Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<h3>What’s Original?</h3>
<p>In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these policies and companies that are likely to benefit.</p>

What’s Original?
In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these policies and companies that are likely to benefit.

Kishida as Prime Minister: The Path Ahead

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>After being <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0927/2021092700107.pdf" target="_blank" rel="noopener">suspended</a> on the 27 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> ("CPP"), a leading agri-food conglomerate in China and Vietnam, has now announced an Offer, by way of a Scheme, from <a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP Foods (CPF TB)</a>.</p>
<p>The consideration is $1.15/share, a 19.79% premium to last close. The Offer price will NOT be increased.</p>
<p>CPF holds 49.74% and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> 25%. Itochu has entered into a rollover agreement with CPF such that upon successful completion of the Scheme, CPF will hold 75% and Itochu 25%. </p>
<p>The Offer premium is a trifle light to that consistently seen in Hong Kong M&amp;A deals in recent years. Nevertheless, this all looks stitched up and should trade tight when shares resume trading on Monday.</p>
<p>More below the fold. </p>
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After being suspended on the 27 September pursuant to the Hong Kong Code on Takeovers and Mergers, Cp Pokphand (43 HK) ("CPP"), a leading agri-food conglomerate in China and Vietnam, has now announced an Offer, by way of a Scheme, from CP Foods (CPF TB).
The consideration is $1.15/share, a 19.79% premium to last close. The Offer price will NOT be increased.
CPF holds 49.74% and Itochu Corp (8001 JP) 25%. Itochu has entered into a rollover agreement with CPF such that upon successful completion of the Scheme, CPF will hold 75% and Itochu 25%. 
The Offer premium is a trifle light to that consistently seen in Hong Kong M&amp;A deals in recent years. Nevertheless, this all looks stitched up and should trade tight when shares resume trading on Monday.
More below the fold. 





C.P. Pokphand (43 HK): Privatisation Offer From CP Foods

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p><a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a>, the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). </p><p>For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. </p><div class="content-highlight"><p>The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. </p></div>

Cp Pokphand (43 HK) (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from CP FOODS (CPF TB), the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. 

C.P. Pokphand’s Privatisation Bid from CPF

<p><a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> ("CPP") a leading agri-food conglomerate in China and Vietnam, is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0927/2021092700107.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Hong Kong Code on Takeovers and Mergers. There is, as yet, no further details forthcoming.</p>
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<p><a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a> (54%) and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> (25%) collectively control <a href="https://di.hkex.com.hk/di/NSAllSSList.aspx?sa2=as&amp;sid=64&amp;corpn=C.+P.+Pokphand+Co.+Ltd.&amp;sd=28/09/2014&amp;ed=28/09/2021&amp;cid=0&amp;sa1=cl&amp;scsd=28%2f09%2f2014&amp;sced=28%2f09%2f2021&amp;sc=43&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">79%</a> of CPP.</p>
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<p>This insight provides some background information on CPP, and also speculates on a fair price should a firm Offer unfold. </p>
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Cp Pokphand (43 HK) ("CPP") a leading agri-food conglomerate in China and Vietnam, is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers. There is, as yet, no further details forthcoming.

CP FOODS (CPF TB) (54%) and Itochu Corp (8001 JP) (25%) collectively control 79% of CPP.


This insight provides some background information on CPP, and also speculates on a fair price should a firm Offer unfold. 


