While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.
Given the slowdown in Apple orders, which are only part of the story here, the shares have been a dreadful performer. They have underperformed TOPIX by 40% over the last 12 months and are 40% off their July 2018 high. They now trade on 11x this year’s numbers (and yield 2.7%), which we believe to be conservative. With the roll out of 5G orders next year will surely be up as well. We would buy at current levels.
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While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.
Given the slowdown in Apple orders, which are only part of the story here, the shares have been a dreadful performer. They have underperformed TOPIX by 40% over the last 12 months and are 40% off their July 2018 high. They now trade on 11x this year’s numbers (and yield 2.7%), which we believe to be conservative. With the roll out of 5G orders next year will surely be up as well. We would buy at current levels.
The biggest positive surprise from Sea Ltd’s (SE US) conference call is strong 2019 adjusted sales guidance: 82%-97% YoY growth for Garena (digital entertainment division) and 117-127% YoY growth for Shopee (e-commerce arm).
Management expects first positive quarterly EBITDA for Shopee Taiwan operations in 1Q19, indicating there is a path to profitability for Shopee’s business model.
Another great news: management expresses high confidence that Shopee’s S&M expenses in terms of absolute dollars would trend down in 2019, vs. 2018.
After a 35% daily share gain on 27 Feb, SE trades at 4.1x 2019E P/adjusted revenue excl. 1P sales, yet still a whopping 49% discount to Pinduoduo’s (PDD US) 8.1x P/S.
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The fog lifts, slowly, on Nissan Motor (7201 JP), but merger talks will have to wait until the company gets its governance in order, and a full-on merger seems remote at best.
Both Mio Kato, CFA and Travis Lundy tackled a report in the FT suggesting that Renault “aims to restart merger talks with Nissan within 12 months” and the long-awaited release of Nissan’s Special Committee for Improving Governance (SCIG) report.
Governance weakness under Ghosn was inexcusably bad. Worse than previously reported. Ghosn unilaterally decided the compensation of directors, top management and himself, while Kelly held broad sway over essentially everyone else, acting as a gatekeeper even against auditors and the accounting department. And it appears that there is zero understanding at Renault that Renault itself is not blameless for bad governance at Nissan over the years. The SCIG recommendations to the board now are, on the whole, pretty decent.
If France and Renault “push” for a merger, Nissan will continue to push back for the foreseeable future. As the governance report shows, the house is nowhere near being in order. All that has happened is that the steps which need to take place for it to be put in order have been identified.
Where Mio and Travis diverge – click to both insights below – is that Mio thinks a breakup of the alliance is more likely than a merger near term, especially if Paris continues to ignore Nissan’s priorities and constantly push for a merger ASAP. He does not feel scale is quite as necessary as people seem to assume, as long as you have access to a strong supply chain.
Travis thinks an outright merger is also unlikely, as the trust is not there, but is a big fan of the existing single platform design to lower costs and reduce parts count. There would be no need to replicate the R&D for parts and platforms across multiple marks, so he thinks the production alliance stays in place even if the capital alliance does not move further.
Sanghyun Park concluded the market had misinterpreted Amazon’s server DRAM demand cut in 4Q18. It wasn’t a sign of falling demand nor is there any convincing sign of server DRAM demand drop-off. It’s more a technical issue and by the time SamE gets the optimization issues right, server DRAM demand of Amazon and Google will return, stabilising DRAM prices.
And that demand may come sooner, potentially by the end of 2Q. This will lead to a ₩4tn quarterly addition to the current street consensus, which backs out a current PER of ~9x.
SamE is up since Micron announced it plans to reduce its output of DRAM and NAND by ~5% this year. From a Common-1P perspective, Sanghyun recommends going long the Common.
Aqila Ali discusses Denso Corp (6902 JP) investment in Airbiquity Inc, one of the leading companies in the connected vehicle services sector and one of the companies that has continuously developed automotive telematics technology. This proposal follows its investment in Quadric.io this year. Denso is in full swing in the development of its autonomous driving business and next-generation technologies development, and it wouldn’t be a surprise to see Denso emerge as the first mover in next-generation technologies such as AD and connectivity solutions. (link to Aqila’s insight: Denso Continues to Strengthen Its Investment CASE with Acquisitions)
Wesfarmers Ltd (WES AU) surprised the market and announced a non-binding proposal to acquire Lynas at A$2.25/share (cash) by way of a scheme. This is a 44.7% premium to the one-day price and a 36.4% premium to the 60-day price. However, it is a 0% premium to the price at which Lynas was trading on 3 December 2018, the day before the Malaysian government imposed two pre-conditions on the rolling over of the processing licence (later in 2019), and it is a 3.2% premium to the one-year average as of 4 December 2018. Lynas rejected the proposal the next day.
Lynas shares have, since mid-December, been trading as if there is significant risk to the renewal of their operating license in Malaysia.
This is a long-term bet by Wesfarmers. But seeing it through would require that Lynas shareholders decide once Malaysia has approved the renewal of their license that this business won’t be able to see better margins ahead the way there was a dream to see them a year ago. Travis did not think that the increased buying on the dip by Greencape Pty and FIL since the Dec 4th announcement are omens of a desire to sell at A$2.25.
A priori, the bid by Wesfarmers does not increase the likelihood of a good outcome on the Malaysian regulatory front. And it disappears if Lynas can’t sort its problems satisfactorily. Therefore, it is not clear what value the bid brings to Lynas shares today. If neither the outcome’s probabilities nor the outcome’s price levels change, the bid should have no material impact on Lynas shares.
At the time of his report, Travis thought this would be a short if the stock pops to the very high A$1 range or A$2.00 area. One caveat to shorting too low: if you think WES would conceivably bid quite a bit higher to enable Lynas to have a processing plant and battery plant at WES in Australia and maintain processing in Malaysia, that might be a different story.
