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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Sandfire Resources Limited / Event-Driven

On 23 September pre-market open, <a href="https://www.smartkarma.com/entities/sandfire-resources-limited" target="_blank" data-smartkarma-citation="entities:1259:1" rel="noopener">Sandfire Resources Limited (SFR AU)</a> requested for a trading halt. A short time later, the company announced the acquisition of the MATSA mining complex from Mubadala and Trafigura for US$1.865bn (A$2.572bn).The acquisition is expected to be completed in the March 2022 quarter and is subject to Spanish Foreign Direct Investment Approval and anti-trust merger control approval.The acquisition will be funded by an A$120m strategic placement to AustralianSuper, a A$165m institutional placement, a A$963m fully underwritten 1 for 1 accelerated non-renounceable entitlement offer (ANREO), debt and cash on hand.Just over 231m shares will be issued at A$5.40/share, a 13.2% discount to the last close of A$6.22/share, and a 6.2% discount to TERP.The increase in market cap as a result of the placement and entitlement offer will result in <a href="https://www.smartkarma.com/entities/sandfire-resources-limited" target="_blank" data-smartkarma-citation="entities:1259:1" rel="noopener">Sandfire Resources Limited (SFR AU)</a> becoming a high probability inclusion to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> at the December rebalance.With a number of M&amp;A deals targeting <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> constituents, there will be more changes to the index over the next couple of regular rebalances (and in the interim as well).

On 23 September pre-market open, Sandfire Resources Limited (SFR AU) requested for a trading halt. A short time later, the company announced the acquisition of the MATSA mining complex from Mubadala and Trafigura for US$1.865bn (A$2.572bn).The acquisition is expected to be completed in the March 2022 quarter and is subject to Spanish Foreign Direct Investment Approval and anti-trust merger control approval.The acquisition will be funded by an A$120m strategic placement to AustralianSuper, a A$165m institutional placement, a A$963m fully underwritten 1 for 1 accelerated non-renounceable entitlement offer (ANREO), debt and cash on hand.Just over 231m shares will be issued at A$5.40/share, a 13.2% discount to the last close of A$6.22/share, and a 6.2% discount to TERP.The increase in market cap as a result of the placement and entitlement offer will result in Sandfire Resources Limited (SFR AU) becoming a high probability inclusion to the S&amp;P/ASX 200 (AS51 INDEX) at the December rebalance.With a number of M&amp;A deals targeting S&amp;P/ASX 200 (AS51 INDEX) constituents, there will be more changes to the index over the next couple of regular rebalances (and in the interim as well).

Sandfire Resources (SFR AU): Acquisition, ANREO and ASX200 Inclusion

On 20 September, <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> announced that it had received an unsolicited, indicative, non-binding and conditional proposal from the infrastructure affiliate of <a href="https://www.smartkarma.com/entities/brookfield-asset-manage-cl-a-0483cfb5-71a5-4931-af80-901e5f30aace" target="_blank" data-smartkarma-citation="entities:23741:1" rel="noopener">Brookfield Asset Management (BAM US)</a> to acquire all the shares in <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> via a Scheme of Arrangement at an indicative price of A$2.50/share in cash.<a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> finished the day 19.2% higher at A$2.36 on volumes that were nearly 3 times the ADV.In a surprising development, earlier today, <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a> announced that it has made a non-binding indicative proposal to acquire all the shares in <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> via a Scheme of Arrangement at an indicative price of A$2.60/share in cash and scrip.What makes this even more surprising is that <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a> and <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> were in discussions earlier. <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> knew that a revised offer from <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a> was forthcoming, yet went ahead and gave Brookfield an 8 week period of exclusivity for due diligence.<a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a> has clearly laid out why its proposal is superior to the proposal from <a href="https://www.smartkarma.com/entities/brookfield-asset-manage-cl-a-0483cfb5-71a5-4931-af80-901e5f30aace" target="_blank" data-smartkarma-citation="entities:23741:1" rel="noopener">Brookfield Asset Management (BAM US)</a> and this could get interesting with a possibility of even higher bids coming in for <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a>.<a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> is a member of the S&amp;P/ASX 100, <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> and S&amp;P/ASX 300 Indices. Once the stock is delisted, it will be replaced in the indices with the highest ranking stocks that are not part of the index. With the wave of ongoing M&amp;A activity, there will be a lot of additions to the indices in the next few months.

