In today’s briefing:
- Asia Cement (743 HK): $3.22/Share Offer – Really?
- Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not
- CK Asset Holdings (1113 HK): First Down, Then Up?
- Softbank (9984 JP): This Time, It’s Different
- Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?
- Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery
- MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%
- TOPIX Inclusions: Who Is Ready (June 2024)
Asia Cement (743 HK): $3.22/Share Offer – Really?
- After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
- Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
- Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.
Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not
- Lasertec shares dropped nearly 8% following a scathing 53-page report by Scorpion Capital, accusing management of “colossal fraud.”
- The SC report is shrill, in our view, and therefore, we think we add value by contributing a second opinion.
- In our view, Lasertec is due for a correction even if SC’s report is inundated by hyperbole.
CK Asset Holdings (1113 HK): First Down, Then Up?
- CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
- CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
- There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.
Softbank (9984 JP): This Time, It’s Different
- Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
- Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
- Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount
Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
- It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
- Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.
Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- Activist short seller Scorpion alleges Lasertec is a “colossal fraud” and “ticking time bomb”
- Most of their allegations relate to problems with Lasertec’s EUV mask inspection tools
- Lasertec achieved Intel’s distinguished supplier ward for the past six years and last December landed an award from TSMC for “Distinguished EUV Mask Inspection and Metrology Collaboration”. What gives?
What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?
- FSS wants Nikke’s MAU data to address revenue concerns. They also seek April and May sales data for Stellar Blade to address valuation concerns despite its recent launch.
- Shift Up updated the prospectus with Nikke’s increasing MAU data but didn’t include Stellar Blade sales data. FSS may request further revisions, possibly delaying the IPO again.
- Nikke’s MAU has risen but plateaued versus the previous quarter, and uncertainty surrounds Stellar Blade’s April-May sales, potentially impacting IPO pricing.
Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery
- During the upcoming Dragon Boat Festival, both flight and railway traffic seems sluggish, indicating a cooled-down enthusiasm for long-distance trips due to budget constraints.
- Data points to booming short-distance travel with self-driving as the major means, helped by lower price;
- Benefiting from hotel booking and catering, Meituan is the biggest beneficiary of such consumption downgrade.
MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%
- Total revenue increased by 25% YoY and all business lines grew strongly.
- In 1Q24, the operating losses from new initiatives decreased by 45% YoY, but new initiatives revenue still grow.
- We conclude that the price target can be double of the market price.
TOPIX Inclusions: Who Is Ready (June 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
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