Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wt-microelectronics-co-ltd" target="_blank" data-smartkarma-citation="entities:19712:1" rel="noopener"><strong>WT Microelectronics (3036 TT)</strong></a> has entered into an agreement to acquire electronic component distributor  <strong><a href="https://www.smartkarma.com/entities/excelpoint-technology-ltd" target="_blank" data-smartkarma-citation="entities:1774:1" rel="noopener">Excelpoint Technology (EXLP SP)</a></strong> by way of a Scheme at a cash consideration of S$1.93/share.</li>
<li>This is an Offer premium 7.8% to last close but a 21.4% premium prior to the announcement Excelpoint was in <a href="https://www.smartkarma.com/compose/insight/68454/WT%20Micro%E2%80%99s%20Offer%20For%20Excelpoint%20Tech%20Event-Driven%200%20Views%20,%2014%20Apr%202022%2010:17%20EXECUTIVE%20SUMMARY%20%20WT%20Microelectronics%20(3036%20TT)%20has%20entered%20into%20an%20agreement%20to%20acquire%20electronic%20component%20distributor%20%20Excelpoint%20Technology%20(EXLP%20SP)%20by%20way%20of%20a%20Scheme%20at%20a%20cash%20consideration%20of%20S%241.93/share.%20This%20is%20an%20Offer%20premium%207.8%%20to%20last%20close%20but%20a%2021.4%%20premium%20prior%20to%20the%20announcement%20Excelpoint%20was%20in%20discussions%20with%20a%20third%20party%20involving%20the%20company's%20shares.%20Albert%20Phuay%20(founder%20and%20CEO)%20will%20reinvest%20part%20of%20his%20cash%20consideration%20under%20the%20Scheme%20in%2020%%20equity%20of%20the%20Acquiring%20Entity,%20with%20the%20balance%2080%%20stake%20owned%20by%20WT.%20%20DETAIL%20%20The%20Offer%20WT%20Semiconductor%20is%20Offering%20S%241.93/share%20by%20way%20of%20a%20Scheme%20for%20all%20Excelpoint%20shareholders.%20A%20final%20dividend%20of%20S%240.088/share%20was%20announced%20on%2016%20February%202022%20-%20page%2019.%20For%20the%20avoidance%20of%20doubt,%20the%20Target%20Shareholders%20as%20at%20the%20Record%20Date%20(29%20April)%20will%20be%20entitled%20to%20receive%20and%20retain%20the%20Final%20FY2021%20Dividend%20in%20addition%20to%20the%20Scheme%20Consideration.%20The%20ex-date%20is%20the%2028%20April,%20and%20payment%20on%20the%2013%20May.%20%20Condition.%20Shareholder%20vote%20-%20this%20requires%20the%20approval%20of%20a%20majority%20of%20shareholders%20in%20number%20(headcount%20rule)%20representing%2075%%20in%20value%20of%20shares%20voted%20at%20a%20scheme%20meeting.%20See%20Quiddity%20Singapore%20M&amp;A%20Guide%202019%20for%20more%20info%20on%20Schemes%20in%20Singapore.%20%20Irrevocables.%20Irrevocable%20undertaking%20total%2050,513,372%20shares%20or%2041.98%%20of%20shares%20out.%20These%20irrevocables%20are%20from%20Albert%20Phuay%20Yong%20Hen%20(39.82%),%20Han%20Jiak%20Siew%20(2.02%%20-%20Phuay's%20wife),%20and%20AP21%20Holdings%20(0.14%),%20a%20vehicle%20controlled%20by%20Phuay.%20Switch%20Option.%20In%20the%20event%20of%20a%20competing%20offer,%20WT%20has%20the%20right,%20subject%20to%20prior%20consultation%20with%20the%20SIC,%20to%20proceed%20by%20way%20of%20a%20voluntary%20conditional%20cash%20offer.%20%20If%20the%20Switch%20Option%20is%20exercised,%20WT%20will%20make%20the%20Offer%20on%20the%20same%20or%20better%20terms%20as%20those%20which%20apply%20to%20the%20Scheme,%20and%20an%20acceptance%20condition%20set%20at%20only%20more%20than%2050%.%20MACs/Prescribed%20Occurrences.%20This%20includes%20no%20more%20than%20a%2010%%20decline%20in%20revenue%20or%20EBITDA%20-%20see%20pages%209-10.%20Anything%20else?%20The%20founder%20and%20CEO%20of%20Excelpoint,%20Albert%20Phuay,%20will%20reinvest%20part%20of%20the%20cash%20consideration%20due%20to%20him%20under%20the%20Scheme%20in%2020%%20equity%20of%20the%20%22Acquiring%20Entity%22,%20with%20the%20balance%2080%%20stake%20owned%20by%20WT.%20%20Albert%20Phuay%20will%20continue%20to%20be%20the%20CEO%20of%20Excelpoint.%20The%20Proposal%20Data%20Point%20Data%20in%20the%20Data%20Point%20The%20Deal%09Scheme%20Offeror%09WT%20Microelectronics%20(3036%20TT)%20%20Target%09Excelpoint%20Technology%20(EXLP%20SP)%20%20Terms%20%09%241.93/share,%20cash.%20Deal%20size:%20US%240.2bn.%20Conditions%09%20Scheme%20vote.%20SIC%20sign-off%20%20Dividends?%09%20Yes%20-%20S%240.088/share%20to%20be%20added.%20%20Source:%20Announcement%20On%20Pricing%20The%20Scheme%20Consideration%20also%20represents%20a%20premium%20of%2058.2%%20over%20the%20NAV%20%20as%20at%2031%20December%202021%20%20Source:%20Announcement%20%20Timetable%20Tentatively%20looking%20at%20an%20effective%20date%20in%20mid-September.%20%20Source:%20Announcement%20%20On%20Excelpoint%20%20Excelpointwas%20incorporated%20in%20Singapore%20on%2018%20May%202001%20and%20was%20listed%20on%20the%20Mainboard%20of%20the%20SGX-ST%20on%207%20January%202004%20at%20S%240.26/share.