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Singapore Press Holdings

Last Week in Event SPACE:  Afterpay, SPH, ESR Cayman, Prosus/Naspers, Kingsoft, Milton, SOHO China

397 Views08 Aug 2021 07:16
SUMMARY

Last Week in Event SPACE ...

  • It is highly illustrative the co-founders of Afterpay Ltd (APT AU) are happy to kick out at price ~22% below the recent high of A$160/share, potentially suggesting further consolidation/competition in this space.
  • Singapore Press Holdings (SPH SP) may start to ask themselves "Hey Keppel, why you bo jio me?!"
  • ESR Cayman (1821 HK), the largest real estate manager in Asia-Pac, combining with ARA Asset Management, the largest Asia-Pac-focused logistics real estate business - quite the platform tie-in.
  • But for most international institutional (active and passive) investors in Naspers (NPN SJ) & Prosus (PRX NA), there remains an interesting quandary of tracking error, mandate-crossing, etc.
  • For what is a relatively straightforward holding company structure, Kingsoft Corp (3888 HK) provides a cheap proxy into Beijing Kingsoft Office Software-A (688111 CH).
  • The Marvelous Milton Corp Ltd (MLT AU) Arb continues to be Maaaahvelous, though you wouldn't know it to see the price evolution.

  • Soho China Ltd (410 HK) SAMR application has been formally accepted. However, this doesn't look to be a simplified procedure.

  • Plus, other events, CCASS movements and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)

M&A - ASIA

Afterpay Ltd (APT AU) (Mkt Cap: $28.4bn; Liquidity: $141mn)

Square Inc (SQ US) and Afterpay have announced a firm merger, the completion of which will create Australia's largest-ever buyout, exceeding Unibail-Rodamco SE (UL NA)'s 2017 takeover of Westfield Corp (WFD AU). Under the terms of the Offer, by way of Scheme, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share. Based on Square’s closing price of US$247.26 on July 30, 2021, this represents an implied transaction price of ~A$126.21 per Afterpay share, or a premium of ~30.6%. Following completion of the transaction, Afterpay shareholders are expected to own ~18.5% of the merged entity on a fully diluted basis.

  • The deal will strengthen Afterpay’s consumer base of 16mn with 70mn annual active Cash App customers. This will also bring Afterpay’s merchant base more consumers through Cash App, and at the same time, reach new Cash App audiences in global geographies. The agreement will help accelerate Afterpay's footprint in the US. The latest annual figures showed sales in the US increasing 177% yoy in FY21.
  • Afterpay allows retailers to offer its customers the option of paying for products in four installments, without interest, if the payments are made on time. Afterpay does not technically charge interest, but enforces "late fee" charges on the installments.
  • All of this is not lost on ASIC, which issued a critical report on BNPL last November highlighting one in five customers missing payments and "while working for the majority of users, some consumers are suffering harm". Similar issues have surfaced in the US, UK, and the EU, and Afterpay has had to adhere to more consumer-friendly rules on late fees in the US. Just this month, Paypal Holdings (PYPL US)'s new BNPL offering in Australia will not charge late payment fees.
  • Assuming no regulatory roadblocks, this looks done. The merger terms enable Aussie investors to continue to have indirect exposure to Afterpay, but also into a significantly larger global payments business.

Links to:
my insight: Afterpay Ltd (APT AU): All Squared Away)
Brian Freitas' insight: Afterpay (APT AU) - Square Is Buying Now in an All Stock Deal.

Singapore Press Holdings (SPH SP) (Mkt Cap: $2.3bn; Liquidity: $17mn)

SPH has decided to accept (announcement, press release, presentation) being taken over by Keppel Corp (KEP SP) based on a Scheme which will deliver to SPH holders S$0.668 in cash, 0.596 units of Keppel REIT, and 0.782 units of SPH REIT through a distribution of 45.4% of SPH's stake in the REIT. Based on the closing prices of 30 July 2021, that would be S$2.099/share or an 11.6% premium to the close. Any dividend that SPH would declare for the fiscal year ending 31 August 2021 would be additive (consensus estimates currently imply ~S$0.02-0.03/share. There are a fair number of conditions. Approval of the Media Business Restructuring at the SPH EGM later this month or September is a sine qua non - if that doesn't pass SPH shareholders, the thing is off. Then there is another EGM at end-Oct early Nov to approve the resulting deal.

