Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven


For the month of May, 11 new deals were discussed on Smartkarma with an overall announced deal size of ~US$7.3bn.



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




APN Property Group (APD AU) 
Property
0.2
Scheme
50%


APN Prop (APD AU): Dexus' Done Deal



Boral Ltd (BLD AU) 
Construction
4.8
Off-market
Nil


Boral Ltd (BLD AU): Seven's Nil Premium



Japara Healthcare (JHC AU) 
Healthcare
0.2
Scheme
30%


Japara Healthcare (JHC AU): Here Comes The Calvary


 



Hong Kong




Chong Hing Bank (1111 HK) 
Banking
0.2
Scheme
51.2%



Chong Hing Bank (1111 HK): Takeover Talk As Shares Pop
Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light



 



Japan




Aomori Bank (8342 JP) / Michinoku Bank (8350 JP) 
Bank
0.6
Merger



Aomori Bank &amp; Michinoku Bank Merger - Nothing To Write Home About Yet



EPS Holdings (4282 JP) 
Data/software
0.1
Tender Offer
35.5%


Another Too-Cheap MBO as Founder Takes Out EPS


 Locoguide (4497 JP) / Kufu (4399 JP)

Real estate
0.4
Merger



Locoguide (4497 JP) - Kufu (4399 JP): Merger Is a Done Deal



Maruka Machinery (7594 JP) / Furusato Industries (8087 JP) 
Trading
0.4
Merger



A Complex SmallCap Merger in Japan: Maruka (7594) And Furusato (8087)



Secom Joshinetsu (4342 JP) 
Security
0.3
Tender Offer
66.2%


Secom To Finally Buy Out Affiliate Secom Joshinetsu (4342)








Malaysia




Can-One Bhd (CAN MK) 
Manufacturing
0.1
MTO
15.8%


Can-One (CAN MK)? Yeoh Can Lah!



IHH Healthcare (IHH MK) 
Healthcare
N/A
N/A
N/A


IHH Healthcare (IHH MK): More Medicine For Mitsui?


Source: Smartkarma Insights






The above does not include BetMakers Technology Group (BET AU) lobbing a non-binding offer of A$4bn (A$1bn cash, $3bn scrip into BET) for Tabcorp Ltd (TAH AU)'s wagering and media division, and Apollo's prior tilt - Tabcorp (TAH AU): Apollo Shows Its Hand.

Nor does the table include the rumoured merger between  Angang Steel Co Ltd (H) (347 HK) and Bengang Steel (000761 CH) - Amalgamated Steel: Merging Angang &amp; Bengang As, Bs, and Hs.



The average premium for the new deals announced (or first discussed) in May was ~41%, with a year-to-date average of ~31% (78 deals). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively. 




Summary of News in May 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)




3P Learning (3PL AU) 

No May update




Bingo Industries (BIN AU) 

1-May: Capital Group announced it has sold its entire 9.7% stake in Bingo Industries (BIN AU).




Crown Resorts (CWN AU) 

10-May: Crown Resorts: Blackstone &amp; Star Place Their Bets
17-May: Crown Says Blackstone's Bid Is Light. Undecided On Star
20-May: Crown Resorts Ltd: Blackstone Offer Rejected, Star Offer May Still Not Reflect True Forward Value




Galaxy Resources (GXY AU) 

No May update




Link Administration Holdings (LNK AU) 

27-May: Link Group (LNK AU): KKR Opens The Bidding For PEXA
31-May: Link Admin (LNK AU) Goes IPO Route For PEXA Afterall




Mainstream Group Holdings Ltd (MAI AU) 

2-May: Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump
6-May: Mainstream (MAI AU): Bidding War Continues as SS&amp;C Overbids for the 4th Time
14-May: Mainstream (MAI AU): +120% in ~2 Months but Bidding War Continues....




McPherson's Ltd (MCP AU) 

No May update




Mortgage Choice (MOC AU) 

26-Mau FIRB gives its approval



Primewest Group Ltd (PWG AU)

14-May: Target's Statement and Bidder's Statements were published. Primewest Group Ltd (PWG AU)'s Board has unanimously recommended shareholders to accept the Offer. 




Think Childcare (TNK AU) 

12-May: Think Childcare (TNK AU) has agreed to extend the Exclusivity Period with Busy Bees to 31st May 2021 (vs. original deadline of 14th May). This is still a non-binding deal with an expected completion date to be in 1Q CY22. 




