Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 26 June 2020, <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> disclosed it held 147mn shares (~4.58%) in <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a>. Gulf continued to increase its stake - and make public announcements after the fact - culminating in a holding of 15% on <a href="https://www.nationthailand.com/news/30402235" target="_blank" rel="noopener">28 January</a>.</p>
<p>In its FY20 results, the <a href="https://www.set.or.th/dat/news/202102/21018001.pdf" target="_blank" rel="noopener">management discussion</a> shed no new light as to their forward intention on Intouch.</p>
<p>Technically, Gulf could take its take all the way up to 24.99% before it was obligated to make an MGO - see <em><a href="https://skr.ma/m2vxP" target="_blank" rel="noopener">Quiddity M&amp;A Guide 2021: Thailand</a></em>.</p>
<p>But an energy company making a tilt for a satellite, internet, and telecommunications company?</p>
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<h3>The New News</h3>
<p>Gulf has <a href="https://www.set.or.th/set/pdfnews.do?newsId=16187886028860&amp;sequence=0" target="_blank" rel="noopener">announced</a> it intends to make a Voluntary Tender Offer (VTO) for shares not held in Intouch at Bt65/share. If it gets to 50%, it will make a downstream offer for <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl-ca1a971f-2f70-4565-b1fd-dda5b533acd3" target="_blank" data-smartkarma-citation="entities:27653:1" rel="noopener">Advanced Info Service PCL (ADVANC-R TB)</a> at Bt122.86/share. The VTO is conditional, amongst other things, on a waiver NOT to make a  downstream offer for <a href="https://www.smartkarma.com/entities/thaicom-pcl" target="_blank" data-smartkarma-citation="entities:18019:1" rel="noopener">Thaicom Pcl (THCOM TB</a>.</p>
<p>Bt65/share is bang-in-line with Intouch's NAV/share.</p>
<p>The Tender Offer has no minimum acceptance condition.</p>
<p>Gulf currently holds 18.93% (there was no prior announcement they had cleared 15%) of shares outstanding. If Singtel (21%) and Temasek (5.2%) tender, Gulf only needs another 4.87% to clear 50%.</p>
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<p>Talk about being caught off-guard. I did not expect Gulf to lift its stake from 5% to 10%, then again to 15%. And I certainly did not expect a full Offer for Intouch.</p>
<p>More below the fold.</p>
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On the 26 June 2020, Gulf Energy Development Public Company (GULF TB) disclosed it held 147mn shares (~4.58%) in Intouch Holdings (INTUCH TB). Gulf continued to increase its stake - and make public announcements after the fact - culminating in a holding of 15% on 28 January.
In its FY20 results, the management discussion shed no new light as to their forward intention on Intouch.
Technically, Gulf could take its take all the way up to 24.99% before it was obligated to make an MGO - see Quiddity M&amp;A Guide 2021: Thailand.
But an energy company making a tilt for a satellite, internet, and telecommunications company?




The New News
Gulf has announced it intends to make a Voluntary Tender Offer (VTO) for shares not held in Intouch at Bt65/share. If it gets to 50%, it will make a downstream offer for Advanced Info Service PCL (ADVANC-R TB) at Bt122.86/share. The VTO is conditional, amongst other things, on a waiver NOT to make a  downstream offer for Thaicom Pcl (THCOM TB.
Bt65/share is bang-in-line with Intouch's NAV/share.
The Tender Offer has no minimum acceptance condition.
Gulf currently holds 18.93% (there was no prior announcement they had cleared 15%) of shares outstanding. If Singtel (21%) and Temasek (5.2%) tender, Gulf only needs another 4.87% to clear 50%.



Talk about being caught off-guard. I did not expect Gulf to lift its stake from 5% to 10%, then again to 15%. And I certainly did not expect a full Offer for Intouch.
More below the fold.


Intouch Holdings: Gulf's Inexplicable Offer

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<p>This week in StubWorld ...</p>
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<a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a>'s long-term discount to NAV and the simple ratio (Intouch over <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a>) are at all-time extremes.  <br><br><a href="https://www.smartkarma.com/entities/8122" target="_blank" data-smartkarma-citation="entities:8122:1" rel="noopener"></a>And <a href="https://www.smartkarma.com/entities/people-s-insurance-co-grou-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance Co (PICC) (1339 HK)</a> is coming up "cheap" after fully correcting last years' narrowing.</div>
<div>Preceding my comments on Intouch and PICC, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</div>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Intouch Holdings (INTUCH TB)'s long-term discount to NAV and the simple ratio (Intouch over Advanced Info Service (ADVANC TB)) are at all-time extremes.    And People's Insurance Co (PICC) (1339 HK) is coming up "cheap" after fully correcting last years' narrowing.
Preceding my comments on Intouch and PICC, 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 - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Reverse Intouch's Stub; (Potentially) Set Up PICC (1339 HK)'s