  • The price is decent, but still under book value. To get the deal done, the SPH EGM to approve the Media Business Restructuring has to agree. It is possible that there will be noise around this. Some were upset in the beginning.
  • Keppel would be buying the Remainco at a discount to book value. Even though the consideration of SPH REIT and Keppel REIT are also below book value, the net transfer of book value is advantageous to Keppel and disadvantageous to SPH holders. Some may get upset at this too. For that, Travis Lundy expects there is a possibility we could see a slight improvement in terms. Perhaps an extra S$0.10 or so. That would not need to come into play until early October I expect so the option is somewhat long-dated.
  • There is likely to be Flowback selling interest on SPH REIT and Keppel REIT. There is likely to be significant ADV impact from an increase in float weight in the two REITs too. Which one wins is not clear. If this is a good deal for Keppel it may not be such a good deal for SPH shareholders.

Links to:
Travis' insight: Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders
Brian's insight: Keppel Corp to Acquire SPH Ex Media: Details and Index Implications

ESR Cayman (1821 HK) (Mkt Cap: $10.1bn; Liquidity: $23mn)

ESR has announced it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn. Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10. All of the ARA shareholders are rolling over their shares - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.

  • The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and JD.com Inc. (9618 HK).
  • There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
  • ESR is placing out shares around its all-time high, and at a small discount to last close. This looks like a great deal for ESR. But the company looks fully-valued here compared to historical metrics. Plus there is an indication of further placements in the near term.

(link to my insight: ESR Cayman (1821 HK) Takes Out ARA Asset Management)

Milton Corp Ltd (MLT AU) (Mkt Cap: $3.0bn; Liquidity: $3mn)

This is still Travis' favourite arb in the Asia/Oceania timezone right now. It is a decent spread (3.4% without considering optionality, more like 5% including the optionality) for about 2 months and a week. It is easy to hedge, and there is embedded optionality in the MLT price, driven by market moves and also helped by a probable buy of 60-100 days of ADV on the acquirer WHSP. For that, while it adds risk, his favourite way of playing this right now is to be long MLT and short a basket of the MLT NAV without a WHSP hedge. The goal of such a position is to be long the arb (which is trading a bit cheap) AND be long the optionality of co-movement upward AND be long the WHSP index up-weight.

  • The "correct" way to hedge this is to be long MLT, short MLT NAV/share, and short about 75% x 1.1x the MLT NAV/share amount of WHSP, hedging that 75% dynamically based on the combined delta of the in-the-money call option and the accrued VWAP Reference Price. There are ways for passive and active managers holding WHSP to profit on this situation. And there is the arb.
  • Be long MLT against MLT NAV, or be long MLT against MLT NAV and monetise the WHSP option. Travis expects there will be upward pressure on WHSP over the next 20 trading days. He expects there could be more upward pressure in the following 20 days.
  • The good optionality comes in the next 20 days, though there is an index inclusion afterwards. As an owner of MLT, if the pre-positioning on the WHSP index up-weight scheduled for September happens by 2 Sep, that is all to the good. There is more good-quality event trade exposure before 2 Sep than after 2 Sep.

(link to Travis' insight: The STILL MARVELOUS Milton Arb Confirms Its Schedule - Much Marvelousness to Come)

Straits Trading (STRTR SP) (Mkt Cap: $1bn; Liquidity: $1mn)

Back on the 17 May, after ARA Asset Management announced a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on Straits Trading (STRTR SP) in Straits Trading: ARA's Pre-IPO Funding From SMBC. Based on the Scheme value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap. That was pretty close to the mark.