Vitalharvest Freehold Trust (VTH AU) 

1-May: And so it goes - MAFM bumps its Offer for Vitalharvest Freehold Trust (VTH AU) to $1.26.
7-May: MAFM exercises a call option and acquires 16.2% of Vitalharvest Freehold Trust (VTH AU).
28-May Roc bumps its Offer for Vitalharvest Freehold Trust (VTH AU) to $1.29/share.  And says it will overbid any MAFM counter! 




Vocus Communications (VOC AU) 

10-May: Vocus Comms (VOC AU): MIRA/Aware's Done Deal
19-May: Vocus Comms (VOC AU): MIRA/​Aware’s Scheme Doc Despatched. EGM On 22 June










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Digital Telecom (6188 HK) 

1-May: Beijing Digital (6188 HK): Offer Now Open. IFA Says Fair
20-May: Beijing Digital Telecom (6188 HK)'s MGO is now unconditional in all respects. 




China Machinery Engineering (1829 HK) 

28-May: China Machinery Engineering (1829 HK): Movement In The Works?




China Traditional Chinese Medicine (570 HK) 

7-May: In its monthly update regarding a potential Offer, China Traditional Chinese Medicine (570 HK) says there is no update.




China Youzan Limited (8083 HK) 

10-May: China Youzan (8083 HK): Reality Check As Shares Rollover




Kerry Logistics Network (636 HK) 

4-May: Kerry Logistics Network (636 HK) will hold an EGM on the 26 May for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. 
26-May: At its SGM, Kerry Logistics Network (636 HK) shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.




New Century REIT (1275 HK) 

No May update




Rivera Holdings (281 HK) 

No April update




Sichuan Languang Justbon Service Group (2606 HK) 

3-May: Languang Justbon (2606 HK): Offer Now Open - For Up To Four Months










India


Comments (with links to insights)




Mphasis Ltd (MPHL IN) 

4-May: The Detailed Public Statement on Mphasis Ltd (MPHL IN) has been released. The Open Offer is scheduled tentatively to run from 18 June to 1 July, which means it is running Very Tight and the option is worth a bit less than I expected. But that just means there is more gamma. One could get big at the high Rs 1600s area. 




Vedanta Ltd (VEDL IN) 

4-May: Vedanta Now Caught Up With Peers - A Different Skew Ahead










Japan


Comments (with links to announcements &amp; insights)




BeNEXT Group (2154 JP) 
No May update



Cocokara Fine (3098 JP) 
No May update



Fuji Kosan Company (5009 JP) 
17-May:  Fuji Kosan Company (5009 JP) has responded to Aslead Strategic Value Fund's Tender Offer with its initial Target Opinion Statement which is "Opinion Withheld." This is because Fuji Kosan hasn't actually done anything yet - two weeks in. They have sent questions to Aslead, and Aslead has five business days to respond. This is slow-walking it. This tender offer is likely to be extended because of that.



Hitachi Metals (5486 JP) 

5-May: Hitachi Metals - Should I Stay or Should I Go Now?




Honshu Chemical Industry (4115 JP) 

13-May: Honshu Chemical (4115) Shareholders Perhaps One Day From a Wrong Price Takeover
16-May:: Honshu Chemical Shareholders Get the Short End of the Stick As The Board Is Ex-Gourd




Invesco Office J Reit (3298 JP) 

6-May:  Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight
11-May:  Starwood Bumps Terms, Lowers Threshold on Invesco Office
13-May:  Invesco Office's Terrible, Horrible, No Good Very Bad Day... Changes Things
20-May:  Invesco Office's Beige Knight (Deemed Dirty Gray By Markets) Suddenly Looks Brighter and Whiter
23-May:  Starwood Responds to Invesco Office's White Knight Proposal
24-May: Starwood has extended their Tender Offer on Invesco Office J Reit (3298 JP) from the 24th of May to 15th of June after the close of the 24th. They did not raise the price. This is basically the equivalent of Starwood calling Invesco's bluff. They can extend again if they want but they are going to make Invesco come out. They can change price later if they think it necessary.



