Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>The Rights of <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. </p>
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<p>If there were borrow on SMM left, it would be a great arb.</p>
<p>As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. </p>
<p>They have the rest of today and tomorrow to trade. </p>
<p>There is also an "MGO Option." And this bit is interesting.</p>

The Rights of Sembcorp Marine (SMM SP) started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. 



If there were borrow on SMM left, it would be a great arb.
As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. 
They have the rest of today and tomorrow to trade. 
There is also an "MGO Option." And this bit is interesting.

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Bond market data and technology, BondEvalue

BondEvalue

Bond market data and technology

BondEvalue is a Singapore-based Fintech that specializes in bond market data and technology. The company's information services business offers bond market data on hard-currency corporate & sovereign bonds across Asia, Middle East, Europe and the Americas. The data, which includes bond prices, yields, news and analytics, is offered to end investors via interactive Mobile and Web Apps. Investors can sign up for a free trial of the service either via the company's website (https://bondevalue.com) or by downloading the BondEvalue Mobile App (http://onelink.to/wej7jq). BondEvalue is also developing an electronic bond exchange, BondbloX in Singapore that allows investors to trade bonds electronically in smaller sizes (US$1,000 or equivalent). For more information, visit https://www.bondblox.com/

Bond Market Data and Technology

Credit

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and 0.7% respectively. Saudi’s TASI was also up 0.6% while UAE’s ADX was down 0.1%. Brazil’s Bovespa also closed 0.8% higher. The Chinese Vice President said that Beijing will back private business in a bid to boost investor confidence. Asian markets had a mixed start – HSI and Nikkei gained 1% and 0.9% in early trade. Shanghai was broadly flat. Singapore’s STI was down 0.2%. US 10Y Treasury yields climbed another 2bp to 1.34%. EU Main CDS and Crossover CDS spreads tightened by 0.5bp and 2.7bp respectively. Asia ex-Japan CDS spreads widened 0.1bp.

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

<p>Two months ago, <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> announced a Rights Offering to raise S$1.5bn to recapitalise operations and provide working capital for the 16 projects currently under execution, some of which have been hit by delays where payment was expected sooner and it will instead come later. </p>
<p>The Rights Offering, coming on top of another Rights Offering and distribution of shares a year ago as the company was <s>cast away by</s> separated from its erstwhile parent <a href="https://www.smartkarma.com/entities/sembcorp-industries-ltd" target="_blank" data-smartkarma-citation="entities:1087:1" rel="noopener">Sembcorp Industries (SCI SP)</a> seemed to upset shareholders who did not understand why a second large offering in a year was needed. The simple answer was that last year, the net capital raise was minimal. It was primarily designed to generate proceeds to be able to pay back a large loan extended by its parent before the split. This year it is about survival.  </p>
<p>As I noted then, it was important to read the <a href="https://links.sgx.com/FileOpen/Trading%20and%20Liquidity%20Update.ashx?App=Announcement&amp;FileID=672231" target="_blank" rel="noopener">Trading and Liquidity Update</a>. The big points are:</p>
<div>
<ol style="list-style-type: decimal;">
<li>Workers are scarce. Costs are up. There are supply constraints because of covid-19. Foreign workers who left can't come back. Relative Singapore success in fighting covid early on raised labor costs locally. It is tough to get new workers and new covid-19 measures introduced in May 2021 won't make it easier. </li>
<li>Projects are delayed. Cash Flows are delayed. In particular, the delivery of two drillships to Transocean has been deferred from FY21/22 to FY2023 and later, delaying S$610mm in cash flow.</li>
<li>The company needs to optimize cost structure</li>
<li>Group turnover this year has been lower than expected. </li>
<li>The group needs to raise money to get comfort on ability to complete existing contract base.</li>
<li>The company is pivoting to renewables and clean energy solutions.</li>
</ol>
<p>The company needs money for all this. And a Rights Issue would provide certainty and immediacy.</p>
<p>The Securities Investors Association (Singapore), which has the general reputation of standing up to companies which do deals where retail investors are inconvenienced, came out with a press release with questions on <a href="https://sias.org.sg/latest-updates/press-statement-questions-to-sembcorp-marine-on-its-latest-proposed-rights-issue/" target="_blank" rel="noopener">15 July</a> which SMM answered on <a href="https://links.sgx.com/FileOpen/Announcement.ashx?App=Announcement&amp;FileID=675213" target="_blank" rel="noopener">19 July</a>.  The company got its Approval in Principle in early August from the SGX. SIAS sponsored a virtual dialogue on <a href="https://sias.org.sg/latest-updates/transcript-of-sias-sembcorp-marine-virtual-dialogue-6-august-2021/" target="_blank" rel="noopener">6 August</a>. There was an update on the <a href="https://links.sgx.com/1.0.0/corporate-announcements/JWHV82WCY953USMS/7bf07888e4783b9b297db68ce0cfac6a63afa1e381c0f244820b7f7d26feba8f" target="_blank" rel="noopener">18th of August</a> from the company, a further very late-in-the-day Q&amp;A published on <a href="https://links.sgx.com/FileOpen/Response%20to%20additional%20questions%20from%20shareholders.ashx?App=Announcement&amp;FileID=680896" target="_blank" rel="noopener">23 August</a> in the morning before the EGM, the EGM was held yesterday, the Rights Offering was approved, and...</p>
<p>...Today after the close, we have an announcement of the Rights Trading Period (31 Aug - 8 Sep), the Exercise Period (31 Aug - 14 Sep) and Pay Date (22 Sep) along with a re-delivery of all the documents from late June and early August (<a href="https://links.sgx.com/FileOpen/Launch%20Announcement.ashx?App=Announcement&amp;FileID=681089" target="_blank" rel="noopener">Announcement</a>, <a href="https://links.sgx.com/FileOpen/Media%20Release.ashx?App=Announcement&amp;FileID=681090" target="_blank" rel="noopener">Media Release</a>, <a href="https://links.sgx.com/FileOpen/Presentation.ashx?App=Announcement&amp;FileID=681091" target="_blank" rel="noopener">Presentation</a>, and <a href="https://links.sgx.com/FileOpen/Trading%20and%20Liquidity%20Update.ashx?App=Announcement&amp;FileID=681092" target="_blank" rel="noopener">Trading and Liquidity Update</a>).</p>
<p>24 August was the last day to trade WITH rights. 25 August is the first day to trade ex-rights.</p>
<p>There is strategy involved. </p>
<p>Much more below the fold.</p>
</div>