The ACCC said will not oppose a tie in between IPH Ltd (IPH AU) and Xenith. Xenith acknowledged the ACCC decision resolves a major uncertainty, but stops short of supporting IPH’s offer as there still exist a number of concerns as detailed in its 19 March announcement.
None of these remaining concerns raised by Xenith appear deal-breakers, and Xenith’s general pushback fails to mention the benefits of leveraging off IPH’s Asia-based presence, IPH’s superior liquidity (versus QANTM limited liquidity), together with the certainty of value under IPH’s offer via the large cash portion.
With IPH’s 19.9% blocking stake, the QANTM/Xenith scheme is a non-starter. Xenith still should engage with IPH, whose offer provides a gross/annualised spread of 7.5%/24.5% – a decent risk/reward – assuming late July completion. The scheme meeting to decide on the QANTM Offer, scheduled for the 3 April, has now been postponed.
SOE State Power Investment Corporation (SPIC) is seeking to privatise China Power New Energy Development Co (735 HK) by way of a Scheme at $5.45/share, a 41.9% premium to last close and a 78.1% premium to the 30-day average. A scrip alternative (6 New shares for one Scheme shares) into an unlisted vehicle under SPIC is also available, but presumably just for SOE shareholders. China Three Gorges, CPNED’s largest shareholder with 27.10%, have given an irrevocable undertaking to vote for the Scheme and to elect the share alternative.
This looks like a pretty clean, straightforward privatization. It is priced above the highest close since its listing by way of introduction on the 18 July 2017, while the excitement over the potential injection of all nuclear power assets and businesses from State Nuclear Power Technology Company has been removed after the restructuring was cancelled in July last year.
Clarity is required as to whether China Three Gorges can vote at the court meeting. Based on the Code, it appears evident they cannot. In addition, the final dividend is expected to be added to the offer price, but again, the announcement is not explicit on this.
The stock is currently trading at an attractive gross/annualised spread of 7.5%/25.7% conservatively assuming a late July completion, and inclusive of the final dividend.
Merck KGaA (MRK GR) has launching an unsolicited, fully financed tender offer on VSM at $48/share cash, a 52% premium to VSM’s stock price on January 25, the day before it agreed to sell itself to Entegris Inc (ENTG US)‘s in an all-stock deal.
Conditions include a minimum acceptance threshold (a majority of shares), the rejection of ENTG’s offer, HSR/CFIUS clearance, plus the usual MACs. Merck does not rule out an increase in the Offer price.
The shareholder vote on the VSM/ENTG is scheduled for April 26th, 2019. The record date to vote is April 2, 2019. This means the last day to buy and participate was this past Friday.
Merck said “the Versum board’s hasty rejection of our proposal and unwillingness to engage in discussions with us has forced us to take this proposal directly to shareholders. … Tell the Versum board to start doing its job and put your interests first.”
A combination of Blackstone and Hellman & Friedman LLC launched an non-LBO LBO for Scout24 in mid-January at €43.50/share (€4.7bn), which was about an 8% premium to the then-current market price, which had already been juiced because of speculation starting after the FT article in late December. Scout24’s Board rejected the Offer. The two buyers came back in mid-February with a Takeover Offer priced at €46.00/share. Both Scout24’s Management Board and Supervisory Board agreed to support the offer. The BidCo has now officially launched its Tender Offer.
The unusual thing about this deal is that the two PE firms are looking to buy a minimum of 50% plus one share, and leave the company listed. The stock has been trading above terms since the new €46 bid. It appears the idea is that another bidder might come in over the top. Travis tends to think the occasional trading at just above €46 is due to arbitrageurs looking at this as a put option. Plus, the lack of additional noise means another bid may not be forthcoming.
Because Scout24 is basically a pure play inline classifieds business, it gets a decent multiple (17x 2019e EV/EBITDA). That said, it is not overwhelmingly expensive for a business which has strong network effects and significant ability to create niche marketplaces using existing technology/IP.
Travis would see nothing wrong with selling in the market here, but as an arb, he is still a buyer at €46.01/share.
Naspers announced the intended listing of its international internet assets on Euronext Amsterdam “no earlier than H2 2019“, together with a secondary, inward listing on the Johannesburg Stock Exchange. The Newco spin-off will include Naspers’ holdings in listcos Tencent and Mail.Ru (MAIL LI), together with ex-South African internet assets. Naspers will maintain a 75% stake in Newco plus Takealot, Media24, and net cash.
Newco’s discount is likely to be narrower than Naspers presently, on account of the smaller free float, and >$2.26bn of investment just from index funds. It will however, still be a Tencent holding vehicle, while Newco’s assets comprise ~94% of Nasper’s assets.
The remaining Naspers, post-spin off could have a wider discount – or “discounts on discounts”. It will be one layer removed from what investors are most interested in – the Tencent holding. As witnessed in other holdco restructurings, providing additional clarity on investments/holdings within a company via spin-offs does not necessarily translate to the parent company’s discount narrowing.
Assigning a 20-25% discount to the Newco and keeping the discount constant (optimistically) at Naspers, gives a negative ~7-13% return. I simply don’t see the value enhancement here, while there is no change in governance and no monetisation at the parent level.
Using a Sum of the Parts analysis, Curtis Lehnert calculated the current discount to NAV to be 37%, the widest level it has been since at least 2015, and approaching the -2 standard deviation level relative to its 6 month average.
The current dividend yield on PCCW was 6.62% vs. 5.55% for HKT. That 1% yield differential is also near the widest since HKT’s listing in 2011.
As Curtis notes, a catalyst for re-rating is hard to find. Still, he argues that the discount has widened out so much that the statistical advantages of mean reversion are in your favor.
