holdings, At Group Co Ltd, Seven & I Holdings, Contec Co Ltd, IMMOFINANZ AG and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • PCOMP Index Rebalance: EMP, MONDE Could Pop; BLOOM, RRHI Could Drop
  • Time Interconnect (1729 HK): Possible Offer
  • CLPH (1589 HK): Composite Doc Out. Offer Now Open
  • AT Group (8293 JP) MBO – Looks Fully Priced But A Closer Look Is Warranted
  • Seven & I’s Response: Dispels Accusations But Gives in to ValueAct’s Demands
  • Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)
  • CPI/Immofinanz: CPI Matches S Immo’s Offer and Secures Another Stake

PCOMP Index Rebalance: EMP, MONDE Could Pop; BLOOM, RRHI Could Drop

By Brian Freitas

Time Interconnect (1729 HK): Possible Offer

By David Blennerhassett

  • Time Interconnect Technology (1729 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
  • Paul Lo, the chairman, recently increased his stake to ~75% of shares out. A large parcel of shares moved into CCASS late last month. 
  • Paul Lo, if he is the Offeror, is unlikely to table an Offer price significantly higher than the last close, given the recent price increase. A take under is possible. 

CLPH (1589 HK): Composite Doc Out. Offer Now Open

By David Blennerhassett

  • China Logistics Property Holdings (1589 HK)‘s Composite Document has now been despatched. The Offer is open for acceptance with a first close on the 25 February.
  • The Offer from JD.com is conditional on 50% acceptances, with 66.4% in the bag.
  • Done deal and trading through terms. The IFA considers the Offer is fair and reasonable. 

AT Group (8293 JP) MBO – Looks Fully Priced But A Closer Look Is Warranted

By Travis Lundy

  • The CEO and family leader Yamaguchi-san is launching an MBO to take out one of the largest Toyota dealers out there. 
  • Optically, it looks fully-priced, with significant net debt and a 74% takeover premium. A closer look is, however, warranted.
  • This is large enough (despite illiquidity) to be interesting, and it could get interestinger.

Seven & I’s Response: Dispels Accusations But Gives in to ValueAct’s Demands

By Oshadhi Kumarasiri

  • Seven & I Holdings (3382 JP) is down 2.71% today following the company’s response to ValueAct’s public letter.
  • We think this share price move is unwarranted and driven by a false interpretation that Seven & I’s response is a rebuttal.
  • Therefore, we would be using this as an opportunity to add more Seven & I shares.

Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)

By Travis Lundy

  • Daifuku Co Ltd (6383 JP) today (4 Feb) announced it would take out TSE-2 industrial computing/IoT subsidiary Contec Co Ltd (6639 JP) in a tender offer at 55% premium.
  • That looks nice, and should have been expected at some point. But it is only half-generous.
  • The shareholder structure tells you how this is likely to end up.

CPI/Immofinanz: CPI Matches S Immo’s Offer and Secures Another Stake

By Jesus Rodriguez Aguilar

  • CPI advances in its takeover and already owns 19.25% of the share capital of Immofinanz, with 28.92% conditionally contracted (at €23/share), thus a combined stake of 48.18% of Immofinanz. 
  • The raised offer price also represents 19.7x EV/Fwd EBIT, 18.4x Fwd P/E, 22.9x deal value/Est. FFO and 76.7% deal value/consensus NAV (source Capital IQ), still not recommended by Immofinanz’s Board.
  • Immofinanz trades at at 4.3% 22e FFO yield and 3.4% 22e dividend yield. My TP, economic profit based is €25.86/share, 12.2% discount to EPRA NTA. Recommendation is long IIA AV.

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Feb 04
0

Event-Driven: Nongfu Spring, Telix Pharmaceuticals, Sony Corp, Microstrategy Inc Cl A, LG Energy Solution, Virtus Health and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues
  • ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport
  • TOPIX-Nikkei Skew Trade Starting to Work Nicely
  • S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale
  • Microstrategy’s Unsurprising Bitcoin Loss
  • KOSPI 200 Rebalancing Screening: Prediction Likelihood, Special Issues, & Passive Impacts
  • BGH Lodges Application With The Takeovers Panel Over CapVest’s Bid for Virtus
  • FnGuide TIGER Top 10 Rebalancing: LG Energy IN & Celltrion OUT

HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues

By Brian Freitas

ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport

By Brian Freitas

TOPIX-Nikkei Skew Trade Starting to Work Nicely

By Mio Kato

  • After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
  • It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
  • Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.

