Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The High Court of Singapore has now sanctioned the proposed restructuring of <a href="https://www.smartkarma.com/entities/olam-international-ltd" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam International (OLAM SP)</a> and the proposed listing of OFI Group.</li>
<li>Entitlement in respect of the Scheme will close on the 11 March. The last day of trading is the 9 March. The listing of OFI is expected in the 2Q22.</li>
<li>With many grain/agri prices touching record highs amid war in Ukraine, boasting an upstream supply is not a bad thing. But the timing of OFI's listing could work both ways.</li>
</ul>


The High Court of Singapore has now sanctioned the proposed restructuring of Olam International (OLAM SP) and the proposed listing of OFI Group.
Entitlement in respect of the Scheme will close on the 11 March. The last day of trading is the 9 March. The listing of OFI is expected in the 2Q22.
With many grain/agri prices touching record highs amid war in Ukraine, boasting an upstream supply is not a bad thing. But the timing of OFI's listing could work both ways.


Olam's Demerger: The Sum Is Probably Greater Than The Whole

<ul>
<li>
<a href="https://www.smartkarma.com/entities/adani-wilmar" target="_blank" data-smartkarma-citation="entities:34763:1" rel="noopener">Adani Wilmar (AWLTD IN)</a> is up ~70% since its listing two days ago. </li>
<li>
<a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a>'s shares remain largely unchanged since Adani Wilma's IPO was officially floated. </li>
<li>90%-Held <a href="https://www.smartkarma.com/entities/yihai-kerry-arawana-holdings-co-ltd-8e397b7b-30b8-4284-afc1-e1dc799b2e5c" target="_blank" data-smartkarma-citation="entities:33230:1" rel="noopener">Yihai Kerry Arawana Holdings (300999 CH)</a> is down 52% in the past year, but trading in line with its average forward multiples since listing. </li>
</ul>



Adani Wilmar (AWLTD IN) is up ~70% since its listing two days ago. 

Wilmar International (WIL SP)'s shares remain largely unchanged since Adani Wilma's IPO was officially floated. 
90%-Held Yihai Kerry Arawana Holdings (300999 CH) is down 52% in the past year, but trading in line with its average forward multiples since listing. 


Wilmar Largely Unchanged As Wilmar Adani's IPO Surges

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> is coming up "expensive" on my stub monitor, yet still trades at a material 65% discount to NAV. </li>
<li>Preceding my comments on Wilmar are the weekly setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold of at least 20%.</li>
</ul>



Wilmar International (WIL SP) is coming up "expensive" on my stub monitor, yet still trades at a material 65% discount to NAV. 
Preceding my comments on Wilmar are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold of at least 20%.


StubWorld: Wilmar Gains Ahead Of Adani Wilmar IPO

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<a href="https://www.smartkarma.com/entities/olam-international-ltd" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam International (OLAM SP)</a> has been a poor stock price performer on the SGX ever since it was attacked by short-seller Muddy Waters in 2012. Olam was essentially rescued by Temasek while peer Noble went bust. The 10-year stock chart says it all. Olam recently closed at 1.76 SGD, far below its peak of 2.64 SGD last reached in February 2012!<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/967/original/image_58873528221633585900666.png?1633585903" class="editor-image img-responsive" data-smartkarma-image-id="233967"></figure>Fast forward almost ten years and Olam is set to go into a period of heightened corporate activity to get Temasek (53% shareholder) its required exit. As well-telegraphed OFI (Olam Food Ingredients) will list on the LSE in 1H22. The OGA (Olam Global Agri) business could get a listing in the US by late 2022 or early 2023.Both listings could unlock significant value for Temasek and Olam minorities. We expect full-on press coverage, analyst, and corporate banking awareness of the OFI deal come 1H22. Olam is a small company in a global context but at 6.7 billion SGD (18 billion SGD Enterprise Value) it is a big deal for the SGX.Back-of-the-envelope calculations and comments to Reuters and The Times make us conclude that Olam could be worth well over 3 SGD/share depending on the eventual OFI valuation and debt assigned to the unit. In a blue-sky scenario, we even get a valuation as high as 4 SGD. That is 70% to 124% upside from Olam's last traded price on SGX. In this scenario, we assign 0 value to OGA which is unrealistic. Major wild card: what % of Olam's 15 billion SGD debt gets assigned to OFI.Given Temasek's ($400 billion AUM and Singapore's key SWF) importance to global investment banks, we are betting that the players involved will pull out all stops to make OFI's listing a success. Minority investors looking to ride the coattails of "the great Temasek unlock" would be wise to position themselves in Olam stock during 4Q21. The downside is protected by a 4% dividend yield which should be safe in case capital markets make an IPO impossible in 1H22.