Japan Asia (3751 JP)
No May update



Sawada Holdings (8699 JP) 

9-May:  Sawada Selldown Was NOT Done - Shareholder Structure Looks Different Now
23-May: Sawada Is A Different Stock Now
31-May:  Be Careful of Expectations on Sawada (8699)




Toshiba Corp (6502 JP) 

14-May: Toshiba – Shareholder Returns Trump Weak Guidance
17-May: Toshiba Results &amp; Shareholder Return - Possibly Big Impact Buyback Coming











New Zealand


Comments 




Tilt Renewables Ltd (TLT NZ) 

No May update











Singapore


Comments (with links to announcements)




Procurri Corporation (PROC SP) 

3-May: The Partial Offer has not become unconditional in all respects on the Closing Date and has therefore lapsed










Thailand


Comments




Intouch Holdings (INTUCH TB) 

No May update




Vinythai Public Co (VNT TB) 

No May update






Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Shanghai Shenzhen CSI 300 Inde / Technical Analysis

Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... see chart below. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.

Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... see chart below. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.

Chinese Indexes Headed Higher; Actionable Themes: Transportation, Materials, and Services

After completing the $1.3bn sale of its 50% stake in USG Boral to Knauf Gips KG, international building and construction materials play <a href="https://www.smartkarma.com/entities/boral-ltd" target="_blank" data-smartkarma-citation="entities:1487:1" rel="noopener">Boral Ltd (BLD AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02359742-2A1290439?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> on April 1 it would use the proceeds to reduce net debt to A$1.5bn from A$1.9bn, and apply the remaining proceeds to commence a buyback.
Boral aims to buy up to 10% of shares out, or ~122mn shares, at a cost of A$670mn based on the then-prevalent share price. CEO Zlato Todorcevski said: “we believe that an on-market buy-back is the most effective method of returning this surplus capital to our shareholders.”
As of <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02372944-2A1297240?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">this morning</a>, Boral had bought back ~10.15mn shares.
<h3>The New News</h3>
After the close of trading today, <a href="https://www.smartkarma.com/entities/seven-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:803:1" rel="noopener">Seven Group Holdings (SVW AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02373310-2A1297476?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> an off-market takeover at $6.50, a nil premium to last close.
There are essentially no conditions to this Offer. There is no minimum acceptance condition. 
Seven currently holds ~23.18% and would be "satisfied" for the Offer to result in a holding of around 30%. 
The Offer is expected to open on May 25 and close on June 25, unless extended.
It's a strange Offer, one that Boral's board will likely reject.
More below the fold.

After completing the $1.3bn sale of its 50% stake in USG Boral to Knauf Gips KG, international building and construction materials play Boral Ltd (BLD AU) announced on April 1 it would use the proceeds to reduce net debt to A$1.5bn from A$1.9bn, and apply the remaining proceeds to commence a buyback.
Boral aims to buy up to 10% of shares out, or ~122mn shares, at a cost of A$670mn based on the then-prevalent share price. CEO Zlato Todorcevski said: “we believe that an on-market buy-back is the most effective method of returning this surplus capital to our shareholders.”
As of this morning, Boral had bought back ~10.15mn shares.
The New News
After the close of trading today, Seven Group Holdings (SVW AU) announced an off-market takeover at $6.50, a nil premium to last close.
There are essentially no conditions to this Offer. There is no minimum acceptance condition. 
Seven currently holds ~23.18% and would be "satisfied" for the Offer to result in a holding of around 30%. 
The Offer is expected to open on May 25 and close on June 25, unless extended.
It's a strange Offer, one that Boral's board will likely reject.
More below the fold.

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

Seven Group Holdings / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/seven-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:803:1" rel="noopener">Seven Group Holdings (SVW AU)</a> aims to raise around A$500m (US$38m) via an institutional placement to primarily help reduce its gearing and provide more financing flexibility. The stock has done well over the past few years but is now trading close to its all time highs.

Seven Group Holdings (SVW AU) aims to raise around A$500m (US$38m) via an institutional placement to primarily help reduce its gearing and provide more financing flexibility. The stock has done well over the past few years but is now trading close to its all time highs. 