Thematic (Sector/Industry)

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<p>This revised guide is part of a series of M&amp;A guides that our Quiddity* team (see our profiles or the footnote below) are publishing to aid investors in understanding the rules, parameters, possibilities, and processes when companies conduct mergers and acquisitions. </p>
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<p>The initial guide - <em><a href="https://skr.ma/rTzri" target="_blank" rel="noopener">Quiddity Thailand M&amp;A Guide 2019</a></em> - was published in May 2019. Since that time, there have been some new developments/clarifications, many of which relate to voluntary de-listings. This is an update.</p>
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<p>These insights are designed to be used as a reference. They are not actionable.</p>
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This revised guide is part of a series of M&amp;A guides that our Quiddity* team (see our profiles or the footnote below) are publishing to aid investors in understanding the rules, parameters, possibilities, and processes when companies conduct mergers and acquisitions. 


The initial guide - Quiddity Thailand M&amp;A Guide 2019 - was published in May 2019. Since that time, there have been some new developments/clarifications, many of which relate to voluntary de-listings. This is an update.


These insights are designed to be used as a reference. They are not actionable.


Equity Bottom-Up

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<p>This week in StubWorld ...</p>
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<p>Following the <a href="https://links.sgx.com/FileOpen/THBEV_Potential_Spin_Off_Listing_of_BeerCo.ashx?App=Announcement&amp;FileID=647386" target="_blank" rel="noopener">no-objection notice</a> from the SGX on the <a href="https://links.sgx.com/FileOpen/THBEV_Potential_Spin_Off_Listing_of_BeerCo.ashx?App=Announcement&amp;FileID=647386" target="_blank" rel="noopener">4 February</a> concerning its BeerCo IPO, <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> announced that the SGX has <a href="https://links.sgx.com/FileOpen/TB_Annoucement_Conditional_ETL_for_BeerCo.ashx?App=Announcement&amp;FileID=654525" target="_blank" rel="noopener">issued</a> its conditional eligibility-to-list letter for the potential listing.  </p>
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<p>Preceding my comments on ThaiBev are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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<p>As always, more below the fold.</p>
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This week in StubWorld ...




Following the no-objection notice from the SGX on the 4 February concerning its BeerCo IPO, Thai Beverage (THBEV SP) announced that the SGX has issued its conditional eligibility-to-list letter for the potential listing.  




Preceding my comments on ThaiBev 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 - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


As always, more below the fold.


StubWorld: ThaiBev’s BeerCo Spin-Off One Step Closer

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>The Stock Exchange of Thailand (SET) has commenced a market consultation on changing the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a>, SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.</p><p>The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.</p><p>The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.</p><p>Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.</p><p>In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.</p>

The Stock Exchange of Thailand (SET) has commenced a market consultation on changing the Stock Exchange of Thailand SET 50 Index (SET50 INDEX), SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

Thailand

Intouch Holdings Public Company Limited is a holding company that invests in diversified telecommunication and media and advertising businesses.  The Company, through its subsidiaries, provides television broadcasting, cellular phone and wireless services.

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Intouch Holdings (INTUCH TB)

Intouch Holdings: Gulf's Inexplicable Offer

I don't get the logic behind the Offer. Still, this looks done. Trading at a 4.4%/11.2% gross/annualised spread, assuming five months to complete....

David Blennerhassett

StubWorld: Reverse Intouch's Stub; (Potentially) Set Up PICC (1339 HK)'s

Intouch Holdings (INTUCH TB)'s long-term discount to NAV and the simple ratio (Intouch over Advanced Info Service (ADVANC TB)) are at all-time...

David Blennerhassett

Quiddity M&A Guide 2021: Thailand

This revised guide is part of a series of M&A guides to aid investors in understanding the rules, parameters, possibilities, and processes when...

David Blennerhassett

StubWorld: ThaiBev’s BeerCo Spin-Off One Step Closer

I see perhaps 12% upside from here if assuming a 25% discount to NAV. Given its growth potential, investors may switch out of ThaiBev into BeerCo....

David Blennerhassett

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

The SET has commenced a market consultation on the proposed changes to make its indices free float market cap weighted. We look at the impact on...

Brian Freitas

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