In today’s briefing:
- GA Pack (468 HK): Stalemate Broken as Management Considers a Possible Counteroffer
- The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium
- GAPack (468 HK)’s Co-Founders (Almost) Walk The Walk
- Metals Decline With Risk Sentiment and Fear in Overdrive
- News: Cemex to Divest Its Dominican Republic Operations for $950 Million
- Iron Ore Tracker (07-Aug-2024): Port Arrivals High, Inventory Piles up at 35 Ports
- Morning Views Asia: Greentown China, Medco Energi, Vedanta Resources
- Tethys Oil AB (SSE: TETY): Strong Financials. All Eyes on Strategic Review Process
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GA Pack (468 HK): Stalemate Broken as Management Considers a Possible Counteroffer
- Greatview Aseptic Packaging (468 HK) disclosed that Mr Bi Hua Jeff (CEO) and Mr Hong Gang (co-founder) are contemplating a possible voluntary conditional offer. The terms and conditions were not disclosed.
- Due to the recent AGM protest votes, management needed to provide a credible alternative to shareholders to ensure that Shandong Xinjufeng Technology Packaging (301296 CH)’s offer failed.
- Shandong Xinjufeng’s likely game plan is to wait for a binding counteroffer, focus on satisfying the preconditions, and requisition an EGM again to get Board representation.
The Unusual Flow Trading Development Caused by SK Innovation’s Appraisal Rights Premium
- Exceeding the ceiling doesn’t cancel the merger; SK Innovation can still proceed. With their decision confirmed, focus should shift to appraisal rights flows rather than cancellation risk.
- We should focus on flow trading given the notable exercise size and potential for unprecedented market activity if institutions, including the NPS, exercise their rights due to the juicy premium.
- The large exercise size and SK Innovation’s KOSPI large-cap status may create unique flow trading opportunities, with potential repurchases after new shares list.
GAPack (468 HK)’s Co-Founders (Almost) Walk The Walk
- To say Greatview Aseptic Packaging (468 HK)‘s management and Shandong Xinjufeng (301296 CH) (XJF) don’t get along is an understatement. GAPack has labelled XJF’s pre-conditional Offer hostile and unwelcome.
- Last night (6th August), co-founders Jeff Bi and Gang Hong tabled a non-binding Offer. No price was mentioned. Collectively they hold 14.72% of shares out compared to XJF’s 26.8%.
- A firm Offer (and price) would have been welcome, and this probably reflects on-going funding negotiations. But the announcement will give minorities pause if/when tendering into XJF’s Offer.
Metals Decline With Risk Sentiment and Fear in Overdrive
- Gold, silver, and copper futures fell by 3%, 6.7%, and 4.6% respectively on Monday amidst recession fears
- Gold and silver options showed bullish sentiment with significant call option buildup, while copper options saw mixed activity with high put interest in the front-month
- Implied volatility surged for gold, silver, and copper, with copper IV increasing by 7 percentage points to 27% post non-farm payroll report
News: Cemex to Divest Its Dominican Republic Operations for $950 Million
- The transaction is valued at approximately 6.8x 2023 EBITDA, or $396/ton, which we consider a good price given that Cemex currently trades at 5.5x LTM EBITDA, or $208/ ton.
- We view Cemex’s divestments of its Dominican Republic assets as a positive credit event that aligns with its strategic priorities.
- With this divestment, the company should focus on growing its key markets through bolt-on acquisition while maintaining its commitment to a healthy balance sheet.
Iron Ore Tracker (07-Aug-2024): Port Arrivals High, Inventory Piles up at 35 Ports
- Iron ore bounced from the 100 USD/ton level and has maintained a rangebound level between 95 and 130 USD/ton for the last three years.
- Inventories at the ports continued to increase, surpassing 150 million tons, representing about 38 days of inventory (normalized levels around 35 days).
- After Capital Group’s recent selldown, Fortescue Metals (FMG AU) looks attractive (with a trailing dividend yield of 11% and 6.5x PE) and could be worth exploring.
Morning Views Asia: Greentown China, Medco Energi, Vedanta Resources
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
Tethys Oil AB (SSE: TETY): Strong Financials. All Eyes on Strategic Review Process
- 2Q24 production of 7,688 bbl/d had been previously reported.
- 2Q24 production was negatively impacted by flooding and production is expected to return to normal during 3Q24.
- In light of the flooding, FY24 production guidance has been trimmed from 7.8-8.6 mbbl/d to 7.8-8.2 mbbl/d.