S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale

By Travis Lundy

  • The Sydney Airport ASX200 exclusion sets up with Telix Pharma replacing it, and two more likely changes – one each in ASX50 and ASX100.
  • Telix as an inclusion is a known known. The others are too.
  • Sydney Airport will end up seeing a LOT of stock for sale on 9 Feb at the close.

Microstrategy’s Unsurprising Bitcoin Loss

By David Blennerhassett

  • Microstrategy Inc(MSTR US) reported a net loss of $90mn or $8.43/share in the fourth quarter, missing consensus estimates for a profit of US$0.89/share.
  • The loss is predominantly due to the inclusion of impairment losses of US$146.6mn on its Bitcoin holdings, negating the $110.5mn in gross profit from the software ops.
  • MicroStrategy remains a bet on Bitcoin. Yet almost any alternate cryptocurrency security appears a better bet, if that is your bent.

KOSPI 200 Rebalancing Screening: Prediction Likelihood, Special Issues, & Passive Impacts

By Sanghyun Park

  • The screening results based on the average market cap for the screening period until the last closing price have seven additions/deletions.
  • LG Energy will make Fast Entry. The one to make room for LG Energy should be Dongwon F&B, an additional deletion to the seven deletions through the preliminary filtering.
  • F&F Holdings may fail to meet the minimum float rate. If it doesn’t make KOSPI 200 this time, Hyundai Marine & Fire Insurance will get to stay in the Index.

BGH Lodges Application With The Takeovers Panel Over CapVest’s Bid for Virtus

By David Blennerhassett

  • BGH has filed an application with the Takeover Panel over, inter alia, Virtus Health (VRT AU) granting exclusivity to CapVest.
  • This application is similar in nature to the one filed by APA Group (APA AU) last year after AusNet Services (AST AU) granted Brookfield exclusivity in a competitive bidding stoush.
  • Virtus is currently trading at a gross spread of ~5.0% to the Scheme price, 3.6% to the Alternative Offer, and 1.8% above BGH’s terms. 

FnGuide TIGER Top 10 Rebalancing: LG Energy IN & Celltrion OUT

By Sanghyun Park

  • The screening period for the upcoming rebalancing is May 3-31. LG Energy satisfies the 3-month minimum listing requirement, so it becomes eligible to join the Index in this rebalancing.
  • LG Energy will likely receive an inflow of ₩44.6B, 0.04% of SO. Considering its tight real-world float (less than 6%), it would still be something we don’t want to overlook.
  • What is critical is an estimated outflow size of Celltrion. It would be about the same amount, but relative to its ADTV, it will be -0.26x.

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Feb 03
0

Event-Driven: LG Energy Solution, Askul Corp, Astellas Pharma, Bank Of Baroda, Myer Holdings, Porsche Automobil Holding Se, CJ ENM and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • KRX New Deal Index Rebalance Preview (March): More Flow for LG Energy
  • ASKUL (2678) – Large, Accretive, Not Enough for Prime So Look For More
  • Astellas Pharma (4503) Buyback – Short-Term Pressure Catalyst
  • NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank
  • Timing Ideal Exit Points on MSCI & KOSPI200 Inclusion for 16 Biggest Korean IPOs in 2020 & 2021
  • Premier Closes In On Myer (MYR AU)
  • Selected European Holdcos and DLCs: January ‘22 Report
  • CJ ENM: Potential Block Sale of Its Stake In Netmarble & Concerns About Corporate Reorganization

KRX New Deal Index Rebalance Preview (March): More Flow for LG Energy

By Brian Freitas

  • The review period for the KRX New Deal indices ended on 31 January. The changes will be announced toward the end of February and implemented on 10 March.
  • We expect LG Energy Solution (373220 KS) to be included in the Battery and BBIG indices, while Kakao Pay (377300 KS) should be added to the Internet Index.
  • The largest selling is expected to be on Douzone Bizon (012510 KS) due to a potential downweight in the Internet index and a deletion from the BBIG index.