Two months ago, Sembcorp Marine (SMM SP) announced a Rights Offering to raise S$1.5bn to recapitalise operations and provide working capital for the 16 projects currently under execution, some of which have been hit by delays where payment was expected sooner and it will instead come later. 
The Rights Offering, coming on top of another Rights Offering and distribution of shares a year ago as the company was cast away by separated from its erstwhile parent Sembcorp Industries (SCI SP) seemed to upset shareholders who did not understand why a second large offering in a year was needed. The simple answer was that last year, the net capital raise was minimal. It was primarily designed to generate proceeds to be able to pay back a large loan extended by its parent before the split. This year it is about survival.  
As I noted then, it was important to read the Trading and Liquidity Update. The big points are:


Workers are scarce. Costs are up. There are supply constraints because of covid-19. Foreign workers who left can't come back. Relative Singapore success in fighting covid early on raised labor costs locally. It is tough to get new workers and new covid-19 measures introduced in May 2021 won't make it easier. 
Projects are delayed. Cash Flows are delayed. In particular, the delivery of two drillships to Transocean has been deferred from FY21/22 to FY2023 and later, delaying S$610mm in cash flow.
The company needs to optimize cost structure
Group turnover this year has been lower than expected. 
The group needs to raise money to get comfort on ability to complete existing contract base.
The company is pivoting to renewables and clean energy solutions.

The company needs money for all this. And a Rights Issue would provide certainty and immediacy.
The Securities Investors Association (Singapore), which has the general reputation of standing up to companies which do deals where retail investors are inconvenienced, came out with a press release with questions on 15 July which SMM answered on 19 July.  The company got its Approval in Principle in early August from the SGX. SIAS sponsored a virtual dialogue on 6 August. There was an update on the 18th of August from the company, a further very late-in-the-day Q&amp;A published on 23 August in the morning before the EGM, the EGM was held yesterday, the Rights Offering was approved, and...
...Today after the close, we have an announcement of the Rights Trading Period (31 Aug - 8 Sep), the Exercise Period (31 Aug - 14 Sep) and Pay Date (22 Sep) along with a re-delivery of all the documents from late June and early August (Announcement, Media Release, Presentation, and Trading and Liquidity Update).
24 August was the last day to trade WITH rights. 25 August is the first day to trade ex-rights.
There is strategy involved. 
Much more below the fold.


Sembcorp Marine Goes Ex-Rights - Strategy From Here

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div>
<p>Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. </p>
<p>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</p>
<p>We have covered the listing and previous placements for KDC in our earlier notes:</p>
</div><div><ul style="list-style-type: disc;">
<li>Sep 2019 placement for US$273m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-just-in-time-for-the-index-inclusion" target="_blank" rel="noopener">Keppel DC REIT Placement - Just in Time for the Index Inclusion</a>
</li>
<li>May 2018 placement for US$228m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-accretive-acquisition-and-probably-expected-dilution" target="_blank" rel="noopener">Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution</a>
</li>
<li>IPO: <a href="https://www.smartkarma.com/insights/first-of-its-kind-exposure-to-rapidly-growing-data-centers" target="_blank" rel="noopener">First of its kind exposure to rapidly growing data centers</a>
</li>
</ul></div>


Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. 
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
We have covered the listing and previous placements for KDC in our earlier notes:

Sep 2019 placement for US$273m: Keppel DC REIT Placement - Just in Time for the Index Inclusion

May 2018 placement for US$228m: Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution

IPO: First of its kind exposure to rapidly growing data centers



Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

David Blennerhassett

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

Singapore

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

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Keppel Corp (KEP SP)

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Last Day+ for the Sembcorp Marine Rights - Replacement Trade for long-only/passive investors, and MGO option for arbs/events. There is some...

Travis Lundy

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and...

BondEvalue

Sembcorp Marine Goes Ex-Rights - Strategy From Here

Sembcorp Marine goes ex-rights on 25 August. The rights start trading on 31 August. There could be trades to do here for long-only investors, but...

Travis Lundy

Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the...

Sumeet Singh

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

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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