Separately – and as expected – the composite document issuance for HKCIM has been delayed until (on or before) the 18 April.
Eclipx (ECX AU) has rallied after a market update confirming it will sell two divisions (Grays and Right2Drive) and use the proceeds to pay down corporate debt.
Ophir Energy (OPHR LN)‘s shareholders approvedMedco Energi Internasional T (MEDC IJ)‘s Offer. Completion of the Offer remains subject to the receipt of clearances from the relevant authorities in Tanzania and not losing all or substantially all of its Bualuang interests in Thailand.
The Offer docs for Healthscope Ltd (HSO AU) have been pushed out to the 24 April so as to incorporate the Scheme and Takeover Documents into a single integrated booklet.
CCASS
My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.
Often these moves can easily be explained – the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.
The Ministry of Industry Affairs and Communications (MIC, the regulator) released Q3 (Dec 2018) data for industry mobile virtual network operator (MVNO) subs today (29 March) characterized by continued declines in growth YoY (+15% in Q3 v 18% in Q2) and the lowest absolute net adds (+480K) since Q2 2014. Growth for the largest consumer-focused MVNO Rakuten Inc (4755 JP) also appears to be the lowest since data has become available but that is not necessarily a sign of strength for the existing network operators as it makes sense for Rakuten to slow MVNO growth before its October real network launch.
In December (13 Dec after trading hours), the FT had an article noting that Germany’s leading property classifieds firm Scout24 AG (G24 GR) (also known for auto classifieds across Europe) was possibly looking to sell itself and that PE firms were lining up to bid. Silver Lake, which had bought British player ZPG (which operates property portals Zoopla and PrimeLocation) for $2.8bn in July 2018, was mentioned as a bidder. Once owned by Deutsche Telekom, control of Scout24 was sold to Blackstone and Hellman & Friedman LLC in 2013-14 (H&F spent €1.5 billion to take a 70% stake in 2013, and Blackstone bought a stake of undisclosed size in 2014), and they listed the company in 2015 with an initial market cap of €3.2 billion. The IPO was €1.16 billion and both sold down, with H&F fully exiting in a placement in 2016.
The share price had been doing well until Q3 last year when German lawmakers, anxious with skyrocketing property prices, started looking at revamping the structure of real estate transaction costs so that they were borne by sellers rather than loaded onto buyers. The shares fell.
source: investing.com
A combination of Blackstone and Hellman & Friedman LLC launched an non-LBO LBO for Scout24 AG (G24 GR) in mid-January at €43.50/share (€4.7 billion) which was about an 8% premium to the then-current market price, which had already been juiced because of speculation starting after the FT article in late December. The company rejected the Offer saying it was too low.
The two buyers came back in mid-February with a Takeover Offer priced at €46.00/share, 5.7% higher than January’s foray and 27% higher than the level pre-FT article; that was about 25x earnings and 28x 2019e cashflow, which is a bit lower than Silver Lake’s ZPG buy multiple. Both Scout24’s Management Board and Supervisory Board agreed to support the offer and said they believed that the transaction is in the best interest of the Company, and an Investment Agreement was signed between the three companies.
The unusual thing about this deal is that the two PE firms are looking to buy a minimum of 50% plus one share, and leave the company listed. The shares jumped to €46 and have been trading at just below to slightly through, leaving many to think that this was a setup for a strategic buyer or possibly Silver Lake to come in over the top.
The New News
Yesterday, the BidCo officially launched its Tender Offer at €46, due to run through 9th May.
Lyft Inc (LYFT US) announced an increase in its IPO price range from $62-68 to $70-72 after previous reports had indicated that the IPO became oversubscribed very early.
There has been significant coverage of the name on Smartkarma but a disappointing lack of obvious puns:
We would highlight Johannes’ interview piece as being well worth a read to understand the driver perspective, as well as Sumeet’s piece and the comments sections for discussions of business model strengths and weaknesses.
Ultimately, this issue isn’t going to be bought for its cheapness and we would guess that it will be successful (initially) due to pent up demand and relatively strong broad stock market performance over the last few months. Below, however, we examine NY transportation data to point out what we feel are misconceptions about the overall value proposition of the ride sharing industry.
Since then, Money Forward’s share price has picked up (closing at JPY4,400 on 26th March 2019), on the back of strong topline guidance for FY11/19E (+55%-65% YoY growth) and “aggressive” medium-term profit targets (positive EBITDA by FY11/21E).
However, following our recent conversation with MF’s IR team, we believe that the above guidance needs to be slightly toned down.
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Given the slowdown in Apple orders, which are only part of the story here, the shares have been a dreadful performer. They have underperformed TOPIX by 40% over the last 12 months and are 40% off their July 2018 high. They now trade on 11x this year’s numbers (and yield 2.7%), which we believe to be conservative. With the roll out of 5G orders next year will surely be up as well. We would buy at current levels.
The biggest positive surprise from Sea Ltd’s (SE US) conference call is strong 2019 adjusted sales guidance: 82%-97% YoY growth for Garena (digital entertainment division) and 117-127% YoY growth for Shopee (e-commerce arm).
Management expects first positive quarterly EBITDA for Shopee Taiwan operations in 1Q19, indicating there is a path to profitability for Shopee’s business model.
Another great news: management expresses high confidence that Shopee’s S&M expenses in terms of absolute dollars would trend down in 2019, vs. 2018.
After a 35% daily share gain on 27 Feb, SE trades at 4.1x 2019E P/adjusted revenue excl. 1P sales, yet still a whopping 49% discount to Pinduoduo’s (PDD US) 8.1x P/S.