ASKUL (2678) – Large, Accretive, Not Enough for Prime So Look For More

By Travis Lundy

  • Askul Corp (2678 JP) today announced a 4.9% buyback, likely via ToSTNeT-3, designed to lower the holding of parent Z Holdings (4689 JP), to meet TSE Prime Tradable Share criteria.
  • While 5.1% earnings accretive, it will not be enough, and the structure suggests despite significant excess cash, the next tranche won’t come immediately.
  • There is short-term strategy, and there is longer-term positioning. Both may work in this case.

Astellas Pharma (4503) Buyback – Short-Term Pressure Catalyst

By Travis Lundy

  • Large Japanese low-multiple pharma company Astellas Pharma (4503 JP) yesterday announced earnings and this morning announced a buyback. 
  • The buyback is small-ish, but the details are definitely worth knowing. 
  • A play against peers for the period and afterwards may have some merit. If you have an execution axe, definitely worth a look.

NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank

By Brian Freitas

Timing Ideal Exit Points on MSCI & KOSPI200 Inclusion for 16 Biggest Korean IPOs in 2020 & 2021

By Douglas Kim

  • We delve in detail the ideal exit points for the biggest 16 IPOs in Korea in 2020 and 2021, with emphasis on the announcement of the MSCI and KOSPI200 inclusions.
  • Typically, the announcement dates of the MSCI index inclusion (+/- two to three trading days) are the optimal period for taking profits.
  • Overall, the MSCI index inclusion had a bigger impact in terms of signaling changes in the direction of these new, large IPOs in Korea.   

Premier Closes In On Myer (MYR AU)

By David Blennerhassett

  • Premier Investments (PMV AU) has added a further 3.9% in Myer Holdings (MYR AU) taking its stake to just short of 20%. 
  • There is no love lost between the boards of Premier and Myer since Premier took a 10.8% stake in March 2017.
  • Premier has attempted to spill the board in the past. That scene looks set to repeat itself. That or a takeover.

Selected European Holdcos and DLCs: January ‘22 Report

By Jesus Rodriguez Aguilar

  • There is just one DLC in this report, Rio Tinto, following the unification of BHP and Shell.
  • Discounts to NAV of holdcos have shown mixed performance: Alba, 41.3%; GBL, 26.9%; Heineken Holdings, 18.2%; Industrivärden, 12.1%; Investor AB, 11.6%; Kinnevik B, 8.8%(premium); Porsche Automobile Holding, 39.2%.
  • Recommended trades: GBL vs. listed assets, Industrivärden vs. listed assets, Investor vs. listed assets, Porsche vs. VW (long 1 PAH3 GR/short 0.5136 VOW GR), Rio Tinto.

CJ ENM: Potential Block Sale of Its Stake In Netmarble & Concerns About Corporate Reorganization

By Douglas Kim

  • According to a local media outlet called ETNews, CJ ENM is considering on selling about half of its stake in Netmarble to potentially acquire the controlling stake in S.M. Entertainment.
  • Although CJ ENM is the lead candidate to acquire SM Entertainment, other contenders including Kakao Corp and Naver are not totally out of the M&A race. 
  • Overall, we would wait on buying CJ ENM at current levels. We think that the market is still concerned about CJ ENM overpaying for SM Entertainment.

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Feb 02
0

Event-Driven: Boral Ltd, Allied Telesis Holdings Kk, Arena Reit, SRF Ltd, Seven & I Holdings, Mineral Resources, HS Holdings, AfreecaTV, Jalux Inc and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Boral’s 45% Capital Return – Resetting Forward Expectations
  • Allied Telesis (6835) – Small Cap Windfall
  • ASX200 Index Rebalance: Arena REIT to Replace Ausnet
  • S&P/ASX200 – Ausnet OUT, Arena REIT IN
  • NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March
  • Seven & I to Sell The Loss Making Department Store Business Amidst Pressure From Investors
  • MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap
  • Sawada/HS (8699) – A NON-Salutary Development
  • KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update
  • JALUX (2729 JP) Tender Offer Commences – Open & Shut Case With Weirdness

Boral’s 45% Capital Return – Resetting Forward Expectations

By Travis Lundy

  • Boral Ltd (BLD AU) today announced a special dividend and return of capital totalling $2.72/share. That is 46% of yesterday’s closing price. 
  • This was not unexpected. Management had promised, media articles had proposed as much. Now it is coming through. 
  • Despite an 11% jump in the forward ex-div price today, the stock is cheap on a FY23 basis.  