On 20 September, Ausnet Services (AST AU) announced that it had received an unsolicited, indicative, non-binding and conditional proposal from the infrastructure affiliate of Brookfield Asset Management (BAM US) to acquire all the shares in Ausnet Services (AST AU) via a Scheme of Arrangement at an indicative price of A$2.50/share in cash.Ausnet Services (AST AU) finished the day 19.2% higher at A$2.36 on volumes that were nearly 3 times the ADV.In a surprising development, earlier today, APA Group (APA AU) announced that it has made a non-binding indicative proposal to acquire all the shares in Ausnet Services (AST AU) via a Scheme of Arrangement at an indicative price of A$2.60/share in cash and scrip.What makes this even more surprising is that APA Group (APA AU) and Ausnet Services (AST AU) were in discussions earlier. Ausnet Services (AST AU) knew that a revised offer from APA Group (APA AU) was forthcoming, yet went ahead and gave Brookfield an 8 week period of exclusivity for due diligence.APA Group (APA AU) has clearly laid out why its proposal is superior to the proposal from Brookfield Asset Management (BAM US) and this could get interesting with a possibility of even higher bids coming in for Ausnet Services (AST AU).Ausnet Services (AST AU) is a member of the S&amp;P/ASX 100, S&amp;P/ASX 200 (AS51 INDEX) and S&amp;P/ASX 300 Indices. Once the stock is delisted, it will be replaced in the indices with the highest ranking stocks that are not part of the index. With the wave of ongoing M&amp;A activity, there will be a lot of additions to the indices in the next few months.

AusNet (AST AU): Bidding War Between Brookfield & APA Brewing?

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the December index review on 3 December and the changes will be effective after the close of trading on 17 December.The review period for the rebalance ends on 19 November, so we are exactly two-thirds of the way through the review period.As of the close on 20 September, we see <a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> as a potential inclusion to the S&amp;P/ASX100 and <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a> as a potential deletion.For the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a>, potential inclusions are <a href="https://www.smartkarma.com/entities/imugene-ltd" target="_blank" data-smartkarma-citation="entities:20276:1" rel="noopener">Imugene Ltd (IMU AU)</a>, <a href="https://www.smartkarma.com/entities/paladin-energy-ltd" target="_blank" data-smartkarma-citation="entities:10117:1" rel="noopener">Paladin Energy (PDN AU)</a>, <a href="https://www.smartkarma.com/entities/amalgamated-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20978:1" rel="noopener">Event Hospitality and Entertainment (EVT AU)</a>, <a href="https://www.smartkarma.com/entities/liontown-resources-ltd" target="_blank" data-smartkarma-citation="entities:20488:1" rel="noopener">Liontown Resources (LTR AU)</a> and <a href="https://www.smartkarma.com/entities/arena-reit" target="_blank" data-smartkarma-citation="entities:12209:1" rel="noopener">Arena Reit (ARF AU)</a>, while potential deletions are <a href="https://www.smartkarma.com/entities/kogan-com-ltd" target="_blank" data-smartkarma-citation="entities:23575:1" rel="noopener">Kogan.com (KGN AU)</a>, <a href="https://www.smartkarma.com/entities/redbubble-ltd" target="_blank" data-smartkarma-citation="entities:24321:1" rel="noopener">Redbubble Ltd (RBL AU)</a>, <a href="https://www.smartkarma.com/entities/monadelphous-group-ltd" target="_blank" data-smartkarma-citation="entities:553:1" rel="noopener">Monadelphous (MND AU)</a>, <a href="https://www.smartkarma.com/entities/omni-bridgeway-ltd" target="_blank" data-smartkarma-citation="entities:8840:1" rel="noopener">Imf Bentham Ltd (OBL AU)</a> and <a href="https://www.smartkarma.com/entities/spark-new-zealand-ltd-3dcc706a-f086-4dd4-882b-2a42a36ccf8d" target="_blank" data-smartkarma-citation="entities:26915:1" rel="noopener">Spark New Zealand (SPK AU)</a>.With multiple M&amp;A deal pending, including <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a>, <a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a>, <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a>, <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> and <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a>, there could be more additions to the index if deals are completed or highly likely to be completed by end November.Short interest on most potential inclusions is quite low, while the short interest on many potential exclusions is quite high.