  • As discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management, ESR Cayman (1821 HK) has now all but sealed the takeover of ARA in a US$5.2bn deal. For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash & ESR scrip - from the transaction. According to STR, its NTA/share after the transaction increases to HK$5.52/share, up from HK$3.72/share as at 31 December.
  • For investors who entered back in October, or before, you've doubled your money. This is probably a good time to exit while there is some liquidity. Further monetisation of stub ops are expected - or Tecity takes the company private. The stub assets are mainly property-related. The rest of the assets are listed holdings and cash/debt. Even 0.8x P/B or 40% upside from here - ~S$4.40/share - would be a bargain for Tecity.
  • The pushback? This ARA development has been relatively well telescoped. There may not be any major new development near term, and this is a moderately long-dated transaction from ESR, therefore shares may drift sideways.

GCA Corporation (2174 JP) (Mkt Cap: $0.6bn; Liquidity: $6mn)

US niche investment bank Houlihan Lokey (HLI US) announced a deal to take GCA private in a Tender Offer - a friendly deal recommended by management - at ¥1380/share. This is at a decent premium to recent price, but at ¥1380/share it is just ¥1000/share after one converts the options and deducts the net cash (cash minus other current liabilities, which are far larger than debt). That is 12x 2021 company forecast EPS. That may not be that generous if there are synergies to be had.

  • The deal is probably a good idea for both parties - buyer and seller. But the price is light. And the process is weak. The reasoning about majority of minority is very weak. The process does not adhere very well to the METI Fair M&A Guidelines. Some would claim that this is not an MBO but when 57% of the shares being tendered are existing and former directors and executives, and one assumes those joining Houlihan Lokey's business will be paid in equity going forward through share-based compensation, and will otherwise be very well-compensated as leaders of the business, one can pretty easily call this a virtual MBO.
  • Travis expects it would be very difficult to block this. However, if someone made noise, there might be a little more juice in it. As it is, Travis expects it to go through as presented.
  • If you are inclined to do merger arb at narrow spreads, Travis thinks this one is worth buying just below terms. It would take a very aggressive activist to get this one to bump, and because both the Offeror and the Target make it their business to advise on corporate defense in the face of hostile bidders and activists, Travis expects they may have the upper hand.

(link to Travis' insight: Houlihan Lokey To Take Out GCA : Light But Likely Done)

MMC Corp Bhd (MMC MK) (Mkt Cap: $1.3bn; Liquidity: $5mn)

Back on the 3 June, Seaport Terminal (Johore) Sdn Bhd, a wholly-owned entity of Tan Sri Syed Mokhtar Albukhary, announced an Offer for port operator and utility play MMC at RM2.00/share, a 70.94% premium to last close. Seaport Terminal owns 51.76% of MMC. The Offer is being done via a selective capital reduction and repayment (SCR) exercise. The deal looked - and looks - clean. It was just a question of timing, and SCRs often average around six months to complete. Apart from an announcement on the 14 July extending the date in which the board intends to respond to Seaport proposal, there was no further development.

  • On the 4 August, RHB announced, on behalf MMC's board, the SCR will be tabled to shareholders at a forthcoming EGM. This gets the ball rolling, with an indicative completion date in the 4Q21.
  • Entitled Shareholders hold 1.468bn MMC shares or 48.24% of shares out, and the blocking stake is 146.89mn shares or 4.824%. I would presume Permodalan Nasional - with 20.9% of shares out - was sounded out prior to the Offer announcement.
  • This looks done. Trading (at the time of the insight) at a gross/annualised spread of 10.5%/31.2%. I would expect the circular to be dispatched within a month. Typically, the gross spread narrows into ~6% for precedent SCRs at the time of the circ dispatch.

(link to my insight: MMC Corp (MMC MK): Board Support, At Last)

Despite a momentary memory lapse from Oil Search Ltd (OSH AU), Santos Ltd (STO AU) confirmed on the 20 July it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board on the 25 June. Oil Search considered the terms were not fair but agreed there was strategic logic combining with Santos. In Santos/Oil Search: Getting Facts Straight, I recommended buying Oil Search, with a view towards an improved ratio upwards of ~0.66x, or ~25% premium to last close using both share prices as 24 June. Santos has now bumped the consideration by 6.5% to 0.6275 new Santos shares for every Oil Search share. This would give Oil Search's shareholders 38.5% of the merger group. The implied transaction price of A$4.52/share - if using Santos price on the 24 June - is a 19.7% premium to the undisturbed price. The Oil Search board recommends the Offer in the absence of superior proposal. Due diligence has been afforded. Link to my insight: Santos and Oil Search Agree on Terms.

