European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 31 May the acceptance period started, it will run until 14 June (inclusive). The adjusted offer price is €7.2 (around 50% of NAV, not too generous in my view).</li>
<li>Slim seeks to build a large real estate landlord and developer. Top shareholders are Santander and BBVA (49.5% and 20.9% respectively), but cannot tender without booking losses on their stakes.</li>
<li>In the long term, this stock should be worth more, albeit it won't be very liquid. For now, gross spread is 1.8% (est. 33% annual return). Long.</li>
</ul>


On 31 May the acceptance period started, it will run until 14 June (inclusive). The adjusted offer price is €7.2 (around 50% of NAV, not too generous in my view).
Slim seeks to build a large real estate landlord and developer. Top shareholders are Santander and BBVA (49.5% and 20.9% respectively), but cannot tender without booking losses on their stakes.
In the long term, this stock should be worth more, albeit it won't be very liquid. For now, gross spread is 1.8% (est. 33% annual return). Long.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> / <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. </li>
<li>
<a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (19 HK)</a> was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops</li>
<li>A residual <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (9432 JP)</a> individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn't mean much, but it's an interesting artefact. </li>
</ul>


The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. 

Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn't mean much, but it's an interesting artefact. 


Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling

Fomento De Construcciones Y Contratas / Event-Driven

<ul>
<li>On 28 June, after market close <a href="https://www.smartkarma.com/entities/fomento-de-construcciones-y-co" target="_blank" data-smartkarma-citation="entities:21269:1" rel="noopener">Fomento De Construcciones Y Co (FCC SM)</a> announced the repurchase and redemption of 7% of its shares at €12.5/share (38% premium, €5.4 billion implied market cap).</li>
<li>According to my calculations, Carlos Slim will hold, directly and indirectly, c. 88.2% of the share capital post repurchase. That, to me, heralds a delisting offer further down the road.</li>
<li>The offer represents 7.1x EV/Fwd EBITDA, 8.9x Fwd P/E (on IBES forecasts). Median TP is €14.7. Gross spread is 5.3% (plus the €0.5 dividend). It seems a safe long.</li>
</ul>


On 28 June, after market close Fomento De Construcciones Y Co (FCC SM) announced the repurchase and redemption of 7% of its shares at €12.5/share (38% premium, €5.4 billion implied market cap).
According to my calculations, Carlos Slim will hold, directly and indirectly, c. 88.2% of the share capital post repurchase. That, to me, heralds a delisting offer further down the road.
The offer represents 7.1x EV/Fwd EBITDA, 8.9x Fwd P/E (on IBES forecasts). Median TP is €14.7. Gross spread is 5.3% (plus the €0.5 dividend). It seems a safe long.


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>S&amp;P DJI commenced a market consultation for the S&amp;P Global Water Index on 29 July and that could lead to quite a few changes to the index in October.</li>
<li>We currently see 14 deletions and 10 inclusions for the index in October. Most of the changes will have a high impact from passive fund trading.</li>
<li>There could be more changes in April 2023 once stocks listed in Emerging Markets are included in the index.</li>
</ul>


S&amp;P DJI commenced a market consultation for the S&amp;P Global Water Index on 29 July and that could lead to quite a few changes to the index in October.
We currently see 14 deletions and 10 inclusions for the index in October. Most of the changes will have a high impact from passive fund trading.
There could be more changes in April 2023 once stocks listed in Emerging Markets are included in the index.


S&P Global Water Index: Market Consultation Driven Potential Changes

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fomento-de-construcciones-y-co" target="_blank" data-smartkarma-citation="entities:21269:1" rel="noopener">Fomento De Construcciones Y Co (FCC SM)</a> launches an offer to buy 24% of <a href="https://www.smartkarma.com/entities/metrovacesa-sa" target="_blank" data-smartkarma-citation="entities:28925:1" rel="noopener">Metrovacesa SA (MVC SM)</a> for €284 million, €7.8/share, cum dividend, in cash (implied EV €1,271.7 million).</li>
<li>The offer represents 19.4 EV/22e EBITDA, and a whopping c. 50% discount to NAV. Reference shareholders (Santander and BBVA) own 70.21% of Metrovacesa. Gross spread is 3.5%.</li>
<li>Considering recent underperformance of the shares, most free float shareholders will tender, in my view. Closing of the offer should happen in less than six months. Long and tender.</li>
</ul>



Fomento De Construcciones Y Co (FCC SM) launches an offer to buy 24% of Metrovacesa SA (MVC SM) for €284 million, €7.8/share, cum dividend, in cash (implied EV €1,271.7 million).
The offer represents 19.4 EV/22e EBITDA, and a whopping c. 50% discount to NAV. Reference shareholders (Santander and BBVA) own 70.21% of Metrovacesa. Gross spread is 3.5%.
Considering recent underperformance of the shares, most free float shareholders will tender, in my view. Closing of the offer should happen in less than six months. Long and tender.


FCC/Metrovacesa: Opportunistic Voluntary Partial Offer

Spain

Elecnor, S.A. generates, transmits, and distributes electrical power and gas. The Company also engineers, constructs and installs power lines and pipelines for the electrical power, water and gas, railroad and telecommunications industries. Elecnor operates in Spain, Portugal, Argentina, Ecuador, Peru, Venezuela, Brazil, Mexico, and Morocco.