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) as part of the December index review on 3 December and the changes will be effective after the close of trading on 17 December.The review period for the rebalance ends on 19 November, so we are exactly two-thirds of the way through the review period.As of the close on 20 September, we see Pilbara Minerals (PLS AU) as a potential inclusion to the S&amp;P/ASX100 and Link Administration Holdings (LNK AU) as a potential deletion.For the S&amp;P/ASX 200 (AS51 INDEX), potential inclusions are Imugene Ltd (IMU AU), Paladin Energy (PDN AU), Event Hospitality and Entertainment (EVT AU), Liontown Resources (LTR AU) and Arena Reit (ARF AU), while potential deletions are Kogan.com (KGN AU), Redbubble Ltd (RBL AU), Monadelphous (MND AU), Imf Bentham Ltd (OBL AU) and Spark New Zealand (SPK AU).With multiple M&amp;A deal pending, including Afterpay Touch (APT AU), Sydney Airport (SYD AU), Ausnet Services (AST AU), Oil Search Ltd (OSH AU) and Spark Infrastructure (SKI AU), there could be more additions to the index if deals are completed or highly likely to be completed by end November.Short interest on most potential inclusions is quite low, while the short interest on many potential exclusions is quite high.

ASX100/​200 Index Rebalance Preview: Potential December Changes With Large Impact

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors


For the month of August, 10 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$39bn, buoyed by the massive Afterpay Touch (APT AU) transaction.



Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.







New Deals


Industry


Size (US$bn)


Type


Premium




Australia




1300 Smiles Ltd (ONT AU) 
Dental
0.2
Scheme
14%


1300Smiles (ONT AU): BGH Sinks Its Teeth In



Afterpay (APT AU) 
Payment facilitator
29.0
Scheme
30.6%


Afterpay Ltd (APT AU): All Squared Away



Huon Aquaculture (HUO AU) 
Fisheries
0.3
Scheme
61%



JBS Nets Huon Agriculture (ASX: HUO) Huon Ag (Huo AU): Twiggy Went To Market




Hong Kong




Golden Throat Holdings (6896 HK) 
Cough medicine
0.3
Scheme
55.8%


Golden Throat (6896 HK): Affirma and Founder Group Cough Up



Suchuang Gas Corp (1430 HK) 
Gas transmission
0.1
Scheme
2.9%


Suchuang Gas (1430 HK): Delisting Proposal From CR Gas



Japan




GCA Corporation (2174 JP) 
Finance
0.6
Tender Offer
31.3%


Houlihan Lokey To Take Out GCA :  Light But Likely Done



Kobe Steel Ltd (5406 JP) / Kobelco Eco Solutions (6299 JP)

Materials
0.4
Merger
N/A



New Zealand




Z Energy Ltd (ZEL NZ) 
Petrol Stations
1.3
Scheme
22%


Z Energy (ZEL NZ) Tentatively Backs Ampol's Approach



Taiwan








China Development Financial (2883 TT) / China Life Insurance (2823 TT)

Insurance
4.8
Merger
N/A


CDFHC - China Life Insurance: US$2bn+ Cash &amp; Scrip Deal to Reach the Finish Line