Allied Telesis (6835) – Small Cap Windfall

By Travis Lundy

  • Allied Telesis is a Japan-listed business with a long US history making networking equipment and solutions for corporate customers. 
  • The company received a legal settlement today which is worth a fair bit to them.
  • The company had already had the best 12 months earnings history in years, while the stock is trading at long-time lows. This could get exciting.

ASX200 Index Rebalance: Arena REIT to Replace Ausnet

By Brian Freitas

S&P/ASX200 – Ausnet OUT, Arena REIT IN

By Travis Lundy

  • The S&P DJI Index team announced the replacement for Ausnet Services (AST AU) when it is deleted from the S&P/ASX200 Friday at the close: Arena Reit (ARF AU) 
  • There are other changes to sub-indices which are not publicly announced but which should align with previous analysis
  • This insight provides estimates for the index events Friday and ways to play them.

NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March

By Brian Freitas

Seven & I to Sell The Loss Making Department Store Business Amidst Pressure From Investors

By Oshadhi Kumarasiri

  • Nikkei reported yesterday that Seven & I Holdings (3382 JP) is in final negotiations to sell its underperforming department store business Sogo Seibu, amidst pressure from several of its investors.
  • The company has indirectly confirmed the news by saying that they are considering changes to Seven & I’s business portfolio including the sale of the Sogo & Seibu business.
  • The disposal of underperforming department stores could increase the efficiency of capital usage and generate upside to shareholders returns and enable the company to focus on growth through geographic expansion.

MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap

By Brian Freitas

  • Post the end of the review period, there are 19 potential adds for Asia and 9 potential deletes. High probability names include 16 adds and 8 deletes.
  • There are stocks that will have same way flow from the FTSE AW/AC trackers in March, while others could have same way flows from KOSPI200 or CSI300 trackers in June.
  • Potential additions that got beaten down over the last few weeks have started to recover and could remain supported going into announcement date on 10 February (Asia time). 

Sawada/HS (8699) – A NON-Salutary Development

By Travis Lundy

  • Sawada/HS Holdings (8699 JP) gets the bulk of its earnings from Khan Bank (even more so post-exit from gaitame).
  • Khan Bank just had a fantastic year with earnings up 77%. 
  • But Sawada has just done a deal with should give one pause.

KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update

By Sanghyun Park

  • For this March rebalancing, the screening base date is January 28, which is the last trading day of January. So, the 3-month rebalancing review period is now done.
  • Other than LG Energy (+₩146,2B), we should pay the most attention to AfreecaTV (+1.70x), Chunbo (+0.36x), Douzone Bizon (-4.82x), and SoulBrain (-0.99x).
  • In addition, large-cap stocks such as SKIET (+0.25x), Ecopro BM (+0.10x), LG Chem (-0.62x), and Posco Chemical (-0.30x) will likely draw much attention.

JALUX (2729 JP) Tender Offer Commences – Open & Shut Case With Weirdness

By Travis Lundy

  • Sojitz and JAL have announced the start of their tender offer for Jalux Inc (2729 JP). There was no surprise in November. And no change in the interim.
  • While not outrageously generous, it is not particularly egregious to minority shareholders and the shareholder structure suggests it gets done easily. 
  • The lack of Japan FTC approval prior to launch is a little odd, but there should be minimal risk, and practically speaking, zero incremental risk vs waiting to start.

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Feb 01
0

Event-Driven: LG Energy Solution, Recruit Holdings, Irongate Group, Playtech Plc, Samsung Biologics Co., and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock
  • Recruit (6098) Buyback – Big, But Meh…
  • Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)
  • JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Jan 2022
  • Irongate: Charter Hall Stakes Its Claim
  • Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive
  • Samsung Biologics: Rights Offering of 3 Trillion Won to Acquire Remaining Stake in Samsung Bioepsis

Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock

By Sanghyun Park

  • LG Energy has the second-largest market cap on KOSPI. For Fast Entry to fail, the price must lose 90% of its current value. So, Fast Entry is a foregone conclusion. 
  • The review period ends on February 21. The implementation date is March 11, and the announcement will likely be made public around February 24-25.
  • The stock with the lowest market cap from May to October last year will leave the Index. The victim is Dongwon F&B, beating Nexen Tire by a very narrow margin.