%20Excelpoint%20is%20a%20regional%20electronics%20component%20distributor%20in%20the%20Asia%20Pacific%20region.%20It%20offers%20electronic%20components,%20engineering%20design%20services,%20and%20supply%20chain%20management%20to%20original%20equipment%20manufacturers,%20original%20design%20manufacturers,%20and%20electronics%20manufacturing%20services.%20Excelpoint's%20suppliers%20include%20Analog%20Device%20(ADI),%20Microchip,%20Qorvo,%20Qualcomm,%20and%20Samsung,%20among%20others.%20The%20company%20now%20works%20closely%20with%20over%204,000%20customers.%20Recent%20Results.%20FY21%20revenue%20was%20up%2044.2%%20to%20US%241.6bn.%20Net%20profit%20increased%20137.2%%20to%20US%2424.5mn.%20%20The%20Board%20proposed%20an%20ordinary%20dividend%20of%20S%240.04/share%20and%20a%20special%20dividend%20of%20S%240.048/share,%20and%20was%20approved%20at%20the%20AGM.%20Abridged%20Fundamentals%20%20Shareholders%20%20Excelpoint%20placed%20out%20those%20shares%20to%20Alonim%20Investments%20on%20the%202%20September%202016%20at%20S%240.55/share.%20Alan%20Kwan%20is%20a%20director.%20I%20don't%20know%20why%20he%20hasn't%20given%20an%20irrevocable.%20Still,%20the%20Offer%20has%20board%20support.%20%20On%20WT%20%20WT%20was%20founded%20in%201993,%20and%20is%20one%20of%20the%20global%20leading%20distributors%20of%20semiconductor%20components.%20WT's%20FY21%20revenue%20was%20~US%2416bn.%20WT%20currently%20partners%20with%20over%2080%20suppliers%20across%20every%20major%20technology%20segment%20to%20serve%20over%208,000%20customers%20worldwide.%20Why%20The%20Deal?%20There%20are%20strong%20synergies%20between%20both%20companies:%20The%20enhanced%20complementary%20product%20line%20offerings%20will%20allow%20for%20business%20expansion.%20Most%20importantly,%20with%20the%20experienced%20teams%20and%20footprints%20from%20both%20companies,%20customers%20will%20benefit%20from%20the%20extensive%20product%20solutions%20and%20technical%20support%20provided%20by%20the%20WT%20group,%20allowing%20them%20earlier%20access%20to%20the%20market.%20%20In%20addition,%20the%20established%20customer%20bases%20combined%20would%20significantly%20improve%20the%20distribution%20capabilities%20and%20customer%20portfolios%20of%20WT%20in%20the%20Asia%20Pacific%20region.%20Cross%20selling%20of%20various%20products%20to%20the%20customers%20of%20Excelpoint%20and%20WT%20would%20not%20onlyrealise%20potential%20synergies%20for%20the%20enlarged%20WT%20group,%20but%20also%20bring%20more%20demand%20creation%20opportunities%20for%20the%20suppliers.%20%20Peer%20Comparison%20Excelpoint%20appears%20inexpensive%20versus%20peers.%20%20On%20a%20trailing%20EV/EBITDA%20basis,%20Excelpoiint%20has%20traded%20at%20a%209%%20discount%20to%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%2048%.%20Excelpoiint%20has%20traded%20at%20a%2020%%20discount%20to%20SGX%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%2044%.%20Excelpoint's%20average%20trailing%20EV/EBITDA%20over%20that%20time%20is%209.7x%20and%20it%20is%20currently%20at%206.2x.%20%20On%20a%20trailing%20PER%20basis,%20Excelpoiint%20has%20traded%20at%20a%2034%%20discount%20to%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%2040%.%20Excelpoiint%20has%20traded%20at%20a%2013%%20discount%20to%20SGX%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%2021%.%20Excelpoint's%20average%20trailing%20PER%20over%20that%20time%20is%2011.7x%20and%20it%20is%20currently%20at%206.5x.%20%20On%20a%20trailing%20P/B%20basis,%20Excelpoiint%20has%20traded%20at%20a%2025%%20discount%20to%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%20a%2069%%20premium.%20Excelpoiint%20has%20traded%20at%20a%2023%%20premium%20to%20SGX%20peers%20over%20the%20past%20three%20years.%20It%20is%20currently%20118%.%20Excelpoint's%20average%20trailing%20P/B%20over%20that%20time%20is%200.7x%20and%20it%20is%20currently%20at%201.5x.%20%20Share%20Price%20Performance%20Optically,%20this%20is%20a%20decade-high%20Offer%20price.%20%20%20Excelpoint%20has%20been%20a%20clear%20outperformer%20versus%20its%20peer%20group.%20%20%20Conclusions%20Last%20There%20appears%20enough%20here%20to%20get%20over%20the%20line.%20%20.%20%20The%20Trade:%20Trading%20at%20a%204.6%%20gross%20spread,%20including%20the%20dividend,%20which%20is%20paid%20this%20time%20next%20month.%20That%20looks%20attractive.%20Get%20involved,%20although%20this%20is%20not%20a%20super%20liquid%20arb%20situation." target="_blank" rel="noopener">discussions</a> with a third party involving the company's shares.</li>
<li>Albert Phuay (founder and CEO) will reinvest part of his cash consideration under the Scheme in 20% equity of the Acquiring Entity, with the balance 80% stake owned by WT. </li>
</ul>



