Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Aussie poles and wires company <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> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02395702-2A1310049?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">rejected</a> two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB).</p>
<p>KKR/OTPPB's first proposal was A$2.70/share, by way of a Scheme, which would be reduced by the 1H21 dividend of A$0.0625/share. KKR/OTPPB subsequently reloaded with A$2.80/share - paltry 12.9% to last close - which was also summarily rejected on the grounds it undervalued Spark.</p>
<p>Spark added:</p>
<blockquote>
<p>Whilst not granting access to due diligence, in order to be constructive, the board of Spark Infrastructure informed the consortium that it was prepared to provide limited information on Spark Infrastructure’s business and its prospects.</p>
</blockquote>
<p>More below the fold.</p>

Aussie poles and wires company Spark Infrastructure (SKI AU) has rejected two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB).
KKR/OTPPB's first proposal was A$2.70/share, by way of a Scheme, which would be reduced by the 1H21 dividend of A$0.0625/share. KKR/OTPPB subsequently reloaded with A$2.80/share - paltry 12.9% to last close - which was also summarily rejected on the grounds it undervalued Spark.
Spark added:

Whilst not granting access to due diligence, in order to be constructive, the board of Spark Infrastructure informed the consortium that it was prepared to provide limited information on Spark Infrastructure’s business and its prospects.

More below the fold.

Spark Infra (SKI AU): KKR & OTPPB's Tilts Falls Short

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/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a> is Australia’s largest airport and the only listed airport on ASX. Sydney Airport revealed a conditional, non-binding indicative offer from a consortium (Sydney Aviation Alliance) comprising of IFM, QSuper and Global Infrastructure Partners. The indicative offer of A$8.25 per share is a 42% premium to the unaffected price of A$5.81 (2 July). The offer price will be reduced by any dividends declared or paid prior to the scheme taking effect. The proposed transaction would be implemented via a scheme of arrangement.</p><p>The Board noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and unanimous recommendation by the Board in the absence of a superior offer. </p><p>Crucially, the offer is conditional on UniSuper agreeing to reinvest its equity interest for an equivalent equity interest in the consortium’s holding vehicle. UniSuper is the largest shareholder who represents 15.28% of the outstanding shares. In response to the indicative offer, UniSuper said that it saw “<em>merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners.</em>" UniSuper will make a final decision after all details have been considered.</p><p>We think that the indicative offer is opportunistic as it offers a modest premium to pre-COVID-19 share prices. However, airports in Australia have been hard hit by tough international travel restrictions, sporadic lockdowns and slow vaccination roll-out. The timing and the shape of a recovery (particularly the crucial international travel) remains highly uncertain suggesting the shares are more suited to the patient long-term investor.</p><div class="content-highlight"><p>Nevertheless, this non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice other infrastructure bidders to start a bidding war. At the last close price of A$7.78, the shares are trading at a 6% gross spread to the indicative offer.</p></div>

Sydney Airport (SYD AU) is Australia’s largest airport and the only listed airport on ASX. Sydney Airport revealed a conditional, non-binding indicative offer from a consortium (Sydney Aviation Alliance) comprising of IFM, QSuper and Global Infrastructure Partners. The indicative offer of A$8.25 per share is a 42% premium to the unaffected price of A$5.81 (2 July). The offer price will be reduced by any dividends declared or paid prior to the scheme taking effect. The proposed transaction would be implemented via a scheme of arrangement.The Board noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and unanimous recommendation by the Board in the absence of a superior offer. Crucially, the offer is conditional on UniSuper agreeing to reinvest its equity interest for an equivalent equity interest in the consortium’s holding vehicle. UniSuper is the largest shareholder who represents 15.28% of the outstanding shares. In response to the indicative offer, UniSuper said that it saw “merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners." UniSuper will make a final decision after all details have been considered.We think that the indicative offer is opportunistic as it offers a modest premium to pre-COVID-19 share prices. However, airports in Australia have been hard hit by tough international travel restrictions, sporadic lockdowns and slow vaccination roll-out. The timing and the shape of a recovery (particularly the crucial international travel) remains highly uncertain suggesting the shares are more suited to the patient long-term investor.Nevertheless, this non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice other infrastructure bidders to start a bidding war. At the last close price of A$7.78, the shares are trading at a 6% gross spread to the indicative offer.

