In today’s briefing:
- HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- United Malt (UMG AU): Malteries Soufflet’s Binding Offer
- Bosideng (3998 HK): Outlook Stays Promising
- General Mills: A Disappointing Quarter For Short-Term Investors And Speculators
HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
- We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
- There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.
Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), United Malt Group Ltd (UMG AU), Chindata Group (CD US), ENM Holdings (128 HK), Tesserent Ltd (TNT AU), Poly Culture.
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Musgrave Minerals (MGV AU), Metro Pacific Investments Co (MPI PM), Kenedix Residential Investment (3278 JP).
United Malt (UMG AU): Malteries Soufflet’s Binding Offer
- The AFR reports that United Malt Group Ltd (UMG AU) has received a binding offer from Malteries Soufflet at A$5.00 per share, a 13.6% premium to the last close price.
- The high spread reflected the risk of a no-deal or price cut due to the weak 1HFY23 results and lack of updates since the end of the 10-week due diligence.
- The offer is conditional on shareholders and FIRB approval. Shareholders will be supportive and breathe a sigh of relief at receiving a binding offer with unchanged terms.
Bosideng (3998 HK): Outlook Stays Promising
- While having a slow FY23, Bosideng International Holdings (3998 HK) is well-positioned to capture the rebound in down apparel sales growth as pent-up demand is released.
- We also expect a recovery in margin, further improvement in channel efficiency and operating leverage from cost control will add to earnings momentum.
- Management expects revenue growth will at least sustain at the rate in the last 5 years. The stock’s valuations are cheap when compared with growth outlook and global peers.
General Mills: A Disappointing Quarter For Short-Term Investors And Speculators
- General Mills has just reported its full fiscal year results and investors are not impressed.
- Expectations of lower organic revenue growth and uncertainties around profitability would likely continue to weigh on the share price.
- Long-term investors, however, could take advantage of this near-term dynamic while enjoying the higher dividend.
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