WT Microelectronics (3036 TT) has entered into an agreement to acquire electronic component distributor  Excelpoint Technology (EXLP SP) by way of a Scheme at a cash consideration of S$1.93/share.
This is an Offer premium 7.8% to last close but a 21.4% premium prior to the announcement Excelpoint was in discussions with a third party involving the company's shares.
Albert Phuay (founder and CEO) will reinvest part of his cash consideration under the Scheme in 20% equity of the Acquiring Entity, with the balance 80% stake owned by WT. 


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>Total short notional in Taiwan stocks is TWD 237,399 mm (~US$7.83 bn) as of 31 January 2020.</p></div><div><p>Over the Lunar New Year shortened two weeks, the largest short positions were put on in <a href="https://www.smartkarma.com/entities/chunghwa-telecom-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9181:1">Chunghwa Telecom (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:772:1">Mediatek Inc (2454 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company-tsmc" target="_blank" rel="noopener" data-smartkarma-citation="entities:11230:1">Taiwan Semiconductor Manufacturing Company (TSMC) (2330 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9126:1">Largan Precision (3008 TT)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:4509:1">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/compeq-manufacturing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9306:1">Compeq Manufacturing (2313 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9632:1">Genius Electronic Optical (3406 TT)</a> and <a href="https://www.smartkarma.com/entities/richwave-technology-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18629:1">Richwave Technology (4968 TT)</a>.</p></div><div><p>We take a look at stocks that have seen the biggest percentage increase and decrease in short notional over the last two weeks and have short notional of at least US$5m. </p></div>

Total short notional in Taiwan stocks is TWD 237,399 mm (~US$7.83 bn) as of 31 January 2020.Over the Lunar New Year shortened two weeks, the largest short positions were put on in Chunghwa Telecom (2412 TT), Mediatek Inc (2454 TT), Taiwan Semiconductor Manufacturing Company (TSMC) (2330 TT) and Largan Precision (3008 TT) while shorts were covered in Innolux Corp (3481 TT), Compeq Manufacturing (2313 TT), Genius Electronic Optical (3406 TT) and Richwave Technology (4968 TT).We take a look at stocks that have seen the biggest percentage increase and decrease in short notional over the last two weeks and have short notional of at least US$5m. 

