(link to Travis Lundy's insight: Mapletree Mega-Merger Means MCT Markup)
China's AML (Anti-Monopoly Law) Authority approval, the key SPA condition to the China Logistics Property Holdings (1589 HK) transaction, has now been satisfied. A number of conditions to the SPA remain outstanding, almost all of which can be waived by the Offeror (JD.com Inc. (9618 HK)). Trading tight to terms with possible payment in early February. Link to my insight: CLPH (1589 HK): MGO Imminent As Anti-Monopoly Approval Satisfied.
The Katakura Industries (3001 JP) MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception). Another would-be activist bought Oasis' shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price. The bidder dashed those hopes, and shares fell, but not to the TOB Price. Link to Travis' insight: Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later.
The Scheme Document for the S$1.4bn ESR-REIT (EREIT SP) / ARA LOGOS (ALLT SP) merger has now been dispatched. The Scheme Meeting will take place on the 27 January with the expected date for the payment of the Cash Consideration and issuance of Consideration Units on the 28 February. The IFA (ING Bank) considered the terms of the Scheme to be fair and reasonable. Link to my insight: ARA Logos (ALLT SP): Scheme Doc Out. Meeting On 27 Jan.
For a decade Adastria Co Ltd (2685 JP) was the fastest growing fashion retailer but, as it matured and the apparel market stagnated, growth rates declined. The company now wants to become a diversified lifestyle retailer with food as a major element so, to speed things along, it will acquire restaurant business Zetton Inc (3057 JP). It is also investing in overseas retailers to spearhead expansion abroad, a strategy that will include Zetton's leading chain, Aloha Table. Link to Michael Causton's insight: Adastria to Expand Beyond Fashion with Zetton Acquisition.
Asia Optical Co (3019 TT) has bumped its Scheme Offer Price for Yorkey Optical International (2788 HK) to HK$0.999/share, a 13.5% increase over its original Offer Price of HK$0.88/share. David Webb, who previously indicated the original price was inadequate, has given an irrevocable undertaking to vote his 49.588mn shares (10.4% of Independent Scheme Shares) in favour of the Scheme. This transaction is now done. The Scheme Document is expected to be dispatched on the 25 January suggesting payment early April. Link to my insight: Yorkey Optical (2788 HK): Webb Backs Asia Optical's Bump.
Keiyo Co Ltd (8168 JP) announced a large (9.2% of shares out) ToSTNeT-3 buyback at JPY 855/share. Normally this would be an occasion for looking at the significant accretion. However, float is low and there appears to be one buyer who may have influenced the price upwards in recent months. It appears that holder which increased its stake last year could be the seller. If it is the seller, there may not be another buyer waiting in the wings. The stock would see EPS accretion for next year, but even if the company raises EBITDAM from long-term industry-lagging numbers to industry average, and shareholders benefit from accretion, it will still be more expensive than peers on a PER basis - trailing and/or forecast. Link to Travis' insight: Very Large Keiyo (8168 JP) Buyback NOT Necessarily Bullish.
Shares have declined ~9% since copper/cobalt miner Jinchuan Group International Resources (2362 HK) said it was unaware Jinchuan Group, its largest shareholder, was proposing a privatisation plan. There is, as yet, no deal on the table. Just rumours. Jinchuan does not appear expensive relative to peers. Not once has the listed vehicle tapped the secondary market. Volume, relative to its market cap, is minimal. Copper is a mainstay for most electrical wiring, power generation, transmission, distribution, and circuitry on account of its high conductivity and durability. As the world moves towards alternative energy sources, copper should remain in high demand. Jinchuan is also China's third-largest cobalt refiner, whose output is used in lithium-ion batteries. Taking the company private would not be a significant outlay for Jinchuan Group. Especially ahead of the Musonoi project coming online. I'd be looking to get involved on any further weakness. Link to my insight: Jinchuan International (2362 HK): Thoughts On A Rumoured Offer.
The China Mobile (600941 CH) A-Share IPO at RMB 57.58/share started trading on 5 January. Travis Lundy thought the premium disappointing, and the dividend overly attractive. At 800x over-subscribed, with substantial clawback, IPO allocations to mainland investors were limited. Cash should be back in investors' hands and the yield is very attractive on A-shares and H-shares. Ahead of trading, China Mobile announcement of a massive buyback. This was within the mandate granted in the 2021 AGM on 29 April 2021, but this has to be considered to be a surprise. They will not likely be able to buy back H-shares past the late April 2022 AGM under the existing mandate, but one would expect the mandate to be renewed and for China Mobile to continue buying.
- 10% or 2.047 billion shares is a LOT. It is 37% of the entire publicly-tradable CCASS position. It is nearly 70 days of ADV. The really big picture is China Mobile finally doing something right with its huge pile of cash. One should expect that the main goal is to cover the 972,555,000 shares of dilution created through the RMB Share Issuance, not necessarily to buy back all 2.047 billion shares.
- Travis would buy dips post the pop. He expects China Telecom (H) (728 HK) could rally on this news too because the H-share trades at a 50% discount to the A-share and the company has net cash equal to about 10% of shares out. Travis expects other SOE H-shares with significant discounts to the As and lots of net cash or significant ability to maintain and roll a net debt position could look at buying back H-shares. This is a good example of an issuer executing an H-share discount arb for the benefit of shareholders.
- If this picks up, Travis would want to be long ALL deeply discount H-shares where the SOE has spare cash, a big discount, and particularly in cases where the Trump Executive Order caused US Persons to sell.
Japan Prime Realty Investment (8955 JP) ("JPR") announced a follow-on equity offering to fund part of their recently announced property acquisition. The primary offer quantity is 38,100 units. In addition, there will also be an over-allotment quantity of 1,900 units. The total size of this offering could be roughly ¥16bn (~US$135mn). In Japan Prime Realty REIT (8955 JP): Offering Could Trigger Outperformance Vs TSEREIT Index, Janaghan Jeyakumar takes a look at the attractiveness of JPR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.
On 5 January, Posco (005490 KS) announced several shareholder-friendly policies including a partial cancellation of its treasury shares. POSCO currently has 11.56 million treasury shares, accounting for 13.3% of its total outstanding shares. The company has not specified exactly how many treasury shares it will cancel this year. Link to Douglas Kim's insight: POSCO Announces Partial Cancellation of Treasury Shares
Nippon Building Fund (8951 JP)("NBF") announced a follow-on equity offering to fund part of their recently announced property acquisition. The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,500 units. The total size of this offering could be roughly ¥33bn (~US$285mn). In Nippon Building Fund (8951): Offering Could Trigger Outperformance Vs TSEREIT Index, Janaghan takes 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. In Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers, Travis looks at how much of float is held by passive trackers.
Comforia Residential REIT (3282 JP) ("CRR") announced a follow-on equity offering to fund part of their recently announced property acquisition. The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn). In Comforia Residential REIT (3282 JP): Offering Could Trigger Outperformance Vs Comps, Janaghan looks at the attractiveness of CRR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.