In today’s briefing:
- Xingda Int’l (1899 HK): Kicking The Tyres
- Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
- Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?
- Shimano (7309) | Value Drivers in an Age of Sobriety
- VinFast Auto Pre-IPO – The Positives – Aiming High…
- Anta Sports (2020 HK): Assessing the Impact of a Potential Amer Sports IPO
- Xingda Int’l (1899 HK): Partial MBO
- Kroger Co: Merger With Albertsons & Other Drivers
- Ulta Beauty: Major Drivers
- General Mills: Delivering High Returns During Market Downturns
Xingda Int’l (1899 HK): Kicking The Tyres
- Xingda International (1899 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
- The controlling shareholders – more commonly known as the Five Parties – hold 45.6% of shares out.
- Two years ago, Xingda sought to spin-off its key operating vehicle. Perhaps the Five Parties are privatising Xingda, then IPOing Xingda Steel Tyre Cord. Or, cashing out their positions.
Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
- Xingda International (1899 HK) disclosed a partial offer from management to acquire a maximum of 80.0 million shares at HK$1.88 per share, a 24.50% premium to the undisturbed price.
- The pre-condition is Executive approval. The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders on the acceptance form.
- The partial offer is an opportunistic foray to seize statutory control as it would not be sufficiently enticing to overcome FIL’s 9.99% blocking stake in a privatisation scheme.
Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?
- Xingda International (1899 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
- It is likely that the management, representing 45.60% of ordinary shares (through a five parties agreement), is seeking to privatise Xingda.
- The bid is likely privatisation through a scheme. Due to FIL’s blocking stake, a decent premium is required, such as an offer approaching HK$2.00 (33% premium to the last close).
Shimano (7309) | Value Drivers in an Age of Sobriety
- Shimano’s stock has declined by 26% YTD reflecting concerns over an economic recession and sales normalization post pandemic
- We believe that Shimano is a key beneficiary of government policy aimed at decarbonization
- We analyse Shimano’s core value drivers and see at around 23% upside for the stock
VinFast Auto Pre-IPO – The Positives – Aiming High…
- VinFast Auto (1905332D VN) is looking to raise up to US$1bn in its upcoming US IPO.
- VinFast is a full-scale mobility platform focused primarily on designing and manufacturing premium EVs, electric scooters and electric buses.
- In this note, we talk about the positive aspects of the deal.
Anta Sports (2020 HK): Assessing the Impact of a Potential Amer Sports IPO
- The potential IPO of Anta Sports Products (2020 HK)‘s 52.7% owned Amer Sports is positive in unlocking the latter’s underlying value, though the impact is quite limited.
- Assuming a P/S of 1.8x (30% discount to peers) and 25% enlargement in share capital, we estimate the exercise may bring ~HK$6n of potential pre-tax deemed disposal gain.
- Although Anta Sports may not receive any cash, it can still pay out special dividends given its Rmb12bn net cash, and this will raise FY23 dividend yield to 3.1%.
Xingda Int’l (1899 HK): Partial MBO
- Late night Xingda (1899 HK) announced a partial Offer from a consortium comprising management – known as the Five parties – at HK$1.88/share – a 24.5% premium to last close.
- The consortium – widely known as the Five Parties – currently holds 45.6%, and the intention of the Offer is to hold 50.01%, or a controlling stake.
- There is a minimum/maximum number shares to be acquired under the Offer. I’d expect the minimum acceptance condition to be met.
Kroger Co: Merger With Albertsons & Other Drivers
- Kroger announced another quarter of quite strong results powered by its strategy of accelerating with digital and leading with fresh.
- Kroger, along with Albertsons Companies, announces a definitive merger agreement whereby the companies will merge two complementary organizations with deep roots and iconic brands in their local communities.
- It launched its foremost in-app flash sales and also enabled its customers to clip the digital offers from their cart directly.
Ulta Beauty: Major Drivers
- Ulta Beauty delivered a good performance in the last quarter with robust revenue growth driving double-digit earnings growth and operating margin expansion.
- The double-digit comp of Ulta Beauty in this quarter was an outcome of growth from its core assortment, compelling newness, and price increases.
- To support guest education and drive discovery, this quarter Ulta Beauty introduced its Skincare We Love All in every store.
General Mills: Delivering High Returns During Market Downturns
- General Mills has significantly outperformed the broader equity market and the consumer staples industry as a whole.
- The share price seems to be running ahead of fundamentals which reduces expected returns going forward.
- The company would also need to dial-up investments in the coming year to secure its strong competitive positioning, according to the company.
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