Japanese materials, machinery, and electric power business Kobe Steel Ltd (5406 JP) announced they would merge with consolidated subsidiary Kobelco Eco Solutions (6299 JP) in a share swap deal that will result in Kobelco Eco getting delisted from the Tokyo Stock Exchange. Kobelco Eco shareholders will receive a scrip consideration of 4.85 Kobe Steel shares per Kobelco Eco share. As at the time of writing, Kobelco Eco has a market cap of ¥44bn (~US$400mn). The Deal is conditional on Kobelco Eco shareholder approval. The record date for the EGM is set to be 20th August 2021 and the EGM is expected to take place on 30th September 2021. The Merger is expected to become effective on 1st November 2021. Link to Janaghan Jeyakumar's insight: Kobelco Eco (6299) - Kobe Steel (5406): This Scrip Merger Is a Done Deal.

In Netmarble Buys SpinX for $2.2 Billion: Biggest Ever Overseas M&A Deal by a Korean Game Company.,Douglas Kim discusses the announcement that Netmarble Corporation (251270 KS) has agreed to purchase a 100% stake of a Hong-Kong based game company SpinX for $2.19 billion (2.5 trillion won). This is the biggest ever overseas M&A deal by a Korean game company.

On 3 August 2021, Blackstone received a notice from SAMR dated 2 August 2021 that the case concerning its notification under the PRC Anti-Monopoly Law had been formally accepted by SAMR for review. That helps explain Soho China Ltd (410 HK)'s share price pop of that day. The issue though is that the application doesn't appear to be classified as a simplified procedure. If it was simple, it would be online already. And it is difficult to understand why this has been accepted for review but it isn't "simple". At the very least, there is movement with the SAMR application.

STUBS

Naspers (NPN SJ) / Prosus (PRX NA)

The Prosus deal to buy 45% of Naspers is the biggest exchange offer outside the US in... well... forever. It has significant effect on the South African capital markets, on Emerging Markets indices, and on the primary avatar of Naspers' original tech investment portfolio, now called Prosus. It is something of a pain in the neck for investors, but then again, so is the entire construct. But it is a Really Big Deal, contingent on 45.33% of the weight of Naspers shareholdings agreeing to receive Prosus shares for some of their Naspers shares at what was, as of the end of the trading day Friday, a 5% premium to the close.

  • This is a long and sordid deal with complications everywhere in the holder structure. The key thing to understand is whether passive funds and active institutional funds will tender. Locals outside the money management business basically do not matter.
  • Travis expects the tender to go through. He currently expects pro-ration of 54-64%. He expects shares that investors do not want to tender will get borrowed and tendered anyway by arbitrageurs. It is obviously a less sexy trade now to buy and borrow and tender to cover a short Prosus position than it was 5% ago. But it is still worthwhile. Travis expects the deal may widen somewhat into the close because he does not believe that arb capacity is sufficiently large to carry all the local selling interest. Separately, the fact that the spread is this wide tells you that there is considerable interest to not be long Naspers after the Offer.
  • If you are a passive investor in MSCI EM or FTSE EM, Travis would recommend tendering then selling the Prosus shares received in place of selling Naspers shares in the downweight. If you are a passive investor in MSCI ACWI or FTSE Global/International, I would recommend tendering to get the Prosus. If you are a passive investor in MSCI EAFE or FTSE DM (i.e. you do not own Naspers now but will have to buy Prosus), and you are flexible, Travis recommends replacing some of your Prosus with Naspers.

Kingsoft Corp (3888 HK) / Beijing Kingsoft Office Software-A (688111 CH)

I see the discount to NAV at ~62%, compared to the 12-month average of 47%. The implied stub of (HK$39.30)/share compares to the (HK$24.02)/share average since Beijing Kingsoft's listing in November 2019. The simple ratio (KS/BS) of 0.085x compares to the 0.11x average over the same timeframe.