Taiwan - Shorts Cover Tech; Increase Positions in Telecom, Banks, Transportation

Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

<h2>What's new?</h2><p>According to Economic Daily and Commercial Times today, a court in Dongguan, Guangdong province, froze Gionee chairman's Liu Lirong's 41.1% percent stake in the company from Jan. 10 2018 to Jan. 9 2020 for not being able to pay employees' salaries and payables to suppliers. Gionee said it was inappropriate to comment on the matter as the case is still undergoing the judicial process. We see this negative to Gionee's supply chain vendors until more facts being clarified.</p><h2>What type of</h2>…

What's new?According to Economic Daily and Commercial Times today, a court in Dongguan, Guangdong province, froze Gionee chairman's Liu Lirong's 41.1% percent stake in the company from Jan. 10 2018 to Jan. 9 2020 for not being able to pay employees' salaries and payables to suppliers. Gionee said it was inappropriate to comment on the matter as the case is still undergoing the judicial process. We see this negative to Gionee's supply chain vendors until more facts being clarified.What type of…

MediaTek's Key Customer - Gionee Chairman's Assets Were Frozen by the Court?

Thematic (Sector/Industry)

<h2>Summary</h2><ul>
<li><em>Starting October 13, 2016, TSMC will be the first company to report 3Q16 results and provide 4Q16 guidance to kick off semi/tech earnings season. Driven by iPhone 7, <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666:1">Apple Inc (AAPL US)</a> Watch 2 production built, open market smartphones in emerging countries, and <a href="https://www.smartkarma.com/entities/191" target="_blank" data-smartkarma-citation="entities:191:1">Samsung Electronics Co Ltd (005930 KS)</a> Note 7 battery problem, our 3Q16 sales report takeaways suggest y/y strengths in foundry and fabless vendors and q/q strengths in Apple's touch panel/pressure sensor and OEM/EMS vendors.  </em></li>
<li>
<em>On</em>…</li>
</ul>

Summary
Starting October 13, 2016, TSMC will be the first company to report 3Q16 results and provide 4Q16 guidance to kick off semi/tech earnings season. Driven by iPhone 7, Apple Inc (AAPL US) Watch 2 production built, open market smartphones in emerging countries, and Samsung Electronics Co Ltd (005930 KS) Note 7 battery problem, our 3Q16 sales report takeaways suggest y/y strengths in foundry and fabless vendors and q/q strengths in Apple's touch panel/pressure sensor and OEM/EMS vendors.  

On…


Taiwan Semi/Tech 3Q Sales Takeaway as an Early Indicator for Global Tech Earnings

<p><em>Despite recent strong performance (17% ytd) across US and Taiwan semiconductor index, we are turning a bit cautious here because Taiwan Semi/Tech July sales are somehow below seasonal and below our expectations. If analysts start to factor in 3-4% appreciation on NT$ against US starting July, earnings prospects in 2H16 for semi and tech companies might not be as strong as market estimated earlier. In conclusion, we believe not much sales momentum left over before we see a seasonal semiconductor</em>…</p>

Despite recent strong performance (17% ytd) across US and Taiwan semiconductor index, we are turning a bit cautious here because Taiwan Semi/Tech July sales are somehow below seasonal and below our expectations. If analysts start to factor in 3-4% appreciation on NT$ against US starting July, earnings prospects in 2H16 for semi and tech companies might not be as strong as market estimated earlier. In conclusion, we believe not much sales momentum left over before we see a seasonal semiconductor…

Insights from Taiwan Semi/Tech July Sales

Taiwan

WT Microelectronics Co., Ltd. develops and markets integrated circuits (IC) products.  The Company's products include linear IC, applied IC, admixture semaphore IC, logic IC, image detecting IC, and memory IC.  Wintech acts as an agent for Texas Instruments, Fairchild, ST Microelectronics, Marvell, Wolfson, and Bowoon.

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WT Microelectronics (3036 TT)

WT Micro's Offer For Excelpoint Tech

Trading at a 4.6% gross spread, including the dividend, which is paid this time next month. That looks attractive. Get involved, although this is...

David Blennerhassett

Taiwan - Shorts Cover Tech; Increase Positions in Telecom, Banks, Transportation

Total short notional in Taiwan stocks is TWD 237,399 mm (~US$7.83 bn) as of 31 January 2020.Over the Lunar New Year shortened two weeks, the...

Brian Freitas

MediaTek's Key Customer - Gionee Chairman's Assets Were Frozen by the Court?

What's new?According to Economic Daily and Commercial Times today, a court in Dongguan, Guangdong province, froze Gionee chairman's Liu Lirong's...

Andrew Lu

Taiwan Semi/Tech 3Q Sales Takeaway as an Early Indicator for Global Tech Earnings

Summary Starting October 13, 2016, TSMC will be the first company to report 3Q16 results and provide 4Q16 guidance to kick off semi/tech earnings...

Andrew Lu

Insights from Taiwan Semi/Tech July Sales

Despite recent strong performance (17% ytd) across US and Taiwan semiconductor index, we are turning a bit cautious here because Taiwan Semi/Tech...

Andrew Lu

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