C.P. Pokphand (43 HK): Suspended Pursuant To Takeovers Code

Travis Lundy

Pan Pacific International Holdings / Event-Driven

<p>Today after the close, <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP)</a> announced two things (in Japanese only).</p><ol>
<li>PPIH was <a href="https://ppih.co.jp/news/210906_2.pdf" target="_blank" rel="noopener">registering for a bond issuance</a> for up to ¥300bn, and</li>
<li>PPIH would <a href="https://ppih.co.jp/news/210906.pdf" target="_blank" rel="noopener">buy back</a> up to 38,054,300 shares tomorrow morning on ToSTNeT-3 before the open, for up to ¥80.94bn. </li>
</ol><p>The second states that FamilyMart, which bought just over 10% of the company in the market starting in 2019 after</p><ol style="list-style-type: lower-alpha;">
<li>selling the rest of its UNY business to PPIH, and</li>
<li>attempting to buy 20% of PPIH in a Partial Tender Offer, which was much discussed on Smartkarma (see <a href="https://www.smartkarma.com/insights/familymart-tender-offer-for-don-quijote-misses-the-mark-as-mr-partridge-stands-pat" target="_blank" rel="noopener">this insight</a> for the result of the Tender Offer to see the earlier ones in the stream)....       ....and missing because almost nobody would sell their shares to FamilyMart</li>
</ol><p>... will sell 38,054,300 shares into the buyback. </p><p>The second statement is odd so merits a quick discussion. And there are opportunities for those who care.  As of Monday's close and consensus forecast Net Income to June 2022, PPIH's forward PER has hit a 20.x handle. That is good, but despite that, the market was not terribly supportive of last month's earnings/guidance release.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/188/original/Screenshot+2021-09-06+at+10.57.11+PM.png?1630940269" class="editor-image img-responsive" data-smartkarma-image-id="228188"></figure><p></p></section><p>As always, more below the fold. </p>

Today after the close, Pan Pacific International Holdings (7532 JP) announced two things (in Japanese only).
PPIH was registering for a bond issuance for up to ¥300bn, and
PPIH would buy back up to 38,054,300 shares tomorrow morning on ToSTNeT-3 before the open, for up to ¥80.94bn. 
The second states that FamilyMart, which bought just over 10% of the company in the market starting in 2019 after
selling the rest of its UNY business to PPIH, and
attempting to buy 20% of PPIH in a Partial Tender Offer, which was much discussed on Smartkarma (see this insight for the result of the Tender Offer to see the earlier ones in the stream)....       ....and missing because almost nobody would sell their shares to FamilyMart
... will sell 38,054,300 shares into the buyback. The second statement is odd so merits a quick discussion. And there are opportunities for those who care.  As of Monday's close and consensus forecast Net Income to June 2022, PPIH's forward PER has hit a 20.x handle. That is good, but despite that, the market was not terribly supportive of last month's earnings/guidance release.As always, more below the fold. 

PPIH (7532 JP) ToSTNeT-3 Buyback - The Alliance Is Strong, so FamilyMart Is Selling Shares

Japan

ITOCHU Corporation is a general trading firm handling textiles, wood, machinery, metals, food, chemicals, construction materials, commodities, and energy related products such as oil and gas. The Company operates around the world. Itochu diversifies by operating in satellite communication and data communication businesses.

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Itochu Corp (8001 JP)

Kishida as Prime Minister: The Path Ahead

In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these...

Mio Kato

C.P. Pokphand (43 HK): Privatisation Offer From CP Foods

This looks pretty clean. Assuming mid-Feb completion, I'd be paying up to and around $1.11/share which is ~5.8%/16.5 gross/annualised spread, when...

David Blennerhassett

C.P. Pokphand’s Privatisation Bid from CPF

CPP announced a privatisation offer from CPF at HK$1.15 cash for each scheme share. Overall, we think the offer price is attractive and that the...

Arun George

C.P. Pokphand (43 HK): Suspended Pursuant To Takeovers Code

I think you could simply use the unaffected price of HK$0.96 and multiply it by the 30% premium widely seen in M&A transactions around the region...

David Blennerhassett

PPIH (7532 JP) ToSTNeT-3 Buyback - The Alliance Is Strong, so FamilyMart Is Selling Shares

PPIH will buy back 6% of shares out on 7 Sep before the open in a ToSTNeT-3 transaction. ANYONE CAN JOIN (long sale or short sale). FamilyMart...

Travis Lundy

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