  • Hong Kong tech stocks have been battered of late on general risk aversion given all that has happened with Chinese regulators and internet names. In contrast, PRC domestic investors have pushed up the Star 50 Index by ~27% in the last five months - and the largest constituent of that index is Beijing Kingsoft.
  • The pushback on the trade here is that the stub ops are not performing at the same level as Beijing Kingsoft.
  • Nevertheless, a 60% NAV discount for a simple net cash holding company, Kingsoft provides an inexpensive exposure to Beijing Kingsoft - and it is the largest shareholder. I would simply opt for mean reversion here - and even a 47% discount to NAV is wide. And short interest, both in HK$ and % terms, is rolling over, with the % level back to the Covid low in March last year.

EVENTS

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

China Telecom Corp Ltd (H) (728 HK) has priced its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs and China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow. It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, Travis would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But...

  • China Mobile (941 HK) is probably 2 months behind China Telecom in its pursuit of an A-share listing. To get the same 3.4% RMB yield (for a better earning company with more cash) at an 87% premium to the H-share, China Mobile would need to rise to HK$59/share from the current HK$49/share. Because there is a buyback obligation at BVPS for the A-shares, and the promise is higher dividends, and because the powers-that-be would not want an A-share listing to flop after the demonstrated upset of the NYSE delisting, Travis would expect the A-shares to be "cushioned" by jawboning, buybacks, and possible indications of higher divs.
  • Given that for a company the size of China Telecom the regression line indicates a H-share discount to A-share of 35-37%, and China Mobile's market cap would suggest a discount of 20-24% might be "appropriate", Travis expects China Mobile has considerable room to rise.
  • Given that a lot of the speculative money in China has now washed out of the games, education, internet names, etc, while the telecoms represent a dearth of growth they may represent a safe haven. And given that they yield well more than Chinese Government Bonds on dividends, and multiples of the yield in terms of earnings, Chinese telecoms seem to be a place where money could congregate.
  • This trade is not for everybody because of the Executive Order which caused the delistings from the NYSE and the MSCI and FTSE index selldowns. US Persons need not look. But for those who can trade it, Travis thinks both China Telecom and China Mobile are attractive here. He thinks China Mobile is MORE attractive here than China Telecom, and would prefer to be long China Mobile to China Telecom over the next several months starting from the close of 6 August.

Aussie Bank Buyback Season Starts

Aussie Bank Buyback Season has started. This has been well-signalled. Profits have rebounded, writebacks have come. CEOs have stated "we have too much capital" and all the majors are well through the "Unquestionably Strong" level of CET1 at 10.5%. If you'd asked me a month ago, I would have been with consensus suggesting CBA with mammoth excess capital would start us off with an off-market buyback to be announced with earnings on 11 August. But ANZ announced an on-market buyback on 19 July. APRA loosened capital management guidance on 29 July. And NAB announced an on-market buyback on 30 July. ANZ's is for ~2% of shares out and ~3.7% of ADV over the next 11+ months. NAB's is for ~3% of shares out and 6.2% of ADV over the next 11+ months.

  • CBA and WBC report earnings on 11 and 19 August, and they have excess franking credits, so could be expected to launch off-market buybacks. Those would normally get announced with earnings, and would imply off-market buyback period in late Aug to late Sep. That would imply on-market buying of a non-negligible portion of the off-market buyback (~4% of shares out in each case) in a short period around the pricing reference period.
  • After those off-market buybacks are complete, expect the "slow-burn" on-market buyback names to see a slightly better cushion.
  • Travis expect the banks will continue to generate decent profits over the next year as well, and so with a lower-than-historic dividend payout ratio encouraged by APRA, and possibly more writebacks to come, I would expect excess capital to accumulate. One can play long/short trades, or tilt long. Still.
  • Travis would be long any or all of the four majors but I prefer the three "not CBA" names on valuation. He expect CBA and WBC may outperform short-term (through end-Sep) because of the dynamics and market impact of off-market buyback programs. After those are complete, he's NAB.