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Given the slowdown in Apple orders, which are only part of the story here, the shares have been a dreadful performer. They have underperformed TOPIX by 40% over the last 12 months and are 40% off their July 2018 high. They now trade on 11x this year’s numbers (and yield 2.7%), which we believe to be conservative. With the roll out of 5G orders next year will surely be up as well. We would buy at current levels.
The biggest positive surprise from Sea Ltd’s (SE US) conference call is strong 2019 adjusted sales guidance: 82%-97% YoY growth for Garena (digital entertainment division) and 117-127% YoY growth for Shopee (e-commerce arm).
Management expects first positive quarterly EBITDA for Shopee Taiwan operations in 1Q19, indicating there is a path to profitability for Shopee’s business model.
Another great news: management expresses high confidence that Shopee’s S&M expenses in terms of absolute dollars would trend down in 2019, vs. 2018.
After a 35% daily share gain on 27 Feb, SE trades at 4.1x 2019E P/adjusted revenue excl. 1P sales, yet still a whopping 49% discount to Pinduoduo’s (PDD US) 8.1x P/S.
SamE Common/1P price ratio gap is again above +100% of σ on a 20D MA in favor of Common. Deepening concerns about memory chip price hammered both SamE and Hynix yesterday. But SamE 1P couldn’t capitalize. 1P fell even further, almost reaching 120D high in Common/1P price ratio in favor of Common.
We’ve recently heard rebounding demand for memory chips. This has pushed up both SamE and Hynix lately. Improving fundamentals coupled with the March AGM cycle factor have consistently supported SamE Common/1P price ratio above +0.5σ on a 20D MA since late Jan. This optimism is now facing a serious challenge probably for the first time since late last year.
Opinions are still heavily divided on memory chip business outlook. The concerns reignited by the falling price news would be here with us in the coming few weeks at least. This’d outweigh even the March AGM factor. 1P starts placing itself ahead of Common. I’d go long 1P and short Common now. I’d hold onto the position until -150~200% of σ. This is a 5~6% yield.
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This insight is a kind of public service announcement for investors looking at the Panalpina Welttransport Holding (PWTN SW) situation as it might affect the likely upcoming Extraordinary General Meeting that the Ernst Göhner Foundation requested of Panalpina, and to which Panalpina has acquiesced. The agenda item of the EGM requested is to implement a “One Share One Vote” system.
Activist Cevian has come out against the proposal by the Ernst Göhner Foundation. This sounds counterintuitive except for one odd legal angle.
The Foundation’s ostensible goal is to ensure that the vote is “fair” so that Cevian and Artisan Partners can vote their full stake after having been capped at 5% for many years because of Article 5 in the Panalpina Articles of Association. The more cunning aspect of this is that, as per the Panalpina announcement…
In a letter addressed to Panalpina’s Board of Directors, minority shareholder Cevian had recently questioned the practice to fully admit EGF with all its voting rights at the Company’s shareholders’ meetings. Cevian took the position that the voting restriction of 5% must be applied to all shareholders and, hence the voting power of EGF must be reduced to 5%. An ad hoc board of independent directors (BoiD) consisting of five directors (without representatives of EGF and Cevian) and chaired by Thomas E. Kern, is currently evaluating the situation based on expert opinions submitted by each of EGF and Cevian and based on independent expert advice obtained by the BoiD.
The Foundation knows that their position may be legally weak, and their position could be capped at 5% rather than grandfathered. Indeed, the “independent expert advice” obtained by Cevian includes the opinions of “four leading Swiss stockbrokers” who had come to the conclusion that the Foundation had been unlawfully excluded from the 5% cap, according to this Reuters article on the 26th. The company states that the Ernst Göhner Foundation is and has been exempted from this rule because of “grandfathering” because it owned the shares before the implementation of the rule, but there is nothing in the Articles of Association which grants the EGF that exemption. The full Cevian press releases in English and German are available through their spokesperson and are attached below (at the bottom of the insight).
Another Reuters article discussed the situation, with quotes from Cevian, and added this tidbit at the end.
An ad hoc board of independent directors consisting of five directors, without representatives of EGF and Cevian…will review the proposal and decide how the voting on it will take place at the extraordinary general meeting,” spokeswoman Edna Ayme-Yahil said.
Investors should note…..
The last paragraph of Article 5 of the Panalpina Articles of Association says “No entries shall be made in the register of shareholders following the dispatch of the convocation to the Shareholders’ Meeting until the day after the Shareholders’ Meeting.” This is a little different than is the case for many large Swiss companies where they give the convocation and investors may subsequently register their shares.
For Novartis AG (NOVN SW), which held its AGM today (28 Feb 2019), the deadline for registering shares was 3 days prior to the AGM as shown on p6 in the Organizational Notes on the AGM Notice.
Temenos Group Ag (TEMN SW) last year set their registration deadline 13 days ahead of the AGM, which is further away, but the Convocation Notice had been sent 47 days before the AGM.
In Panalpina’s case, if you are not registered by the time the company sends out the convocation, there is no requirement for the company to admit your shares to the register even if there is plenty of time to do so (though the Board can make exceptions to the entry restriction).
For investors interested in or concerned about the situation, there are measures which may be advisable to implement ASAP to ensure you can vote.
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This insight is a kind of public service announcement for investors looking at the Panalpina Welttransport Holding (PWTN SW) situation as it might affect the likely upcoming Extraordinary General Meeting that the Ernst Göhner Foundation requested of Panalpina, and to which Panalpina has acquiesced. The agenda item of the EGM requested is to implement a “One Share One Vote” system.
Activist Cevian has come out against the proposal by the Ernst Göhner Foundation. This sounds counterintuitive except for one odd legal angle.