Sacyr S.A. offers construction services, operates concessions and develops and rents real estate in Spain.  The Company develops housing, office buildings, factories, shopping malls, hotels and retirement homes, offers building maintenance services, and administers and markets real estate.

ACS, Actividades de Construccion y Servicios, S.A. is an engineering and contracting company that develops civil and industrial infrastructures. The Company provides Civil Works Construction, Greenfield Concession Development, Industrial Services (electricity, oil and gas) and Environmental Services (waste treatment and facility management).

ACS, Actividades de Construcción y Servicios (ACS SM)

ACS, Actividades de Construcción y Servicios

Obrascon Huarte Lain, S.A. is a construction and engineering company. The Company builds highways, waterworks, civil engineering projects, residential housing and public buildings.  Obrascon also offers public works maintenance and water management services.

Construcciones y Auxiliar de Ferrocarriles SA manufactures railroad cars and components, as well as complete turnkey transportation systems. Exports are increasingly important to the Company, with customers in the UK, Finland, Poland Hong Kong, Brazil and elsewhere. Domestically, the Company has, and will, supply rolling stock to the Madrid and Bilbao subway systems.

Construcciones Y Auxiliar De Ferrocarriles SA (CAF SM)

Construcciones Y Auxiliar De Ferrocarriles SA

Talgo S.A. is a Spain-based specialized rolling stock engineering company focused on the designing, manufacturing and servicing of lightweight trains.

Compania de Distribucion Integral Logista Holdings, S.A. operates as an international logistical solution provider. The Company offers logistics, parcel and express courier transport, industrial parcel transport, and long distance and full truck load transport management services.

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

Prosegur, Compania de Seguridad SA offers security and transportation services. The Company offers surveillance, electronic security, and burglar alarms.  It also transports funds, periodicals and corporate mail, and stores, handles, and distributes special materials.  Prosegur operates in Europe and the Americas.

Ferrovial SA is an infrastructure operator and industrial company. The Company operates in multiple countries in a range of sectors including construction, airport, toll road, and municipal services.  Ferrovial SA also has a services division in which they provide facility management, infrastructure maintenance and upkeep, and energy and waste management services.

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

Fluor Corporation is a professional services company. The Company provides engineering, procurement, construction and maintenance as well as project management services on a global basis. Fluor also provides outsourcing of maintenance services and asset operations, equipment rental and sales, business support services, and other services.

IRB Infrastructure Developers Limited is an infrastructure development and construction company in India with significant experience in the roads and highways sector.  The Company is also involved in the real estate development sector.

TAISEI CORPORATION is a general contractor operating nationwide and overseas. The Company builds residential, commercial, and institutional buildings such as condominiums and single-family houses.  Taisei also performs civil engineering works for roads.  The Company, through its subsidiaries, operates real estate, resort development, and financial businesses.

China State Construction International Holdings Limited, through its subsidiaries, provides building construction and civil engineering works services in Hong Kong.

Valmont Industries, Inc. designs and manufactures poles, towers, and structures for lighting, communication, and utility markets and provides protective coating services for infrastructure.  The Company also manufactures and distributes industrial and agricultural irrigation products in addition to a wide variety of fabricated products for commercial and industrial applications.

Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the Company provides earthwork construction, manufactures and supplies road surfacing materials, and operates quarry and road laying projects. Gamuda also has operation in hiring and rental of plant and machinery, develops properties, and manufactures and sells paper.

Dycom Industries, Inc. provides engineering, construction, and maintenance services to telecomm providers in the United States.  In addition to its primary services, the Company performs underground utility locating and electric utility contracting services.  Dycom also provides services related to the installation of integrated voice, data, and video networks in office buildings.

China National Chemical Engineering Company Ltd. offers construction services. The Company builds chemical, petrochemical, pharmaceutical and power plants, and coal industry facilities.

China National Chemical Engineering Company A (601117 CH)

China National Chemical Engineering Company A

Voltas Limited offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools, mining and construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals.

Fomento de Construcciones y Contratas S.A. (FCC) offers construction services and manufactures building materials.  The Company offers civil engineering services, constructs housing and commercial buildings, roads, and other infrastructure projects, develops real estate, collects, treats, and disposes of solid waste, markets street cleaning machines, and produces cement.

Fomento De Construcciones Y Contratas (FCC SM)

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Fomento De Construcciones Y Contratas (FCC SM)

FCC/Metrovacesa: Acceptance Period

The acceptance period will last until 14 June. This stock, because of its lower liquidity, has been under the radar, but some hedge funds have...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Take Private Looming

FCC SM will repurchase and amortise 7% of share capital at €12.5/share (38% premium vs. 6-month VWAP). Post-completion, free float will be c. 6.8%.

Jesus Rodriguez Aguilar

S&P Global Water Index: Market Consultation Driven Potential Changes

S&P DJI's market consultation for the S&P Global Water Index could lead to quite a few changes to the index in October. There are a few potential...

Brian Freitas

FCC/Metrovacesa: Opportunistic Voluntary Partial Offer

The offer price is not particularly generous for Metrovacesa's shareholders, although considering the underperformance of the shares, I believe a...

Jesus Rodriguez Aguilar

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