Sydney Airport Gets an Opportunistic Indicative Offer

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div><p>S&amp;P Dow Jones Indices will announce changes 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> as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p></div><div>We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - <a href="https://www.smartkarma.com/entities/centuria-capital-group" target="_blank" data-smartkarma-citation="entities:15546:1" rel="noopener">Centuria Capital (CNI AU)</a>, <a href="https://www.smartkarma.com/entities/pinnacle-investment-manageme" target="_blank" data-smartkarma-citation="entities:20624:1" rel="noopener">Wilson (PNI AU)</a> and <a href="https://www.smartkarma.com/entities/sealink-travel-group-ltd" target="_blank" data-smartkarma-citation="entities:6400:1" rel="noopener">Sealink Travel (SLK AU)</a> while the potential deletions are <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/nrw-holdings-ltd" target="_blank" data-smartkarma-citation="entities:9271:1" rel="noopener">NRW Holdings (NWH AU)</a> and <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> is a close add and the corresponding deletion is <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a>.</div><div></div><div>There is a large impact expected on the inclusions while the impact on the deletions is lower.</div><div></div><div>For <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>, the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.</div>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - Centuria Capital (CNI AU), Wilson (PNI AU) and Sealink Travel (SLK AU) while the potential deletions are Nuix Limited (NXL AU), NRW Holdings (NWH AU) and G8 Education (GEM AU).
Galaxy Resources (GXY AU) is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with Orocobre Ltd (ORE AU).
De Grey Mining (DEG AU) is a close add and the corresponding deletion is Westgold Resources (WGX AU).There is a large impact expected on the inclusions while the impact on the deletions is lower.For G8 Education (GEM AU), the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

<p><strong><a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a></strong> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02391761-2A1307944?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a consortium comprising IFM Investors, QSuper, and fund manager Global Infrastructure Management has made an indicative, non-binding Offer by way of a Scheme at $8.25/share,  a 42% premium to last close.  </p>
<p><strong>SYD</strong> has commenced an assessment of the proposal but mentions the Offer price is below the Covid-cliff, and that the pandemic effect on operations is expected to be short-term.  </p>
<p>Separately, the Offer is conditional on regulatory approvals such as FIRB and ACCC. As a critical aviation asset, it's not just the opportunistic price that could torpedo this deal.</p>
<p>More below the fold.</p>

Sydney Airport (SYD AU) has announced a consortium comprising IFM Investors, QSuper, and fund manager Global Infrastructure Management has made an indicative, non-binding Offer by way of a Scheme at $8.25/share,  a 42% premium to last close.  
SYD has commenced an assessment of the proposal but mentions the Offer price is below the Covid-cliff, and that the pandemic effect on operations is expected to be short-term.  
Separately, the Offer is conditional on regulatory approvals such as FIRB and ACCC. As a critical aviation asset, it's not just the opportunistic price that could torpedo this deal.
More below the fold.

Sydney Airports (SYD AU): Opportunistic Tilt Amid Cloudy Future

Founder of Antler Capital

Stanley Tsai, CFA

Equity Bottom-Up

<p><strong>BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> </strong></p>
<p>As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.</p>
<p><strong>BOCAVI is a highly geared play on the resumption of air travel. </strong>The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.</p>
<p><strong>Management's countercyclical capex expansion increasingly looks like a shrewd bet. </strong>At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  </p>
<p><strong>We expect the firm's undiscounted committed revenues to top USD20bn in 2021.</strong> By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. </p>
<p><strong>We are buyers at book value.</strong> The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.</p>
<p>Attachment: BOCAVI Financial Summary</p>

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

Australia

Sydney Airport operates the Sydney, Australia airport. The Company develops and maintains the airport infrastructure and leases terminal space to airlines and retailers.

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Sydney Airport (SYD AU)

Spark Infra (SKI AU): KKR & OTPPB's Tilts Falls Short

This appears a full offer for Spark, especially noting greater regulatory oversight on expected returns. KKR/OTTB have deep pockets. But I'm...

David Blennerhassett

Sydney Airport Gets an Opportunistic Indicative Offer

The non-binding indicative offer lays a marker for the intrinsic value of the shares, gives the Board an opportunity to negotiate a bump or entice...

Arun George

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

We see 3 potential changes to the ASX200 at the Sep rebalance with CNI, PNI and SLK being included and NXL, NRW and GEM being deleted. Passive...

Brian Freitas

Sydney Airports (SYD AU): Opportunistic Tilt Amid Cloudy Future

A full Offer probably needs to be tabled at $9+, ~9% up from the current proposal, and an additional $2bn outlay from the Consortium. I think DD...

David Blennerhassett

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

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