The Foundation’s ostensible goal is to ensure that the vote is “fair” so that Cevian and Artisan Partners can vote their full stake after having been capped at 5% for many years because of Article 5 in the Panalpina Articles of Association. The more cunning aspect of this is that, as per the Panalpina announcement…
In a letter addressed to Panalpina’s Board of Directors, minority shareholder Cevian had recently questioned the practice to fully admit EGF with all its voting rights at the Company’s shareholders’ meetings. Cevian took the position that the voting restriction of 5% must be applied to all shareholders and, hence the voting power of EGF must be reduced to 5%. An ad hoc board of independent directors (BoiD) consisting of five directors (without representatives of EGF and Cevian) and chaired by Thomas E. Kern, is currently evaluating the situation based on expert opinions submitted by each of EGF and Cevian and based on independent expert advice obtained by the BoiD.
The Foundation knows that their position may be legally weak, and their position could be capped at 5% rather than grandfathered. Indeed, the “independent expert advice” obtained by Cevian includes the opinions of “four leading Swiss stockbrokers” who had come to the conclusion that the Foundation had been unlawfully excluded from the 5% cap, according to this Reuters article on the 26th. The company states that the Ernst Göhner Foundation is and has been exempted from this rule because of “grandfathering” because it owned the shares before the implementation of the rule, but there is nothing in the Articles of Association which grants the EGF that exemption. The full Cevian press releases in English and German are available through their spokesperson and are attached below (at the bottom of the insight).
Another Reuters article discussed the situation, with quotes from Cevian, and added this tidbit at the end.
An ad hoc board of independent directors consisting of five directors, without representatives of EGF and Cevian…will review the proposal and decide how the voting on it will take place at the extraordinary general meeting,” spokeswoman Edna Ayme-Yahil said.
Investors should note…..
The last paragraph of Article 5 of the Panalpina Articles of Association says “No entries shall be made in the register of shareholders following the dispatch of the convocation to the Shareholders’ Meeting until the day after the Shareholders’ Meeting.” This is a little different than is the case for many large Swiss companies where they give the convocation and investors may subsequently register their shares.
For Novartis AG (NOVN SW), which held its AGM today (28 Feb 2019), the deadline for registering shares was 3 days prior to the AGM as shown on p6 in the Organizational Notes on the AGM Notice.
Temenos Group Ag (TEMN SW) last year set their registration deadline 13 days ahead of the AGM, which is further away, but the Convocation Notice had been sent 47 days before the AGM.
In Panalpina’s case, if you are not registered by the time the company sends out the convocation, there is no requirement for the company to admit your shares to the register even if there is plenty of time to do so (though the Board can make exceptions to the entry restriction).
For investors interested in or concerned about the situation, there are measures which may be advisable to implement ASAP to ensure you can vote.
The 2018 10-K filing confirms Tesla’s operations still are not generating consistently sustainable profits or cash flow unvarnished by substantial boosts from accounting maneuvers and unusual items as seen with the “miracle” third quarter (see “Great Magic Trick Tesla; Now Do it Again“)
Tesla Shanghai Gigafactory construction is underway and yet still not fully funded after at least six months of negotiations with bankers, and thus may also be developing differently versus what Tesla has presented (adding to my previously noted concerns in “Tesla – Shanghai Surprise“).
The common theme here is that all these problems were preventable, avoidable, and unnecessary.
That’s not going away any time soon–as long as Musk remains in complete control.
How long will that be?
Good question–Read on as Bond Angle analysis continues.
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This insight is a kind of public service announcement for investors looking at the Panalpina Welttransport Holding (PWTN SW) situation as it might affect the likely upcoming Extraordinary General Meeting that the Ernst Göhner Foundation requested of Panalpina, and to which Panalpina has acquiesced. The agenda item of the EGM requested is to implement a “One Share One Vote” system.
Activist Cevian has come out against the proposal by the Ernst Göhner Foundation. This sounds counterintuitive except for one odd legal angle.
The Foundation’s ostensible goal is to ensure that the vote is “fair” so that Cevian and Artisan Partners can vote their full stake after having been capped at 5% for many years because of Article 5 in the Panalpina Articles of Association. The more cunning aspect of this is that, as per the Panalpina announcement…
In a letter addressed to Panalpina’s Board of Directors, minority shareholder Cevian had recently questioned the practice to fully admit EGF with all its voting rights at the Company’s shareholders’ meetings. Cevian took the position that the voting restriction of 5% must be applied to all shareholders and, hence the voting power of EGF must be reduced to 5%. An ad hoc board of independent directors (BoiD) consisting of five directors (without representatives of EGF and Cevian) and chaired by Thomas E. Kern, is currently evaluating the situation based on expert opinions submitted by each of EGF and Cevian and based on independent expert advice obtained by the BoiD.
The Foundation knows that their position may be legally weak, and their position could be capped at 5% rather than grandfathered. Indeed, the “independent expert advice” obtained by Cevian includes the opinions of “four leading Swiss stockbrokers” who had come to the conclusion that the Foundation had been unlawfully excluded from the 5% cap, according to this Reuters article on the 26th. The company states that the Ernst Göhner Foundation is and has been exempted from this rule because of “grandfathering” because it owned the shares before the implementation of the rule, but there is nothing in the Articles of Association which grants the EGF that exemption. The full Cevian press releases in English and German are available through their spokesperson and are attached below (at the bottom of the insight).
Another Reuters article discussed the situation, with quotes from Cevian, and added this tidbit at the end.
An ad hoc board of independent directors consisting of five directors, without representatives of EGF and Cevian…will review the proposal and decide how the voting on it will take place at the extraordinary general meeting,” spokeswoman Edna Ayme-Yahil said.
Investors should note…..
