In today’s briefing:
- L’Occitane (973 HK): Conditional VGO at HK$34
- Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
- KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer
- L’Occitane (973 HK): Geiger’s $34/Share Offer
- SHEIN IPO: The Biggest IPO in 2024 in London?
- Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion
- NPN X PRX Discount Update Post Tencent Early Game Release News Flow
- Fuyao Glass (3606 HK): Global Champion Benefiting From Structural Uptrend
- Quiddity JPX-Nikkei 400 Rebal 2024: End-Apr 2024 Estimates
- International Automobile Analysis
L’Occitane (973 HK): Conditional VGO at HK$34
- L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
- The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
- Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.
Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
- On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP)
- The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
- I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).
KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer
- The Nikkei reports that Carlyle is in the final stages of buying Mitsubishi Corp (8058 JP)’s 35% stake in Kfc Holdings Japan (9873 JP), which will result in a tender offer.
- The structure will likely be similar to the KDDI Corp (9433 JP)/ Lawson Inc (2651 JP) tender, where MitCorp provides an irrevocable NOT to accept but vote for share consolidation.
- The shares have been up 33.6% since Nikkei flagged the sale on 28 February. KFC Japan will trade in line with peers’ multiples at a JPY5,700 offer.
L’Occitane (973 HK): Geiger’s $34/Share Offer
- After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
- The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
- This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.
SHEIN IPO: The Biggest IPO in 2024 in London?
- Although Shein has yet to formally announce the listing destination, there is a growing anticipation that the listing venue could be London, rather than New York.
- It has been reported that the company has more than doubled its net profit to more than US$2 billion in 2023.
- The company is currently seeking a corporate value of nearly US$70 billion to US$90 billion in the Shein IPO which would be one of the biggest IPOs globally in 2024.
Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion
- Japanese instant noodle manufacturer Toyo Suisan Kaisha (2875 JP) has become the newest target for activist investors in Japan.
- Nihon Global Growth Partners Management, Inc argues that Toyo Suisan’s investments are overly concentrated in its legacy businesses, despite these ventures yielding low returns.
- Therefore, they are recommending that Toyo Suisan exit its legacy businesses, increase the payout ratio to 40%, and use some of its excess cash for a share buyback of ¥20bn.
NPN X PRX Discount Update Post Tencent Early Game Release News Flow
- Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.
- The game is expected to be released in China on the 21st of May following positive test results.
- Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.
Fuyao Glass (3606 HK): Global Champion Benefiting From Structural Uptrend
- Fuyao Glass Industry Group (3606 HK) is the largest auto glass producer in the world, with an estimated 40% market share globally, and a dominant 65% market share in China.
- The investment case for Fuyao include: ASP increase from product mix upgrade; increasing sales volume due to more auto glasses needed per car; and improving margins.
- The company has production bases in China with annual production volume of around 32.5 million units, and in US with annual production volume of around 5.5 million units.
Quiddity JPX-Nikkei 400 Rebal 2024: End-Apr 2024 Estimates
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
- Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-April 2024.
International Automobile Analysis
- Spanning the globe for current best-in-breed auto players shows diverging action.
- New pair suggestion: Long Tesla/Short Rivian. Bottom could be in on TSLA
- Updated JD.com general status from last week’s China/Japan Note encouraging.
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