In today’s briefing:
- Alumina (AWC AU): Further Thoughts on Alcoa’s Proposal
- Bondalti/Ercros: Fair Offer
- Feb Rebalance – JSE Auction Analytics (SA Upweighted in ACWI and EM)
- HELLENiQ ENERGY – Dividend shows confidence in future
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Alumina (AWC AU): Further Thoughts on Alcoa’s Proposal
- I have received several questions from readers on Alcoa (AA US)’s non-binding proposal for Alumina Ltd (AWC AU) in the context of the current gross spread of 9.2%.
- The questions primarily concerned Citic Resources Holdings (1205 HK) voting intentions, the probability of a bump and the likelihood of Aloca shareholders supporting the transaction.
- CITIC Resources’ lack of public endorsement of the transaction is due to HKEx listing requirements and not an indication of a NO vote risk.
Bondalti/Ercros: Fair Offer
- Ercros (ECR SM), a venerable Spanish chemical company has received a €3.6/share, cum dividend, offer from Bondalti. The premium is 40.6%, implied equity €329.17 million and implied EV €421 million.
- The offer represents 6x EV/Fwd NTM EBITDA, typical mid-cycle multiple for commodity chemicals, 12.9x Fwd P/E. The offer price accounts for an improving H2. The shares suffer from low liquidity.
- Therefore the top shareholders will be glad to cash in. How long does the Spanish government take to authorise FDI will be the primary concern. Gross spread is 4.7%. Long.
Feb Rebalance – JSE Auction Analytics (SA Upweighted in ACWI and EM)
Indices were rebalanced in the closing auction last week Thursday.
Turnover on the JSE for the day was R25.6bn, R12.9bn traded in the closing auction (50%).
Turnover at the November rebalance was R40.6bn.
HELLENiQ ENERGY – Dividend shows confidence in future
ELPE reported its final results on 29 February. Adjusted net income of €0.6bn was lower than our forecast of €0.64bn. A positive surprise was that the board is recommending a final dividend of €0.60 per share, which was above our expectation of €0.30 per share. We believe this reflects management’s confidence in the current shape of the business. The balance sheet has been strengthened year-on-year, with net debt reduced from €1.94bn (at end-FY22) to €1.63bn. Our forecasts are under review.