The last paragraph of Article 5 of the Panalpina Articles of Association says “No entries shall be made in the register of shareholders following the dispatch of the convocation to the Shareholders’ Meeting until the day after the Shareholders’ Meeting.” This is a little different than is the case for many large Swiss companies where they give the convocation and investors may subsequently register their shares.
For Novartis AG (NOVN SW), which held its AGM today (28 Feb 2019), the deadline for registering shares was 3 days prior to the AGM as shown on p6 in the Organizational Notes on the AGM Notice.
Temenos Group Ag (TEMN SW) last year set their registration deadline 13 days ahead of the AGM, which is further away, but the Convocation Notice had been sent 47 days before the AGM.
In Panalpina’s case, if you are not registered by the time the company sends out the convocation, there is no requirement for the company to admit your shares to the register even if there is plenty of time to do so (though the Board can make exceptions to the entry restriction).
For investors interested in or concerned about the situation, there are measures which may be advisable to implement ASAP to ensure you can vote.
The 2018 10-K filing confirms Tesla’s operations still are not generating consistently sustainable profits or cash flow unvarnished by substantial boosts from accounting maneuvers and unusual items as seen with the “miracle” third quarter (see “Great Magic Trick Tesla; Now Do it Again“)
Tesla Shanghai Gigafactory construction is underway and yet still not fully funded after at least six months of negotiations with bankers, and thus may also be developing differently versus what Tesla has presented (adding to my previously noted concerns in “Tesla – Shanghai Surprise“).
The common theme here is that all these problems were preventable, avoidable, and unnecessary.
That’s not going away any time soon–as long as Musk remains in complete control.
How long will that be?
Good question–Read on as Bond Angle analysis continues.
We expect the Q4 18 report in mid-May will be pivotal for sentiment on KDDI Corp (9433 JP) as the results for its current mid-term plan are announced and new targets for the next three years are set. This plays against a backdrop of moderately higher competitive intensity both in the near-term on cheap handsets and longer-term with Rakuten Inc (4755 JP) market entry. Shares are down 15% from highs in September 2018 as markets have factored in the new state of affairs but coming out of our meeting with the company today we feel more confident in how they are positioned.
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This insight is a kind of public service announcement for investors looking at the Panalpina Welttransport Holding (PWTN SW) situation as it might affect the likely upcoming Extraordinary General Meeting that the Ernst Göhner Foundation requested of Panalpina, and to which Panalpina has acquiesced. The agenda item of the EGM requested is to implement a “One Share One Vote” system.
Activist Cevian has come out against the proposal by the Ernst Göhner Foundation. This sounds counterintuitive except for one odd legal angle.
The Foundation’s ostensible goal is to ensure that the vote is “fair” so that Cevian and Artisan Partners can vote their full stake after having been capped at 5% for many years because of Article 5 in the Panalpina Articles of Association. The more cunning aspect of this is that, as per the Panalpina announcement…
In a letter addressed to Panalpina’s Board of Directors, minority shareholder Cevian had recently questioned the practice to fully admit EGF with all its voting rights at the Company’s shareholders’ meetings. Cevian took the position that the voting restriction of 5% must be applied to all shareholders and, hence the voting power of EGF must be reduced to 5%. An ad hoc board of independent directors (BoiD) consisting of five directors (without representatives of EGF and Cevian) and chaired by Thomas E. Kern, is currently evaluating the situation based on expert opinions submitted by each of EGF and Cevian and based on independent expert advice obtained by the BoiD.
The Foundation knows that their position may be legally weak, and their position could be capped at 5% rather than grandfathered. Indeed, the “independent expert advice” obtained by Cevian includes the opinions of “four leading Swiss stockbrokers” who had come to the conclusion that the Foundation had been unlawfully excluded from the 5% cap, according to this Reuters article on the 26th. The company states that the Ernst Göhner Foundation is and has been exempted from this rule because of “grandfathering” because it owned the shares before the implementation of the rule, but there is nothing in the Articles of Association which grants the EGF that exemption. The full Cevian press releases in English and German are available through their spokesperson and are attached below (at the bottom of the insight).
Another Reuters article discussed the situation, with quotes from Cevian, and added this tidbit at the end.
An ad hoc board of independent directors consisting of five directors, without representatives of EGF and Cevian…will review the proposal and decide how the voting on it will take place at the extraordinary general meeting,” spokeswoman Edna Ayme-Yahil said.
Investors should note…..
The last paragraph of Article 5 of the Panalpina Articles of Association says “No entries shall be made in the register of shareholders following the dispatch of the convocation to the Shareholders’ Meeting until the day after the Shareholders’ Meeting.” This is a little different than is the case for many large Swiss companies where they give the convocation and investors may subsequently register their shares.
For Novartis AG (NOVN SW), which held its AGM today (28 Feb 2019), the deadline for registering shares was 3 days prior to the AGM as shown on p6 in the Organizational Notes on the AGM Notice.
Temenos Group Ag (TEMN SW) last year set their registration deadline 13 days ahead of the AGM, which is further away, but the Convocation Notice had been sent 47 days before the AGM.
In Panalpina’s case, if you are not registered by the time the company sends out the convocation, there is no requirement for the company to admit your shares to the register even if there is plenty of time to do so (though the Board can make exceptions to the entry restriction).
For investors interested in or concerned about the situation, there are measures which may be advisable to implement ASAP to ensure you can vote.
The 2018 10-K filing confirms Tesla’s operations still are not generating consistently sustainable profits or cash flow unvarnished by substantial boosts from accounting maneuvers and unusual items as seen with the “miracle” third quarter (see “Great Magic Trick Tesla; Now Do it Again“)
Tesla Shanghai Gigafactory construction is underway and yet still not fully funded after at least six months of negotiations with bankers, and thus may also be developing differently versus what Tesla has presented (adding to my previously noted concerns in “Tesla – Shanghai Surprise“).