Thailand




Siam Future Development (SF TB) 
Malls
0.8
MGO
8%


Siam Future Development (SF TB): Central Pattana MGO As MAJOR Cineplex Exits



US




New Frontier Health Corp (NFH US) 
Hospitals
1.6
Merger
27.9%


New Frontier (NYSE: NFH): Healthcare Homecoming


Source: Smartkarma Insights





The average premium for the new deals announced (or first discussed) in August was ~28%, with a year-to-date average of ~33% (112 deals &amp; total deal size of US$234bn). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively.
The above does not include the possible US$5.5bn deal for between IGO Ltd (IGO AU) &amp; Western Areas (WSA AU) (IGO/Western Areas: Battery Mineral Grab); ESR Cayman (1821 HK) acquiring unlisted ARA Asset Management for US$5.2bn (ESR Cayman (1821 HK) Takes Out ARA Asset Management),; or the rumoured US$7.8bn takeover of JOYY (YY US) (JOYY (JOYY US): Rumoured Privatisation). 

Offer Premium Summary


     




2019


2020


2021 YTD



Australia
33.0%
32.4%
35.2%


Hong Kong
25.2%
34.7%
33.9%


Japan
44.0%
35.2%
28.6%


ROW
29.1%
24.2%
34.6%


Average
31.5%
31.1%
33.0%



Source: Smartkarma Insights






Summary of News in August of Arb Situations On Smartkarma's Radar
(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)




Australia


Comments (with links to announcements &amp; insights)




5G Networks Ltd/Australia (5GN AU) / Webcentral (WCG AU) 

No August update




Australian Pharmaceutical Industries (API AU) 

No August update




Crown Resorts (CWN AU) 

No August update




Empired Ltd (EPD AU) 

24-Aug. Capgemini has received OIO approval.




Hansen Technologies (HSN AU) 

26-Aug: Hansen Technologies (HSN AU) said today BGH needs further time to complete its DD, but that it has confirmed to Hansen it remains willing to proceeds with a transaction substantially on the terms of its original proposal.  BGH's DD extended to the 10 September. That's a worrying long DD period. 




iCar Asia Ltd (ICQ AU) 

13-Aug: iCar Asia Ltd (ICQ AU) and Carsome obtained ASIC joint bid relief. 




Iress Ltd (IRE AU) 

11-Aug: Iress Ltd (IRE AU)' board has now backed a revised Offer from EQT - but at $15.91/share, just 3.3% above the previous proposal. Iress (IRE AU) Accepts EQT's Latest Proposal




Japara Healthcare (JHC AU) 

30-Aug: FY21 results




Mainstream Group Holdings Ltd (MAI AU) 
27-Aug: FY21 results




Milton Corp Ltd (MLT AU) 

12-Aug: The Magnality of the Marvelous Milton Merger Makes a Moribund March To Metaphysis (It's Mirific!) 25-Aug: Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks




Oil Search Ltd (OSH AU) 

2-Aug: Santos and Oil Search Agree on Terms 24-Aug: Oil Search Ltd (OSH AU) posted a net profit of US$139mn in FY21.




Rhipe Ltd (RHP AU) 

No August update




Spark Infrastructure (SKI AU) 

23-Aug: A firm Offer for Spark Infrastructure (SKI AU) has now been tabled and a SID entered into with KKR, OTTPB, and PSP. The terms remain the same. Spark's board unanimously recommends the Offer. The Scheme Meeting is expected to be held by the end of 2021. Spark Infrastructure (SKI AU): KKR/OTPPB/PSP's Firm Offer




Sydney Airport (SYD AU) 

16-Aug: Sydney Airport (SYD AU) announced it had received a revised offer of $8.45 from the consortium on the 16 Aug. The Board also concluded the proposal was low-balled. That rejection comes as no surprise - this is just a 2.4% bump in terms.  I'm still disinclined to chase it here. I still think there is a chance of a "no deal".  Sydney Airports (SYD AU) Reject's Consortium's Revised Offer.




Think Childcare (TNK AU) 

18-Aug: Court meeting scheduled for the 29 September for Think Childcare (TNK AU).




