In today’s briefing:
- Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme
- Azure (AZS AU): MinRes’ Discounted Exit
- NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program
- CSR Ltd (CSR AU): Saint-Gobain’s A$9/Share Offer
- Azure Minerals Block – Removal of Overhang but Still a Risky Bet
- CSR (CSR AU): Saint-Gobain’s Non-Binding Proposal at A$9.00
- ASEAN EV Ecosystem Update: Further Initiatives to Build a Regional EV Ecosystem
- Asahi Kagaku Kogyo
Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme
- The AFR reports that JPMorgan is selling 14.5% of Azure Minerals (AZS AU) shares at A$3.42. The primary seller is said to be Mineral Resources (MIN AU), seeking to exit.
- MinRes’ decision to sell out a discount rather than accept the scheme A$3.70 offer reflects the cost of securing a say on Andover and the opportunity cost of capital.
- The transaction booklet will be despatched in early March. At the last close and for an early May scheme payment, the gross/annualised spread is 2.5%/13.4%.
Azure (AZS AU): MinRes’ Discounted Exit
- JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price.
- It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
- Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.
NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program
- On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the “corporate value up” program.
- NPS plans to accept proposals from the local asset management and investment advisory companies from 21 to 29 February. NPS is likely to finalize the selected candidates sometime in March.
- We provide a list of 34 companies where the NPS has at least 5% ownership stake, with PBR of 0.5x or less, and included in KOSPI 200.
CSR Ltd (CSR AU): Saint-Gobain’s A$9/Share Offer
- Cie De Saint-Gobain (SGO FP) has approached CSR Ltd (CSR AU) with a non-binding indicative offer to acquire all of CSR’s shares at A$9/share via a scheme of arrangement.
- At the last close of CSR (pre-trading halt) the gross spread to the offer price is 13.21%. That will close significantly once the stock resumes trading.
- Given the large premium to the last close, at a price higher than the highest high, and support from the CSR Board, the deal should go through.
Azure Minerals Block – Removal of Overhang but Still a Risky Bet
- Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up.
- The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
CSR (CSR AU): Saint-Gobain’s Non-Binding Proposal at A$9.00
- In response to media speculation, Cie De Saint-Gobain (SGO FP) confirmed a non-binding proposal for CSR Ltd (CSR AU) at A$9.00, a 32.9% premium to the undisturbed price.
- Saint-Gobain is conducting confirmatory due diligence. CSR is at a trading halt concerning receiving a proposal regarding a potential material transaction involving CSR.
- Shareholders should be supportive as the offer represents a 15-year high. The timing of a binding agreement is the key risk.
ASEAN EV Ecosystem Update: Further Initiatives to Build a Regional EV Ecosystem
- EV supply chain is at a nascent stage in ASEAN and EV adoption in the region lags behind developed markets despite boasting a large population with a burgeoning middle class.
- However, Governments in the region continue to introduce new initiatives and offer incentives to promote the sector, while companies continue to attract large investment to develop the EV market.
- The four companies we looked at have reported earnings and we have discussed their latest results and our investment thesis.
Asahi Kagaku Kogyo
- Asahi Kagaku Kogyo’s Facility in Kunshan, China Asahi Kagaku Kogyo (TYO 7928) is a $12m market cap net-net industrial plastics manufacturer that over the last 10 years mostly operates around breakeven.
- The business itself isn’t interesting, but it’s a positive that they aren’t losing money.
- There also isn’t a single writeup on this company or any mentions of it on X/Twitter, so it’s definitely under the radar.
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