Olam International (OLAM SP) has been a poor stock price performer on the SGX ever since it was attacked by short-seller Muddy Waters in 2012. Olam was essentially rescued by Temasek while peer Noble went bust. The 10-year stock chart says it all. Olam recently closed at 1.76 SGD, far below its peak of 2.64 SGD last reached in February 2012!Fast forward almost ten years and Olam is set to go into a period of heightened corporate activity to get Temasek (53% shareholder) its required exit. As well-telegraphed OFI (Olam Food Ingredients) will list on the LSE in 1H22. The OGA (Olam Global Agri) business could get a listing in the US by late 2022 or early 2023.Both listings could unlock significant value for Temasek and Olam minorities. We expect full-on press coverage, analyst, and corporate banking awareness of the OFI deal come 1H22. Olam is a small company in a global context but at 6.7 billion SGD (18 billion SGD Enterprise Value) it is a big deal for the SGX.Back-of-the-envelope calculations and comments to Reuters and The Times make us conclude that Olam could be worth well over 3 SGD/share depending on the eventual OFI valuation and debt assigned to the unit. In a blue-sky scenario, we even get a valuation as high as 4 SGD. That is 70% to 124% upside from Olam's last traded price on SGX. In this scenario, we assign 0 value to OGA which is unrealistic. Major wild card: what % of Olam's 15 billion SGD debt gets assigned to OFI.Given Temasek's ($400 billion AUM and Singapore's key SWF) importance to global investment banks, we are betting that the players involved will pull out all stops to make OFI's listing a success. Minority investors looking to ride the coattails of "the great Temasek unlock" would be wise to position themselves in Olam stock during 4Q21. The downside is protected by a 4% dividend yield which should be safe in case capital markets make an IPO impossible in 1H22.

Olam: Lots of Corporate Activity in '22/'23 to Unlock Significant Value for Temasek and Minorities

<div>
Back on the 26 February this year, Huon <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02347852-3A562617?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a loss of A$95.3mn for the 1H21, including a non-impairment charge of A$113.9mn. In a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02336871-3A560489?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">market update</a> earlier that month, Huon said salmon prices had declined ~40% relative to the first six months of 2020. Concurrent with its 1H21 results, Huon said the board has initiated a strategic review to assess the potential for corporate-level transactions for the benefit of shareholders. In a follow-up announcement on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02387935-3A569418?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">25 June</a>, Huon said that strategic review remained ongoing. 
</div>
<div>
The most likely outcome of the review was a take-private transaction, however, an auction process dragged on, with a number of bidders pulling out on account of pricing. 
On the 6 August, Huon <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02404691-3A572314?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a firm Offer, by way of a Scheme, with  Brazil's <a href="https://www.smartkarma.com/entities/jbs-sa" target="_blank" data-smartkarma-citation="entities:24455:1" rel="noopener">JBS SA (JBSS3 BZ)</a>. Huon shareholders would receive A$3.85/share in cash. A fully-franked dividend of $0.0125/share - if paid - will be netted.
The cash price was a 61% premium to the last close, before the strategic review was announced on the 26 February. The Bender family with 53% of shares out intend to vote all of their shares in support of the Scheme, in the absence of a superior offer. The Offer also required approval from FIRB.
Apart from FIRB signing off - no small ask given JBS had fallen foul of US regulators recently - this looked like a done deal, with possible completion in November. 
</div>
<div>
But Andrew Forrest's family fund Tattarang had other plans and promptly upped its stake to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02405676-3A572494?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">18.51%</a> on the 10 August from 7.33% at the time of the SID announcement. That current stake all but blocks a Scheme. 
Not to be outdone,  JBS announced a parallel takeover bid on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02406953-3A572757?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">13 August</a>. This second Offer is conditional on 50.1% acceptances from shareholders.  With the Bender's stake, that Offer is effectively done - barring FIRB rejection. The Bender family also entered in a pre-bid acceptance agreement for 19.9% of shares out. 
It was unclear at the time whether Forrest was trying to block JBS in Huon or just looking for a better price.
In various media advertisements last Friday, Forrest <a href="https://www.harvestroad.com/its-time-to-commit-a-public-challenge-to-jbs-from-dr-andrew-forrest-ao/" target="_blank" rel="noopener">called on</a> JBS to commit to the same principles as Tattarang’s agri-food business, Harvest Road, and its beef processing company, Harvey Beef.
<div>
<blockquote>
For a small expense and through good management at Harvey Beef, we have established a clear No Pain No Fear framework in the critical stages of cattle processing as part of our ambition to exceed animal welfare standards and create a path for others to follow.
This means our customers don’t have to compromise their values when they choose to buy our products.
Animals provide humans with a valuable source of protein, the least we can do is respect this by ensuring they are treated with the utmost care.
As the world’s biggest protein producer, JBS can rise to this same standard.
</blockquote>
Not altogether surprisingly, JBS took umbrage with this challenge, saying it already adheres to high standards in its animal handling. As did Huon. 
Huon <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02409974-3A573426?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> this morning...   that it has been...
<blockquote>
uncompromising in its commitment to the highest standards of animal husbandry, biosecurity, environmental management, and sustainable farming practices. Huon remains the only seafood producer in Australia to achieve RSPCA Approved Farming certification and firmly believes its sustainable salmon farming practices can be benchmarked against the best standards in the world.
</blockquote>
</div>
Huon also added Tattarang had earlier expressed interest in Huon and submitted a non-binding and conditional indicative offer. Tattarang was invited to participate further in the strategic review process but declined to do so. Tattarang’s non-binding and conditional indicative offer was at a material discount to JBS’s $3.85 offer.
Oddly, Huon is trading almost at terms. Given the non-negligible risk FIRB blocks the deal, I would avoid shares here.
More below the fold. 