Seven Group Holdings Placement - Good Track Record but Still a Large Deal to Digest

New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<h2>Building Weekly</h2>
<h3>New Zealand</h3>
<ul>
<li>Housing market remains buoyant (REINZ, Jan.): House sales down -30.8% mom, +3.2% yoy (previous +8.5% mom, +45.8% yoy); days to sell in Auckland -8 yoy to 35 (vs. long-term average 35), ex-Auckland -7 to 35 (vs. long-term average 42). House prices +1.3% mom, +19.2% yoy (previous +2.2% mom, +18.0% yoy), with Auckland +17.7% yoy and ex-Auckland +20.4% yoy.</li>
<li>What net migration? (Dec.): Net gain of 451 migrants in December -94.6% yoy (previous +643, -92.6%). Calendar 2020 +44.1k (2019 73.1k).</li>
<li>Concrete production finishes the year strong (4Q20): +4.5% qoq, +8.3% yoy (previous +36.7% qoq, +4.4% yoy), with growth seen across all major regions, including regional North Island +22% yoy, Auckland +9%, Waikato/BoP +6%, Canterbury +3%, Wellington +3%, and regional South Island +2%.</li>
<li>FBU reports strong 1H, operating trends expected to continue (1H21): FBU reported 1H21 EBIT +48% underpinned by robust NZ activity and cost out. Management comments highlighted a slower Jan/Feb ramp up in activity but with levels now back in line with the end of 2020, eased import competition due to supply chain issues, and solid product price increases but some input cost pressure.</li>
<li><a href="https://www.rbnz.govt.nz/news/2021/02/financial-stability-strengthened-by-firmer-lvr-restrictions" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.rbnz.govt.nz/news/2021/02/financial-stability-strengthened-by-firmer-lvr-restrictions&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNFeXXMaG_P57rhNPmY9r6pkVrAemg" rel="noopener">RBNZ reinstates LVR restrictions</a>: “We expect mortgage lenders to respect the 60/5 investor restrictions immediately with all new loan approvals”</li>
<li><a href="https://www.nzherald.co.nz/business/major-bank-clamps-down-on-new-build-lending-to-investors-ahead-of-lvr-changes/JTIRGO4C55SRRDWOV3GWU22ZCQ/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.nzherald.co.nz/business/major-bank-clamps-down-on-new-build-lending-to-investors-ahead-of-lvr-changes/JTIRGO4C55SRRDWOV3GWU22ZCQ/&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNH14vamATRCMhjI9XzJyCxTfPGUKw" rel="noopener">Major bank clamps down on new build lending to investors ahead of LVR changes</a>&nbsp;despite new builds being exempt from lending restrictions</li>
<li><a href="https://www.mfe.govt.nz/rma/resource-management-system-reform" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.mfe.govt.nz/rma/resource-management-system-reform&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNGLWLsFWJzxWH7oL3tKQ596ArZ3gg" rel="noopener">Resource Management Act to go</a>, replaced by three pieces of legislation: Natural and Built Environments, Strategic Planning, and Climate Change Adaptation Bills will be introduced to Parliament in late 2021 with the aim of passing to law by the end of 2022.</li>
<li><a href="https://www.stuff.co.nz/business/124156787/price-hikes-in-wings-as-businesses-fend-off-cost-pressures" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.stuff.co.nz/business/124156787/price-hikes-in-wings-as-businesses-fend-off-cost-pressures&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNEIlaPrebtVpRlsXXRaP27rxh5H4g" rel="noopener">Steel &amp; Tube fends off cost pressures</a>:&nbsp;“Chief executive Mark Malpass said its steel mill suppliers were telling him that raw materials, particularly iron ore and nickel, had risen significant[ly] as had transport and container costs.”</li>
<li>Construction activity uninterrupted by community COVID cases: <a href="https://www.nzherald.co.nz/business/workers-return-to-wet-auckland-building-sites-under-strict-alert-level-3-measures/FOBVXB424N33QJPPD32QDWOHKM/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.nzherald.co.nz/business/workers-return-to-wet-auckland-building-sites-under-strict-alert-level-3-measures/FOBVXB424N33QJPPD32QDWOHKM/&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNGYws3x9m_LweeWRetQWGgoemipkg" rel="noopener">Workers return to wet Auckland building sites under strict alert level 3 measures</a></li>
<li>Alternative methods to fix housing shortage: <a href="https://www.stuff.co.nz/life-style/homed/renting/124183905/unleashing-buildtorent-to-solve-the-rental-crisis" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.stuff.co.nz/life-style/homed/renting/124183905/unleashing-buildtorent-to-solve-the-rental-crisis&amp;source=gmail&amp;ust=1613693289494000&amp;usg=AFQjCNFMzptm_jXZ1VfGrjLIRQw77xkvGw" rel="noopener">Unleashing 'build-to-rent' to solve the rental crisis</a></li>
</ul>
<h3>Australia</h3>
<ul>
<li>New sales fall back as HomeBuilder ends (Jan.): Detached dwellings -69.4% mom, -12.1% yoy (previous +91.8% mom, +203.2% yoy).</li>
<li>Mixed reporting season outlook comments:</li>
</ul>
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Boral:&nbsp;1H21 AU EBIT -20% yoy with concrete volumes -8%, quarries -3%, and cement -4% as well as building products revenue +10%; expecting “continued weakness in multi-residential and non-residential construction”. North America EBITDA -28% yoy with Fly Ash volumes -9%, roofing flat, and stone +4% as well as light building product revenue +6%; “production volumes should continue to ramp up to meet strong market demand”.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James Hardie:&nbsp;3Q North America volume growth of +17% yoy, Europe +17%, and Asia-Pacific +9%.&nbsp;"Based on the continued, strong momentum in its business and expectations for continued growth in residential end markets” JHX lifted FY21 guidance by 11% (at the midpoint).
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GWA Group:&nbsp;1H21 Australia revenue -6% yoy, NZ+3%, and UK +6%. Expects 2H21 Australian detached residential and renovation activity to increase but multi-residential and non-residential to remain subdued. “Growth” expected in NZ, the UK, and Asia.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CIMIC&nbsp;(FY20): Underlying group EBIT down -24% on revenue of -14%. Guidance for +8-14% NPAT growth. “Outlook remains positive for construction and services, with new work recovering” supported by “significant stimulus packages” with “more than $500bn of tenders to be bid and/or awarded in 2021 and beyond”.
<h3>International</h3>
<ul>
<li>US: Healthy housing permits and starts (Dec.): Permits +4.2% mom, +17.0% yoy (previous +5.9% mom, +8.3% yoy), with single-family dwellings up +30% yoy and volatile multi-family down -7%. Starts +5.8% mom, +5.2% yoy (previous +3.1% mom, +15.1% yoy) on single-family +28% yoy and multi-family -39%</li>
<li>US: Homebuilders remain confident (Jan.): 83 (previous 86; positive &gt;50&gt;&nbsp; negative).</li>
<li>US: Reallocation of travel spend to alterations and additions continues (Remodelling market index, 4Q): 79.0 (previous 82.0; positive &gt;50&gt;&nbsp; negative).</li>
</ul>
Chart of the week: It’s not just Auckland, house price appreciation is broad based
Change in house price index (3m moving average, yoy%)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1691983174971843271&amp;th=177b21bbae2262c7&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9A0EVKoDV2JPEQwNPn31FxqBppBEgwP-YhzWsqW1VlOEcuzCBjsfv_YZBHuxdGg_FkOVFvNikBgDvfJ9o7t2TtSOxIXbGFsYWQW5hwF8hYNWu3syMB_4CGYlE&amp;disp=emb" width="455" height="312" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source:&nbsp;REINZ,&nbsp;Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1691983174971843271&amp;th=177b21bbae2262c7&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9-0qPkWoEU5JLyFKRZfT8sLPteSHIANJrQG6uJkzrGKtlQtZo9GQbMFFLA2FhIgm4gaBck7Qp9q0GgaWWeUE91Rt7Js1PpIcvrmYUKYd2lf9YvVa7TBLDfl9o&amp;disp=emb" class="editor-image img-responsive"></figure>
 P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Building Weekly
New Zealand

