In today’s briefing:
- Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75
- PCOMP Index Rebalance Preview: Just the Ad Hoc Change
- Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer
- Fast Retailing (9983) | Is China Still Recovering?
- Dali Foods (3799 HK): Founder’s Scheme
- Less Positive Disclosure Regarding the Gender Wage Gap Is Evidence of Less Positive Reasons
- PT Surya Citra Media (SCMA IJ) – Catalytic Converter
- Ford: Surprisingly Still Undervalued
- Manchester United’s Q3 Earnings Reviewed (Rating Downgrade)
Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75
- Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
- Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal.
PCOMP Index Rebalance Preview: Just the Ad Hoc Change
- With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August.
- However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
- Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.
Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer
- Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation offer from Poly Group at HK$8.88 per H Share, a 77.6% premium to the undisturbed price of HK$5.00.
- The pre-condition of regulatory approvals is a formality as Poly Group is an SOE. The key condition is approval by at least 75% of independent H Shareholders (<10% rejection).
- The offer price is final. There is no minimum acceptance condition. No independent H Shareholder holds a blocking stake. The offer is attractive, waving the way to success.
Fast Retailing (9983) | Is China Still Recovering?
- Fast Retailing’s stock price is overvalued and faces downside risks from its Q3 results (maybe), China outlook (perhaps), and index rebalancing (most likely).
- Fast Retailing has enjoyed a premium over its global peers largely due to its higher exposure to China growth. Any wobbles here could be negative catalyst
- There is also a technical issue that will likely cap the weighting of Fast Retailing in the Nikkei 225 = index selling pressure
Dali Foods (3799 HK): Founder’s Scheme
- Late last night (27 June), Dali Foods Group (3799 HK) a leading branded F&B play, announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.
- The cancellation price, which has been declared final, is HK$3.75/share, is a respectable 37.87% premium to undisturbed, but…
- Xu and concert parties control 88.89%, with disinterested shareholders holding 11.11%, therefore a blocking stake at the Scheme meeting is just 1.11% of shares out.
Less Positive Disclosure Regarding the Gender Wage Gap Is Evidence of Less Positive Reasons
- The few positive disclosures suggest that there are few positive companies. The question is how much progress companies will make in efforts on gender gap disparity over the next year.
- To eliminate this gap, companies need to quickly realize that human resources are valued fairly as human capital, without gender distinction, and used as a resource for growth.
- Now that stock prices have become a key measure of management, pressure from investors influencing stock prices is more effective. Deep analysis of human capital disclosures is required of investors.
PT Surya Citra Media (SCMA IJ) – Catalytic Converter
- PT Surya Citra Media had strong start to the year in terms of audience share but advertising revenues were slightly disappointing with a poor showing for the overall market.
- Advertising revenues were impacted by a slowdown in e-commerce activity but overall the market adjusted downwards with 2Q expected to be slow but with a strong recovery expected in 2H2023.
- PT Surya Citra Media continues to invest in original content but less aggressively, with cashflows expected to be stronger in 2023. There are also potential catalysts ahead from listing subsidiaries.
Ford: Surprisingly Still Undervalued
- Receding credit risk and a more predictable inflationary environment will likely deliver tailwinds to cyclical stocks.
- The U.S. Government is set to throw its support behind the EV industry, and Ford might be a primary beneficiary.
- However, we are giving the stock the benefit of the doubt.
Manchester United’s Q3 Earnings Reviewed (Rating Downgrade)
- Manchester United plc blitzed past its fiscal third quarter revenue estimate.
- However, key risks have surfaced, and limited transparency exists regarding its pending takeover.
- Manchester United’s brand engagement is scaling due to its growing YouTube and Instagram exposure.
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