In today’s briefing:
- JD.com Tencent Distribution Quick Update – Settlement Done. Shares Hit CCASS, but Not All Shares
- Mazda – A Buy As The Yen Weakens With The BOJ Trapped
- JD.com (9618 HK): Passive Hang Seng Buying in June
- Minth (425): Hop On
- Jin Jiang Capital’s Offer Risk/Reward – Pre-Condition Satisfied
- Yum China (YUMC.US/9987.HK): Expand Share Repurchase Program to Buffer COVID Impact
JD.com Tencent Distribution Quick Update – Settlement Done. Shares Hit CCASS, but Not All Shares
- On 23rd Dec 2021, Tencent declared a special interim dividend in the form of a distribution in specie of 457.326m Class A ordinary shares of JD.com.
- While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is happened on 25th Mar 2022.
- In this note, we talk about the updates since our last note and the actual number of shares in CCASS.
Mazda – A Buy As The Yen Weakens With The BOJ Trapped
- With the BOJ being forced to step in to hold 10 year rates under 0.25% today the yen is under increasing pressure.
- There are naturally a variety of stocks which are likely to benefit from this multi-decade breakout of the yen dollar.
- Mazda is one of the best plays here in our view and we lay out the rather simple case below.
JD.com (9618 HK): Passive Hang Seng Buying in June
- JD.com Inc. (9618 HK) shares from the Tencent (700 HK) in-specie dividend settled on 25 March. That has increased the number of CCASS shares and the Hong Kong free float.
- Given the large trading volumes in JD.com Inc. (9618 HK) on 25 March and 28 March, we expect most of the forced selling from the ADR allotment is done.
- There will be selling in JD.com Inc. (9618 HK) from active investors and the overhang from the Prosus (PRX NA) holding. Buying from HSI/HSCEI trackers in June could help a bit.
Minth (425): Hop On
- Share price sell-off is overdone as the prospect of the war worsening is less likely.
- Channel checks have shown that EV sales remain upbeat despite the war.
- The long-term prospect to participate in the growing EV industry through battery housing and body parts remain intact.
Jin Jiang Capital’s Offer Risk/Reward – Pre-Condition Satisfied
- Shanghai Jin Jiang Capital Company Limited (2006 HK)’s privatisation offer from Jin Jiang International Holding is HK$3.10 per H share. The pre-condition was fulfilled on 28 March.
- The key conditions for the delisting will be approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.
- At last close and for a May end effective date (composite document despatched on 1 April), the gross and annualised spread to the offer is 4.7% and 32.1%, respectively.
Yum China (YUMC.US/9987.HK): Expand Share Repurchase Program to Buffer COVID Impact
- Yum China Holdings, Inc (YUMC US) board has expanded share repurchase program by $1bn to total $2.4bn amid the tougher operating environment due to Omicron outbreak.
- Omicron outbreak spread widely in March across China, Yum China saw its March first 2-week SSSG is down 20% year-over-year and 1Q22 operating profit will likely be down 40-50% year-over-year.
- We continue to think Yum China is the best-run restaurant chain in China. It has resilient business model to navigate through pandemic. Risk/reward is more compelling to own Yum China.
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