Singapore

• China Hainan Rubber Industry (601118 CH) has despatched the offer document relating to its Halcyon Agri (HACL SP) MGO at US$0.315 or S$0.413 per share. The offer closes on 24 March.
• The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate (47% excluding the Gondobintoro Family).
• We think that this is achievable as the offer is attractive. At the last close and for an early-April payment, the gross and annualised spread is 0.7% and 7.3%, respectively.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Pertamina Geothermal Energy (PGEO IJ) has a flat debut and Star Entertainment Group (SGR AU) aims to raise A$800 million to fix its balance sheet.
• Event-Driven developments – Sembcorp Marine (SMM SP), Halcyon Agri (HACL SP), Fujitec Co Ltd (6406 JP), Jiangnan (1366 HK), Techtronic Industries (669 HK), Origin Energy (ORG AU), Nitro, Pushpay. 

• The Offer Document for China Hainan Rubber Industry (601118 CH)‘s mandatory Offer for Halcyon Agri (HACL SP) has been dispatched. 
• Hainan Rubber holds 36% and needs 14% out of 34.8% available – or ~40% to tender.  The first close is the 24 March.
• There is no IFA opinion in the Offer Doc. This will be present in the Circular which is expected to be sent out by the 10th March, at the latest.

• Sembcorp Marine shows interesting bull support at 0.12 where price and trendline meet but does face global cycle headwinds in March. Sell near term above 14.
• MACD trendline support under pressure and a must hold level for the bull case. An MACD would spell trouble for price.
• Current weakness if viewed as a pullback after the May to June bull triangle breakout. 11 is the key pivot level to hold.

• There is no good reason to buy Japan Post Bank (7182 JP)‘s dip until the offering. It’s unlikely to earn the ROE to deserve the PBR it has versus peers.
• Brookfield and EIG/MidOcean’s revised NBIO will garner Origin Energy (ORG AU) board support; however, the terms are weird and unfair to investors holding fewer than 100k shares. 
• SATS (SATS SP) rights offer is not actually a surprise. Not at all. Passive funds will exercise. 

• There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three new deals was discussed on Smartkarma this past week: New Century Resources (NCZ AU)off-market Offer;AAG Energy Holdings’ (2686 HK) ‘s Scheme; and Jiangnan (1366 HK)‘s MBO.
• Key updates took place for: Nitro Software Ltd (NTO AU), Origin Energy (ORG AU), Pushpay Holdings (PPH NZ), Sembcorp Marine (SMM SP), and Boustead Projects (BOCJ SP).

• Grab reported 4Q2022 results yesterday. Q4 revenue more than quadrupled to $502m (vs consensus $403.48) while reported a negative adjusted EBITDA of $111m (vs consensus $137m) vs $305m in 4Q2021.
• Deliveries business went on to report positive adjusted EBITDA driven by improvement in take rate coupled with reduction in total incentives.
• Grab Holdings (GRAB US) share price dropped 8.29% at the end of yesterday’s trade despite the company accelerating its profit timeline to breakeven in 4Q2023 vs 2H2024 previously.

• On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
• The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation. 
• BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.

• SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
• The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
• There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

• Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
• They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
• Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

• Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
• In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
• Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms. 

• Although the sell-side has lowered their immediate and medium-term targets, our analysis points to another surprise to the downside for Sea Ltd (SE US) in 4Q22.
• Having exhausted pretty much all the cost-cutting in the past few quarters, we don’t see much room for Sea Ltd to further reduce its losses in the e-commerce business.
• With the sell-side optimistic once again expecting a narrower loss, a big miss in the fourth quarter could send Sea Ltd shares back towards their Nov 2022 lows.

In the upcoming webinar, Datuk William will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

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• Singapore-headquartered last-mile internet connectivity startup Transcelestial Technologies has received US$10 million in a Series A extension round.
• Existing investor Airbus Ventures led the round, with participation from Kickstart Ventures, Genesis Alternative Ventures, Wavemaker, Cap Vista, and SEEDS Captial. In-Q-Tel had also joined in a previous undisclosed round.
• The new round brings Transcelestial’s total investment raised to date to US$24 million.

• Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
• MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
• There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

• Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
• That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic. 
• It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources

• The transaction completes on 28 February and the distribution in-specie of 49% new Sembcorp Marine (SMM SP) shares will be credited to Keppel Corp (KEP SP)‘s shareholders on 1 March.   
• While the potential index inclusions are likely to support new SMM shares, there is likely to be greater short-term downward pressure from the overhang created by the distribution in-specie. 
• New SMM trades at a premium P/NAV multiple of 1.81x vs peers. However, New SMM’s order book of S$18.1 billion implies an undemanding EV/order book of 0.60x vs historical ranges.

• The company was founded in 1828 as a British trading house, active across rubber plantations, tin smelting, trading of oil products, shipping, distribution of consumer goods and more.
• After Singapore become an independent country, Boustead Singapore was spun off from its Malaysian and British counterparts.
• In 1996, the company became controlled by entrepreneur FF Wong. 

• This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
• This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
• That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.

• This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
• This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
• While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here. 

• ESR-LOGOS REIT (EREIT SP) is looking to raise US$114m (S$150m) in a private placement. The proceeds will be used to fund potential acquisitions and finance the redevelopment of its properties. 
• Post offering, there will also be a US$114m (S$150m) non-renounceable preferential offering, which will bring the total gross proceeds of the equity fund raising to US$228m (S$300m).
• The deal is a relatively large one to digest at 46 days of ADV and 6.4% of current mcap. We’ll talk about the deal dynamics.

• Sembcorp Marine (SMM SP) shareholders voted overwhelmingly for the merger between Keppel O&M and Sembcorp Marine. The transaction is expected to close by 28 February.  
• The divestment of Keppel O&M will further move Keppel Corp (KEP SP) towards a more asset-light and recurring earnings model, providing a helpful tailwind to hit its 15% ROE target.
• Pre-Dividend in specie distribution, our Keppel SoTP valuation based on Sembcorp Marine’s reference issue price (S$0.122) and last close (S$0.136) is S$8.49 and S$8.72 per share, respectively.