</div>


Back on the 26 February this year, Huon announced a loss of A$95.3mn for the 1H21, including a non-impairment charge of A$113.9mn. In a market update earlier that month, Huon said salmon prices had declined ~40% relative to the first six months of 2020. Concurrent with its 1H21 results, Huon said the board has initiated a strategic review to assess the potential for corporate-level transactions for the benefit of shareholders. In a follow-up announcement on the 25 June, Huon said that strategic review remained ongoing. 


The most likely outcome of the review was a take-private transaction, however, an auction process dragged on, with a number of bidders pulling out on account of pricing. 
On the 6 August, Huon announced a firm Offer, by way of a Scheme, with  Brazil's JBS SA (JBSS3 BZ). Huon shareholders would receive A$3.85/share in cash. A fully-franked dividend of $0.0125/share - if paid - will be netted.
The cash price was a 61% premium to the last close, before the strategic review was announced on the 26 February. The Bender family with 53% of shares out intend to vote all of their shares in support of the Scheme, in the absence of a superior offer. The Offer also required approval from FIRB.
Apart from FIRB signing off - no small ask given JBS had fallen foul of US regulators recently - this looked like a done deal, with possible completion in November. 


But Andrew Forrest's family fund Tattarang had other plans and promptly upped its stake to 18.51% on the 10 August from 7.33% at the time of the SID announcement. That current stake all but blocks a Scheme. 
Not to be outdone,  JBS announced a parallel takeover bid on the 13 August. This second Offer is conditional on 50.1% acceptances from shareholders.  With the Bender's stake, that Offer is effectively done - barring FIRB rejection. The Bender family also entered in a pre-bid acceptance agreement for 19.9% of shares out. 
It was unclear at the time whether Forrest was trying to block JBS in Huon or just looking for a better price.
In various media advertisements last Friday, Forrest called on JBS to commit to the same principles as Tattarang’s agri-food business, Harvest Road, and its beef processing company, Harvey Beef.


For a small expense and through good management at Harvey Beef, we have established a clear No Pain No Fear framework in the critical stages of cattle processing as part of our ambition to exceed animal welfare standards and create a path for others to follow.
This means our customers don’t have to compromise their values when they choose to buy our products.
Animals provide humans with a valuable source of protein, the least we can do is respect this by ensuring they are treated with the utmost care.
As the world’s biggest protein producer, JBS can rise to this same standard.

Not altogether surprisingly, JBS took umbrage with this challenge, saying it already adheres to high standards in its animal handling. As did Huon. 
Huon said this morning...   that it has been...

uncompromising in its commitment to the highest standards of animal husbandry, biosecurity, environmental management, and sustainable farming practices. Huon remains the only seafood producer in Australia to achieve RSPCA Approved Farming certification and firmly believes its sustainable salmon farming practices can be benchmarked against the best standards in the world.


Huon also added Tattarang had earlier expressed interest in Huon and submitted a non-binding and conditional indicative offer. Tattarang was invited to participate further in the strategic review process but declined to do so. Tattarang’s non-binding and conditional indicative offer was at a material discount to JBS’s $3.85 offer.
Oddly, Huon is trading almost at terms. Given the non-negligible risk FIRB blocks the deal, I would avoid shares here.
More below the fold. 



United States

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products. The Company processes oilseeds, corn, milo, oats, barley, peanuts, and wheat. Archer-Daniels-Midland also processes produce products which have primarily two end uses including food or feed ingredients.

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Archer Daniels Midland Co (ADM US)

Olam's Demerger: The Sum Is Probably Greater Than The Whole

With many grain/agri prices touching record highs amid war in Ukraine, having an upstream supply is not a bad thing. But the timing of OFI's...

David Blennerhassett

Wilmar Largely Unchanged As Wilmar Adani's IPO Surges

Wilmar is relatively inexpensive, even taking into account its cross-border, possibly-difficult-to-short subsidiary. Management's average buyback...

David Blennerhassett

StubWorld: Wilmar Gains Ahead Of Adani Wilmar IPO

I'd buy Wilmar here. Management's average buyback price since April is $4.44/share. I see a more realistic discount of ~50% - where it traded on...

David Blennerhassett

Olam: Lots of Corporate Activity in '22/'23 to Unlock Significant Value for Temasek and Minorities

Olam is set to see a significant increase in corporate activity in 1H22. Investors would be wise to position in the stock before the newsflow hits...

Nicolas Van Broekhoven

Huon Ag (Huo AU): Twiggy Went To Market

Trading at a gross/annualised return of 0.2%/1.2%. I doubt there is a bump here. I'd be inclined to avoid this transaction. I think FIRB approval...

David Blennerhassett

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