The common theme here is that all these problems were preventable, avoidable, and unnecessary.
That’s not going away any time soon–as long as Musk remains in complete control.
How long will that be?
Good question–Read on as Bond Angle analysis continues.
We expect the Q4 18 report in mid-May will be pivotal for sentiment on KDDI Corp (9433 JP) as the results for its current mid-term plan are announced and new targets for the next three years are set. This plays against a backdrop of moderately higher competitive intensity both in the near-term on cheap handsets and longer-term with Rakuten Inc (4755 JP) market entry. Shares are down 15% from highs in September 2018 as markets have factored in the new state of affairs but coming out of our meeting with the company today we feel more confident in how they are positioned.
With Harmonic Drive Systems (6324 JP) having rebounded as much as 56% from its trough this year, risk-reward looks decidedly less attractive now. While we had been somewhat constructive on the name due to order looking like they have a hit bottom, a closer analysis of the breakdown of orders has us thinking that a potential rebound could underwhelm relative to the markets revenue expectations and that the stock’s premium multiple could leave it more vulnerable than more modestly priced peers.
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At the Eclipx Group 2019 AGM, the Chairman mentioned that it was the board unanimously endorses this proposal and that a revised timetable will be announced when the contents of the Scheme Book are agreed upon with MMS.
At the GrainCorp 2019 AGM, the Chairman announced that the engagement between the two parties remains active, and the proposal is still indicative and non-binding.
On 6th February 2019, Greencross held a scheme meeting at which the shareholders approved the scheme of arrangement (99.67% of Greencross shareholders present and voting at the Scheme Meeting voted in favour). A dividend of AUD 0.19 was announced on 7th February (ex-date: 12-Feb-2019), to be paid on 20th February 2019, conditional on court approval of the scheme. The scheme received court approval on 11th February 2019, along with which the company suspended the trading of its shares on ASX from the close of trading on 11th February 2019. The Scheme was implemented on 27th February 2019.
On 1st February 2019 it was announced that Healthscope entered into an Implementation Deed with Brookfield, where Brookfield is to acquire all of the shares of Healthscope through a scheme at A$2.5/share and an off-market takeover offer A$4.2/share. A dividend of A$ 0.035 (ex-date:04-Mar-2019) announced on 14th February 2019, is included in the offer price.
The “go-shop” period in relation to the KKR Scheme, which allowed MYOB and its advisers to solicit a superior competing proposal, ended on 22nd February 2019, without any superior proposals emerging. As a result, the Directors of MYOB have reaffirmed their recommendation of the scheme. The Scheme Booklet is expected to be released in mid – late March 2019, with the Scheme meeting expected to be held in late April 2019.
On 18th February 2019, when the exclusivity period granted to BGH Consortium was to expire, Navitas announced that the exclusivity period is extended to 1st March 2019. This extension was granted in order to carry out a limited set of remaining due diligence, as per the announcement. The Directors of Navitas continue to unanimously recommend the Scheme.
On 20th February 2019, the company announced the offer becoming unconditional, along with which it was announced that ESR has an interest of 74.78% of Propertylink and that Centuria Capital Group in respect of their 19.51% ownership. The offer has been extended to the 8th March.
Ruralco has announced it has entered into a Scheme Implementation Deed in which Nutrien Ltd (NTR CN) has agreed to take Ruralco private at $4.40/share – a 44% premium to last close and the one-month VWAP.
In a market update released by Sigma Healthcare, on 11th February 2019, it was announced that high level due diligence is still underway with regard to the potential merger proposal.
Hanergy announced on 26th February 2019, the intention of HMEH to privatise the company by way of a Scheme, at one SPV share for every Hanergy share. No price was given for the SPV.
The deadline to despatch the Composite Document has been extended to either 30th April 2019 or 7 days after the date of fulfilment of the conditions, whichever is earlier. This extension is required in order to prepare the Goldjoy Circular to convene the EGM and because completion is subject to the conditions of the Sale and Purchase Agreement being fulfilled.
On 13th February 2019, major shareholder of Xingfa Aluminium – Guangxin Aluminium, acquired 5,000 shares in Xingfa, which triggered the launch of a Madatory General Offer, as Guangxin’s stake in Xingfa exceeded 30%. The offer price is HK$5.60 cash/share.
Based on the original schedule, BDMN has today gone ex-rights on being able to vote in the Shareholder Meeting on March 26 and also ex-rights on the ability to select the cash payment for your shares.
On the 7th Feb, Descente announced that it was opposed to the deal. They can’t do much because the deal is launched. Shortly after, the employees union, a group of ex-employees, and a former president all came out against Itochu’s Tender Offer. On the 26th, the company announced that it would bring forward its announcement of its Medium Term Plan by a couple of months.
On 12th February 2019, KDDI Corp announced that they intend to conduct a Tender offer for a minimum 45,758,400 shares of Kabu.Com Securities at ¥559/share. If they are able to acquire the minimum, it would lead to a Two Step Squeezeout, because when KDDI’s holding is combined with that of MUFJ Securities’, their total holding reaches 66.67%.
On 4th February 2019 after the close, Reno KK filed a Large Shareholder Report declaring a 5.83% position as of 28th January 2019, following which, on the 5th of February they announced that they had purchased an additional 2.49% on the 29th of January, increasing their holding to 8.31%. On the days that followed, along with their joint holder Aoyama Fudosan, the Reno group increased their stake to 9.55% by 1st February 2019 (which was announced on 8th February 2019). On 18th February, an article was published on toyokeizai.net which suggested that Mr. Nakatsuji (longstanding external shareholder) and Sakurai Mie (leader shareholder and descendent of the founder of Kosaido), were against the takeover. It was announced on 26th February 2019, that the tender offer close date had extended to 12th March 2019, from 1st March 2019.