Recruit (6098) Buyback – Big, But Meh…

By Travis Lundy

  • Recruit announced a buyback of up to 34 million shares in an own share tender offer to take place at a price below the current market price.
  • This kind of tender offer is almost always meant for Japanese corporate holders as it rarely makes sense for others to participate.
  • This is mildly EPS accretive, BVPS decretive, quite ROE accretive, but Recruit can’t really use this method for the rest of its cross-holdings.

Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)

By Brian Freitas

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Jan 2022

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
  • Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-January 2022.

Irongate: Charter Hall Stakes Its Claim

By David Blennerhassett

  • Irongate (IAP AU) has announced a non-binding proposal from Charter Hall (CHC AU) and Dutch pension fund PGGM at $1.90/security, by way of a Scheme, plus a possible $0.0467/security distribution.
  • Importantly, the proposal contains a call option over 360 Capital’s 19.9% security holding in IAP.
  • IAP is considering the Offer. Expect the board to grant due diligence.  This proposal is a 10.5% premium to 360 Capital’s Offer, before taking into account the distribution. 

Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive

By Jesus Rodriguez Aguilar

  • Court and EGM meetings are scheduled 2 February. Aristocrat is the only suitor remaining.  Some investors in Playtech who anticipated a bidding war aren’t too keen to support the deal.
  • The Board threatens with a break-up and auction of both Snaitech and the B2B white label software division. Analysts believe that the business is worth more than the current offer.
  • Reiterate long PTEC LN, TP 680/share (Aristocrat offer), with the potential upside risk of a sweetened offer to placate some investors, or a break-up.

Samsung Biologics: Rights Offering of 3 Trillion Won to Acquire Remaining Stake in Samsung Bioepsis

By Douglas Kim

  • We have a Negative view on this nearly 3 trillion won rights offering by Samsung Biologics.
  • The expected price of the rights offering is 599,000 won which is 18.9% below current share price and would represent about 7% shares dilution.
  • Despite the long-term positive prospects of consolidating results from Samsung Bioepsis, we believe the acquisition price was a bit too high at more than 100% higher than Biogen’s valuation multiples.

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Jan 31
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Event-Driven: BHP Group, Total Access Communication, Meritz Fire & Marine Insurance, Link Net, Samsung Electronics Pref Shares, Mapletree North Asia Commercial Trust, IMMOFINANZ AG and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • BHP Group – A Tale of Two Rebals? Maybe… But Maybe Not
  • DTAC/TRUE Merger: Stocks Trading Near Their VTO Prices
  • MSCI Korea 10-Day Review Period Done: Screened Results
  • Link Net’s MTO from Axiata Investments and XL Axiata
  • Korea Large-Cap Prefs: Pref-Ord YTD Yield Difference & 20-Day MA Sigma
  • (Mostly) Asia M&A: January 2022 Roundup
  • CPI/Immofinanz: Raised Offer

BHP Group – A Tale of Two Rebals? Maybe… But Maybe Not

By Travis Lundy

  • The BHP Group index rebal on the S&P/ASX was bigger than most thought. 
  • The BHP Group index rebal on the PLC line in the UK on the FTSE UK series, MSCI and FTSE Europe, and Stoxx indices was smaller than most expected. 
  • But the funding and reverse funding excess volume tells a different story. 

DTAC/TRUE Merger: Stocks Trading Near Their VTO Prices

By Brian Freitas

MSCI Korea 10-Day Review Period Done: Screened Results

By Sanghyun Park

  • MSCI Korea’s February index review period ended last Friday because next Monday is Korea’s Lunar New Year holiday.
  • Meritz Financial Group and Meritz Fire stayed above the full MCs and float MCs without missing a single day during the 10-day review period.
  • Shinpoong‘s MC was below the lower buffer throughout the review period. Douzone stayed above the lower buffer, but the odds of its exclusion are high as we have two additions.