Housing market remains buoyant (REINZ, Jan.): House sales down -30.8% mom, +3.2% yoy (previous +8.5% mom, +45.8% yoy); days to sell in Auckland -8 yoy to 35 (vs. long-term average 35), ex-Auckland -7 to 35 (vs. long-term average 42). House prices +1.3% mom, +19.2% yoy (previous +2.2% mom, +18.0% yoy), with Auckland +17.7% yoy and ex-Auckland +20.4% yoy.
What net migration? (Dec.): Net gain of 451 migrants in December -94.6% yoy (previous +643, -92.6%). Calendar 2020 +44.1k (2019 73.1k).
Concrete production finishes the year strong (4Q20): +4.5% qoq, +8.3% yoy (previous +36.7% qoq, +4.4% yoy), with growth seen across all major regions, including regional North Island +22% yoy, Auckland +9%, Waikato/BoP +6%, Canterbury +3%, Wellington +3%, and regional South Island +2%.
FBU reports strong 1H, operating trends expected to continue (1H21): FBU reported 1H21 EBIT +48% underpinned by robust NZ activity and cost out. Management comments highlighted a slower Jan/Feb ramp up in activity but with levels now back in line with the end of 2020, eased import competition due to supply chain issues, and solid product price increases but some input cost pressure.
RBNZ reinstates LVR restrictions: “We expect mortgage lenders to respect the 60/5 investor restrictions immediately with all new loan approvals”
Major bank clamps down on new build lending to investors ahead of LVR changes&nbsp;despite new builds being exempt from lending restrictions
Resource Management Act to go, replaced by three pieces of legislation: Natural and Built Environments, Strategic Planning, and Climate Change Adaptation Bills will be introduced to Parliament in late 2021 with the aim of passing to law by the end of 2022.
Steel &amp; Tube fends off cost pressures:&nbsp;“Chief executive Mark Malpass said its steel mill suppliers were telling him that raw materials, particularly iron ore and nickel, had risen significant[ly] as had transport and container costs.”
Construction activity uninterrupted by community COVID cases: Workers return to wet Auckland building sites under strict alert level 3 measures
Alternative methods to fix housing shortage: Unleashing 'build-to-rent' to solve the rental crisis