Reportedly Amazon.com Inc (AMZN US) and Comcast will enter the race and have submitted initial bids to acquire Nexon. EA was also mooted as a participant in first round bidding.
On the 8 Feb, ND Software announced a Management Buy Out (MBO) sponsored by both the existing president, who owns 20%, and J-Will Partners to take the company private at ¥1700/share, which is a 28.7% premium to last trade and comes out to be roughly 7.2x trailing 12-month EV/EBITDA.
The results of the Tender Offer was released on 20th February 2019. There were 32.43 million shares tendered, while the Tender Offer was only to buy 26.6666 million shares, which led to an 82.23% pro-ration. Following the closing of the Tender Offer, the Murakami grouping will own 4% of shares out and 5.7% of voting rights remaining.
On 14th February 2019, Minebea Mitsumi announced the launch of their Tender Offer to acquire U Shin Ltd at ¥985/share. The offer opened on 15th February 2019, and will close on 10th April 2019. The intention to make an offer to acquire U Shin Ltd was first announced back in November 2018.
After market close on 31st January 2019, Sumitomo Corp (8053 JP) consolidated subsidiary SCSK Corp (9719 JP) announced a Tender Offer to buy out minorities in Veriserve Corp (3724 JP). At the time of announcement, SCSK held 2,900,000 shares or 55.59% of voting rights. The Tender Offer is at ¥6,700/share
The formal offer document was despatched on 1st February 2019, with the first closing date scheduled for 1st March 2019. On the same day a couple of hours later, due to irrevocable involved, the 50% shareholder acceptance condition was met, and the offer was declared unconditional. This allowed the company to extend the closing date of the offer to 15th March 2019 (final closing date).
On 15th February 2019, an announcement was published declaring the offer unconditional, this led to the extension of the closing date to 4th March 2019.
Singapore Exchange Securities Trading Limited approved PCI Limited’s application to delist the company from the official list of the SGX-ST, when the scheme becomes effective and binding in accordance with its terms
On the 14th of February the company announced that in the board meeting held on 29th January 2019, two independent directors objected to the terms of the Tender Offer which had been agreed. There is reportedly an investigation into shareholder rights being conducted. It is to note that in the 14th Feb release, it became clear that Otis Elevator had bid TWD 63/share for Yungtay but the directors had not approved the bid.
On 13th February 2019, Delta announced that the conditions precedent of the Conditional Voluntary Tender Offer was fully satisfied, following which on 18th February 2019 the Intention to Make a Tender Offer (Form 247-3) was announced along with the FY18 Dividend of Bt 2.30/share (which will be added). The Offer document was released on 22nd February 2019, announcing the Tender offer period – from 26-Feb-2019 to 01-Apr-2019.
In the “Management Discussions” attached to FY18 earnings of Global Power Synergy Company Ltd, they mentioned that they are collaborating with GLOW in order to decide on tender offer price for GLOW’s shares, after taking into consideration the disposal of one of GLOW’s plants.
On 25th February 2019, Golden Land Prop Dvlp announced that they had received information that Frasers Property intends to make a Voluntary Tender Offer to acquire all of Golden Land Prop Dvlp’s shares at Bt 8.5/share.
Thanachart Capital Public Company Limited (TCAP), as a major shareholder of Thanachart Bank Company Limited, announced on 26th February 2019, that they entered the Non-binding Memorandums of Understanding, in relation to the merger between Thanachart and TMB.
On 21st February 2019, the offer period expiry date was extended to 7th March 2019 (previously 28th February 2019). As per the announcement on 22nd February 2019, the Anta Sports shareholders approved the deal to buy Amer Sports, with 99.19% of votes cast being for the deal. A couple of days later, on 25th February 2019, Mexico’s regulator approved the takeover, and this was the last of the approvals.
On 22nd February 2019, an announcement was released with the news that Saputo Inc had offered £6.20 cash/per share, to acquire all of the shares of Dairy Crest by way of a Scheme of Arrangement.
On 26th February 2019, Diageo made an announcement stating that they had been approached by Sichuan Swellfun, with a possible partial tender offer to increase their stake in Diageo to 70% (from 60%) at RMB 45/share.
Visa announced an increase in their offer to £0.37/share (from £0.30/share), on 7th February 2019. The following day Mastercard issued a stated that they were considering their options. On 11th February 2019, Visa posted their Offer Document, following which Mastercard announced that they no longer have any letters of intent acceptiig their offer. An announcement on 21st February 2019, mentioned that both the Court Meeting and General Meeting have been adjourned by the Chairman and the new date will be announced in due course. On 27th February 2019, the offer was extended to remain open till 8th March 2019.
It was announced on 30th January 2019 that Medco Energi Internasional T had reached an agreement to acquire Ophir Energy at an offer price of £0.55/share, by way of a Scheme of Arrangement.Petrus Advisors (3.5% shareholder) dialed up the pressure on its opposition for this offer, with a letter addressed to Ophir’s Chairman, on 19th February 2019.
Oslo Børs VPS Holding ASA
On 4th February Nasdaq AB published the Public Offer document, according to which the acceptance period is from 4th February 2019 to 4th March 2019.
On 4th February 2019, Panalpina disclosed that their largest shareholder, the Ernst Göhner Foundation, does not support DSV’s indicative offer, which was made in January 2019. Following an announcement by Panalpina on 15th February 2019, regarding Panalpina pursuing a private combination with Agility Group, DSV informed the market that on 6th February 2019, they put forward an all-cash offer of CHF 180/share.
On the morning of January 23rd, 2019, after five PUSU extensions, RPC announced the recommended final cash offer by Apollo for 782p per share, or £3.323 billion.
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