Link Net’s MTO from Axiata Investments and XL Axiata

By Arun George

  • Link Net (LINK IJ)’s two largest shareholders (66.03% of the outstanding shares) have signed a SPA to sell their stakes to Axiata Investments and XL Axiata (EXCL IJ) at IDR4,800.
  • Post-Completion, Axiata Investments and XL Axiata will then be required to launch a mandatory tender offer to acquire the remaining 33.97% Link Net shares at IDR4,800 per share
  • The tender offer is expected to be completed in 3Q2022. At the last close price of IDR4,430, the shares are trading at an 8.4% gross spread to the offer.

Korea Large-Cap Prefs: Pref-Ord YTD Yield Difference & 20-Day MA Sigma

By Sanghyun Park

  • Korean prefs have outperformed ords on a YTD basis, probably due to the LG Energy listing. Many of KOSPI’s large-cap stocks have seen an outflow to make room for LGES.
  • Samsung Electronics 1P and Mirae Asset 2PB have a negative pref-ord YTD yield difference and are currently below-1.0σ on a 20-day MA.
  • Mirae widened the pref-ord spread by announcing an ord-only share buyback. So it should be seen as an outlier. Then, virtually all that remains is the Samsung Electronics 1P.

(Mostly) Asia M&A: January 2022 Roundup

By David Blennerhassett

  • For the month of January, 6 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$9bn.
  • The average premium for the new deals announced (or first discussed) in January was ~18%.
  • This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.

CPI/Immofinanz: Raised Offer

By Jesus Rodriguez Aguilar

  • Immofinanz recommends shareholders neither accept S Immo’s €23/share partial offer, nor CPI’s €22.7/share for the whole share capital (both cum dividend). CPI controls (pending approvals) 35.5% of Immofinanz.
  • Crossed shareholdings and poor use of capital among Austrian real estate players put a lid on their stock market performance, nevertheless Immofinanz’s discount to NAV is steadily approaching pre-Covid levels.
  • The shares of Immofinanz look good value in my view, at 4.3% 22e FFO yield, 21% discount to EPRA NTA, with the potential upside from an improved CPI’s offer.

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Jan 29
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Event-Driven: LG Chem Ltd, Link Net, KakaoBank, Biotest AG, Samsung Electronics and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • LG Chem: Still Cheap After LG Energy’s Big Debut
  • Link Net (LINK IJ): Axiata’s MTO
  • End of Mandatory Lock-Up Periods for 44 Stocks in Korea in February 2022
  • Grifols/Biotest: Put Period
  • Will Samsung Get EV Envy from LG Energy Solution Listing?

LG Chem: Still Cheap After LG Energy’s Big Debut

By David Blennerhassett

Link Net (LINK IJ): Axiata’s MTO

By David Blennerhassett

  • Axiata Group (AXIATA MK) has entered into conditional SPAs with Asia Link Dewa and PT First Media to acquire 1.82 billion shares, or 66.03% in Link Net (LINK IJ). 
  • The purchase consideration is IDR4,800/share. Upon completion of the acquisition, Axiata will be obligated to make a mandatory tender offer (MTO).
  • Axiata expects to complete the proposal, which is subject to regulatory and shareholder approvals, by the third quarter of 2022.

End of Mandatory Lock-Up Periods for 44 Stocks in Korea in February 2022

By Douglas Kim

  • In this insight, we discuss the end of the mandatory lock-up periods for 44 stocks in Korea in February 2022. 
  • Among these 44 stocks, 8 stocks are in KOSPI and 36 stocks are in KOSDAQ.
  • These 44 stocks could be subject to further selling pressures in February and could on average underperform relative to the market. 

Grifols/Biotest: Put Period

By Jesus Rodriguez Aguilar

  • The offer has been accepted by 96.2% of ordinary shares, 43.24% of the preferred shares and 69.7% of the total share capital. Acceptance for ordinary shares extended to 21 April.
  • Grifols is addressing its leverage, although may not distribute cash dividends until 2024. The discount of B shares has tightened to 33.1%. Long GRFS US/short GRF SM.
  • Short BIO3 GR, the shares should return to pre-bid levels (around €35/share), although borrow may be tight. Long BIO GR, and put the shares to Grifols (until 21 April).

Will Samsung Get EV Envy from LG Energy Solution Listing?

By Ken S. Kim

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