Australia

New sales fall back as HomeBuilder ends (Jan.): Detached dwellings -69.4% mom, -12.1% yoy (previous +91.8% mom, +203.2% yoy).
Mixed reporting season outlook comments:

-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Boral:&nbsp;1H21 AU EBIT -20% yoy with concrete volumes -8%, quarries -3%, and cement -4% as well as building products revenue +10%; expecting “continued weakness in multi-residential and non-residential construction”. North America EBITDA -28% yoy with Fly Ash volumes -9%, roofing flat, and stone +4% as well as light building product revenue +6%; “production volumes should continue to ramp up to meet strong market demand”.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James Hardie:&nbsp;3Q North America volume growth of +17% yoy, Europe +17%, and Asia-Pacific +9%.&nbsp;"Based on the continued, strong momentum in its business and expectations for continued growth in residential end markets” JHX lifted FY21 guidance by 11% (at the midpoint).
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GWA Group:&nbsp;1H21 Australia revenue -6% yoy, NZ+3%, and UK +6%. Expects 2H21 Australian detached residential and renovation activity to increase but multi-residential and non-residential to remain subdued. “Growth” expected in NZ, the UK, and Asia.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CIMIC&nbsp;(FY20): Underlying group EBIT down -24% on revenue of -14%. Guidance for +8-14% NPAT growth. “Outlook remains positive for construction and services, with new work recovering” supported by “significant stimulus packages” with “more than $500bn of tenders to be bid and/or awarded in 2021 and beyond”.
International

US: Healthy housing permits and starts (Dec.): Permits +4.2% mom, +17.0% yoy (previous +5.9% mom, +8.3% yoy), with single-family dwellings up +30% yoy and volatile multi-family down -7%. Starts +5.8% mom, +5.2% yoy (previous +3.1% mom, +15.1% yoy) on single-family +28% yoy and multi-family -39%
US: Homebuilders remain confident (Jan.): 83 (previous 86; positive &gt;50&gt;&nbsp; negative).
US: Reallocation of travel spend to alterations and additions continues (Remodelling market index, 4Q): 79.0 (previous 82.0; positive &gt;50&gt;&nbsp; negative).

Chart of the week: It’s not just Auckland, house price appreciation is broad based
Change in house price index (3m moving average, yoy%)

Source:&nbsp;REINZ,&nbsp;Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities

 P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Australia

Boral Limited is a manufacturer and supplier of building and construction materials in Australia and internationally.  Boral supplies building products to the residential and commercial building markets, operates clay brick business in the U.S. (for clay roof tiles and fly ash) along with the production of plasterboard, timber products and concrete products.

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Building Weekly

Building Weekly New Zealand Housing market remains buoyant (REINZ, Jan.): House sales down -30.8% mom, +3.2% yoy (previous +8.5% mom, +45.8%...

Forsyth Barr

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