(link to Travis' insight: Aussie Bank Buyback Season Starts - Expect A$12-15bn and Funky Flows)

SK Innovation (096770 KS) confirmed that it plans to split-off its battery unit business. The company mentioned that it will separate out its battery and oil & gas production businesses into individual units by October. These new companies would continue to be owned by SK Innovation. SK Innovation first mentioned in July that it is considering on splitting off its battery unit business and today's announcement is a confirmation of this initial consideration. There will be an EGM on the 16 September to approve the formation of two new corporations including SK Battery Co and SK E&P Corp which are expected to be officially launched on October 1st. Link to Douglas' insight: SK Innovation: To Split SK Battery & SK E&P Business Units.

M&A - US

New Frontier Corporation (NFH US) (Mkt Cap: $1.5bn; Liquidity: $3mn)

Back on the 10 February 2021, private hospitals and medical centers operator New Frontier made an announcement it had received a preliminary non-proposal binding letter from a buyer-group, including President Carl Wu, Carnival Investments, Vivo Capital Fund IX, Max Rising International Ltd (a company affiliated with Carl Wu) - among others. The group offered to acquire shares of New Frontier for $12 in cash, a 27.9% premium to last close. New Frontier has now entered into a definitive merger agreement, also at US$12/share.

  • The merger is conditional on an affirmative vote from shareholders representing at least two-thirds of the shares out, and that the aggregate quantity of dissenting shares shall be less than 10% of shares out.
  • The announcement is silent on the buyer consortium's % holding, but I estimate it to be at least 37%. This looks pretty clean. Possible completion late 4Q21.
Hollysys Automation Technology (HOLI US) (Mkt Cap: $1.2bn; Liquidity: $5mn)

Hollysys has announced it is in the process of evaluating a non-binding offer from Superior Emerald, a company controlled by Ascendent Capital Partners, and Changli Wang, the founder of Hollysys (who retired in 2013 "with honor") to acquire all of the outstanding ordinary shares of Hollysys for US$23.00/share in cash. That's a 34.5% premium to the CPE/Shao consortium proposal, and a ~84% premium to the undisturbed price.

  • Hollysys is cheap, and you have two parties pitching Offers well in excess of the last traded price. On that basis, it is probably worth picking shares up around here.
  • Yet this is a sordid affair, with two ongoing court cases, and spiteful contention over the ownership of shares.
  • I don't expect this to move forward in any meaningful way until the conclusion of these trials. Plus expect CPE to continue with their bellicose press releases.

TOPIX INCLUSIONS!

Tachiaigai Bunbai Offerings are the most common "Pre-event" indicators for TOPIX Inclusion Events. A tachiaigai bunbai Offering is where a company sells newly issued or secondary shares (usually from a controlling shareholder) to the public (Off-market), with a limit placed on the maximum quantity per subscriber, most often with the intention of increasing the number of shareholders, public float percentage, and/or the market capitalization of the public float in order to meet TSE1 Section Transfer requirements. They are announced as taking place in a period a week or two later, then confirmed on the eve of the offer on pricing date - usually at a 2-4% discount - and the offer takes place pre-open the next day.

INDEX REBALS

OTHER M&A & EVENT UPDATES

CCASS

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.

Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, lock-up expiry, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.

Name

% chg

Into

Out of

King Fook (280 HK) 15.22%HSBCOutside CCASS
Shuang Yun (1706 HK)10.00%KingkeyOutside CCASS
Snack Empire (1843 HK) 75.00%EasyHSBC
Yu Tak International (8048 HK) 51.96%China YinshengGuotai
Wah Wo (9938 HK)25.00%HSBCOutside CCASS
Hao Bai (8431 HK)18.75%FutuGuotai
Nomad (8645 HK)18.70%UpbestOutside CCASS
Solis Holdings Ltd (2227 HK) 56.64%HSBCGlory Sun
Wan Leader (8482 HK)10.55%CitiSilverbricks
Source: HKEx

The following large movement(s) concern recently listed companies, and therefore are (likely) lock-up related.

Name

% chg

Into

Out of

Kuaishou Technology (1024 HK) 16.47%Std ChartOutside CCASS
Source: HKEx
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