IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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.

Event-Driven

<a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> made an offer to acquire <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>/IJMC’s entire stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  <div class="content-highlight">A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  </div>

Kuala Lumpur Kepong (KLK MK) made an offer to acquire Ijm Corp Bhd (IJM MK)/IJMC’s entire stake in Ijm Plantations (IJMP MK)/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Alpha Factors

Equity Bottom-Up

INVESTMENT CONCLUSION: An improved outlook for CPO pricing should support the shares into the S$0.30s.  Pricing expectations have improved as a result of strong biodiesel demand outstripping low production.  CPO prices have jumped 33% from June, yet <a href="https://www.smartkarma.com/entities/golden-agri-resources-ltd" target="_blank" data-smartkarma-citation="entities:1142:1" rel="noopener">Golden Agri Resources (GGR SP)</a> shares are down 20% in the same period.

INVESTMENT CONCLUSION: An improved outlook for CPO pricing should support the shares into the S$0.30s.  Pricing expectations have improved as a result of strong biodiesel demand outstripping low production.  CPO prices have jumped 33% from June, yet Golden Agri Resources (GGR SP) shares are down 20% in the same period. 

Golden Agri: Pricing Up / Stock Down:  Trading Buy

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like <a href="https://www.smartkarma.com/entities/golden-agri-resources-ltd" target="_blank" data-smartkarma-citation="entities:1142:1" rel="noopener">Golden Agri Resources (GGR SP)</a> and <a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> until the risks associated with a recent spike in transboundary haze passes.  Over the past few days, there has been a sharp deterioration in air pollution throughout Southeast Asia as a result of an escalation of fire clearing activities across Sumatra and Kalimantan.

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like Golden Agri Resources (GGR SP) and Wilmar International (WIL SP) until the risks associated with a recent spike in transboundary haze passes.  Over the past few days, there has been a sharp deterioration in air pollution throughout Southeast Asia as a result of an escalation of fire clearing activities across Sumatra and Kalimantan.  

Golden Agri & Wilmar – Avoid till the Smoke Clears

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like <a href="https://www.smartkarma.com/entities/1142" target="_blank" data-smartkarma-citation="entities:1142:1">Golden Agri Resources (GGR SP)</a> (GAR).

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like Golden Agri Resources (GGR SP) (GAR). 

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

INVESTMENT VIEW: The Australian Bureau of Meteorology has just downgraded its risk of El Niño from ‘Alert’ to ‘Watch’, and as a result, we temper our optimism for a near-term rally in CPO prices.  Longer-term, we remain bullish on <a href="https://www.smartkarma.com/entities/1142" target="_blank" data-smartkarma-citation="entities:1142:1">Golden Agri Resources (GGR SP)</a>, but higher CPO prices remain a key catalyst for our bullish call on the shares.

INVESTMENT VIEW: The Australian Bureau of Meteorology has just downgraded its risk of El Niño from ‘Alert’ to ‘Watch’, and as a result, we temper our optimism for a near-term rally in CPO prices.  Longer-term, we remain bullish on Golden Agri Resources (GGR SP), but higher CPO prices remain a key catalyst for our bullish call on the shares. 

Golden Agri:  Reduced Risk of El Niño Pushes Out CPO Price Recovery into 2020

Malaysia

Sime Darby Plantation Berhad produces and distributes agricultural products. The Company offers palm oil, fats products, oleochemicals, rubber, lubricants, ozone acids, glycerine, and fatty acids, as well as provides vegetable farming and cattle rearing services. Sime Darby Plantation serves customers in Asia.

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Sime Darby Plantation Bhd (SDPL MK)

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

KLK MK made an offer to acquire IJMC’s entire stake in IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. If the SPA...

Arun George

Golden Agri: Pricing Up / Stock Down: Trading Buy

INVESTMENT CONCLUSION: An improved outlook for CPO pricing should support the shares into the S$0.30s. Pricing expectations have improved as a...

Charles Spencer

Golden Agri & Wilmar – Avoid till the Smoke Clears

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like Golden Agri Resources (GGR SP) and Wilmar...

Charles Spencer

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

INVESTMENT VIEW:The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional...

Charles Spencer

Golden Agri: Reduced Risk of El Niño Pushes Out CPO Price Recovery into 2020

INVESTMENT VIEW:The Australian Bureau of Meteorology has just downgraded its risk of El Niño from ‘Alert’ to ‘Watch’, and as a result, we temper...

Charles Spencer

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