Youfoodz Holdings (YFZ AU) 

13-Aug: Youfoodz Holdings (YFZ AU) enters into a SID with Hellofresh
24-Aug: Youfoodz Holdings (YFZ AU) posted a net loss of A$3.5mn in FY21.








Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Capital Land Ltd H (2868 HK) 

19-Aug: Beijing Capital Land (2868 HK): Pre-Cons Satisfied. This Should Trade Tight 24-Aug: This will give the stock a bit of an extra push. The SFC does not consider GIC's Reco Pearl to be acting in concert with the Offeror for Beijing Capital Land Ltd H (2868 HK). In addition, Redo Pearl has given an irrevocable undertaking to vote in favour of the Scheme resolutions. Reco owns 181,194,000 H Shares, representing 4.15% of the issued shares and 11.83% of the H Shares held by the Independent H Shareholders.
27-Aug: Beijing Capital Land (2868 HK): EGM On The 23 Sept. IFA Says Fair




Bestway Global Holding (3358 HK) 

22-Aug: Scheme Doc dispatched. Court Meeting will be held on the 15 September with expected payment on or before the 19 October. 
Bestway Global (3358 HK): Scheme Doc Out. Court Meeting On Sept 15th




China Traditional Chinese Medicine (570 HK) 

11-Aug: And it's a deal break - Sinopharm has decided not "to proceed with the Possible Privatisation this time".




China Youzan Limited (8083 HK) 

30-Aug: Youzan Technology has re-filed its application with the Stock Exchange for the listing of the Youzan Technology Shares by way of an offering of new shares, instead of by way of introduction.




Chong Hing Bank (1111 HK) 

14-Aug: Chong Hing Bank Ltd have announced an interim dividend of HK$0.11 will be added to the cancellation price:   23-Aug: Irevocables received.  24-Aug: Chong Hing Bank (1111 HK) has announced Cosco Shipping, with 19,823,037 shares, representing approximately 2.04% of the issued shares, 8.14% of the Scheme Shares, and 12.68% of the Independent Scheme Shares, has given an irrevocable to vote for the Scheme. 



Kerry Logistics Network (636 HK)

3-Aug: Kerry Logistics Network (636 HK) announced NDRC and MoC approval has been received as to the partial offer. A number of pre-cons still remain outstanding, all of which are technically waivable, apart from the SFC consent. 
10-Aug: Kerry Logistics (636 HK): Pre-Cons Done. Partial Offer To Commence Next Week 14-Aug: Kerry Logistics (636 HK): Doc Out Early - Offer Now Open 30-Aug: Kerry Logistics (636 HK): Technicalities As Partial Draws To An End




Nature Home Holding Company (2083 HK) 
18-Aug: Nature Home Holding Company (2083 HK) has announced an (expected) delay in the dispatch of the Composite Doc so as to accommodate the interims, which are due out on the 31 August. The dispatch date is now expected on or before the 30 September compared to my earlier estimate of 27 September. 



Soho China Ltd (410 HK) 

8-Aug: SOHO China (410 HK): Time To Buy




WH Group (288 HK) 

17-Aug: WH Group Partial Buyback Offer Now Unconditional
18-Aug: WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud 30-Aug: WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations On the 30th of August the company announced the results of the buyback offer with a pro-ration of 23.1%









India


Comments 




Adani Power (ADANI IN) 

No August update, though SEBI is said to be investigating the low indicative price.  And the stock is going into FTSE Large as of 17 September. 




Mphasis Ltd (MPHL IN) 

No August update









Japan


Comments (with links to announcements &amp; insights)




Hitachi Metals (5486 JP) 

No August update




Invesco Office J Reit (3298 JP) 

26-Aug: Invesco Office Index Deletion Monday 30 Aug




Sakai Ovex (3408 JP) 
No August update (City Index Eleventh reported on 3 August that as of 27 July they had lifted their stake to 8.01%); tender closes 8 Sep. 




Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>The acquisition of <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> by <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>  has been well received by the market</li>
<li>There are great qualities to the deal, including strategic fit and potential synergies</li>
<li>Nonetheless, we believe that there are challenges in the form of credit risks to Afterpay’s Buy Now Pay Later (BNPL) model, as well as increased regulatory scrutiny and oversight</li>
<li>Factoring in these risks, and despite the growth potential, we ask is the price right? We look at a number of valuation metrics including PEG</li>
<li>We remain negative on Square even with the growth potential; we would recommend Afterpay shareholders – the key winners in the deal - to cash in their Square shares post deal</li>
<li>Risks to our negative view include faster than expected revenue growth bringing Afterpay into profit, lower than expected BNPL delinquencies and better than expected synergies</li>
</ul>


The acquisition of Afterpay Touch (APT AU) by Square Inc (SQ US)  has been well received by the market
There are great qualities to the deal, including strategic fit and potential synergies
Nonetheless, we believe that there are challenges in the form of credit risks to Afterpay’s Buy Now Pay Later (BNPL) model, as well as increased regulatory scrutiny and oversight
Factoring in these risks, and despite the growth potential, we ask is the price right? We look at a number of valuation metrics including PEG
We remain negative on Square even with the growth potential; we would recommend Afterpay shareholders – the key winners in the deal - to cash in their Square shares post deal
Risks to our negative view include faster than expected revenue growth bringing Afterpay into profit, lower than expected BNPL delinquencies and better than expected synergies


Square (SQ US) & Afterpay (APT AX): Is the Price Right?

Australia

Afterpay Limited provides financial solutions. The Company offers payment platform that allow users to maintain financial wellness and control, by splitting payments in four, for both online and in-store purchases. Afterpay serves customers globally.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Afterpay (APT AU)

Sandfire Resources (SFR AU): Acquisition, ANREO and ASX200 Inclusion

Sandfire Resources is buying the MATSA mine in Spain and conducting a placement and entitlement offer to raise funds. This will lead to a big jump...

Brian Freitas

AusNet (AST AU): Bidding War Between Brookfield & APA Brewing?

Yesterday, Brookfield made an offer for AusNet at A$2.5/share in cash. Today, APA Group made an offer at A$2.6/share in cash + scrip. This could go...

Brian Freitas

ASX100/200 Index Rebalance Preview: Potential December Changes With Large Impact

There could be 1 change to the ASX100 and 5 changes to the ASX200 at the December rebalance. With a long M&A pipeline, there could be additional...

Brian Freitas

(Mostly) Asia M&A: August 2021 Roundup

The average premium for the new deals announced (or first discussed) in August was ~28%, with a year-to-date average of ~33%. The average premium...

David Blennerhassett

Square (SQ US) & Afterpay (APT AX): Is the Price Right?

The market is enthusiastic for Square-Afterpay, but we believe prospects are challenged by credit risk combined with fast sales growth, increased...

Victor Galliano

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Sandfire Resources (SFR AU): Acquisition, ANREO and ASX200 Inclusion

Sandfire Resources is buying the MATSA mine in Spain and conducting a placement and entitlement offer to raise funds. This will lead to a big jump...

Brian Freitas

AusNet (AST AU): Bidding War Between Brookfield & APA Brewing?

Yesterday, Brookfield made an offer for AusNet at A$2.5/share in cash. Today, APA Group made an offer at A$2.6/share in cash + scrip. This could go...

Brian Freitas

ASX100/​200 Index Rebalance Preview: Potential December Changes With Large Impact

There could be 1 change to the ASX100 and 5 changes to the ASX200 at the December rebalance. With a long M&A pipeline, there could be additional...

Brian Freitas

(Mostly) Asia M&A: August 2021 Roundup

The average premium for the new deals announced (or first discussed) in August was ~28%, with a year-to-date average of ~33%. The average premium...

David Blennerhassett

Square (SQ US) & Afterpay (APT AX): Is the Price Right?

The market is enthusiastic for Square-Afterpay, but we believe prospects are challenged by credit risk combined with fast sales growth, increased...

Victor Galliano

ASX100/200 Index Rebalance Preview: Potential December Changes With Large Impact