In today’s briefing:
- T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
- T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
- Fushan Energy: Coking Coal Prices High and Dividend Yield >10% with ~50% of Mkt Cap in Cash
- Rain Industries (RAIN.NSE)
T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
- In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price.
- I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
- It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.
T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
- T&K Toka Co Ltd (4636 JP) notes that Bain expects to satisfy the pre-condition and launch the JPY1,400 tender offer by mid-January.
- The shares have, on average, traded 1.9% above the offer due to Dalton’s stakebuilding. Bain has three options – unchanged terms, allowing Dalton to roll over its shares, or bumping.
- Bain is likely to bump as satisfying the minimum acceptance condition is challenging. A revised offer price of around JPY1,500 is possible.
Fushan Energy: Coking Coal Prices High and Dividend Yield >10% with ~50% of Mkt Cap in Cash
- Shougang Fushan Resources (639 HK) energy, a pure play on high coking coal prices, now trades at 5.7x FY24 PE (1.5x EV-EBITDA), assuming 2,200 RMB/ton prices (vs spot 2500).
- The company has ~7.5 bn HKD of net cash (on H12023), representing 50% of the market cap despite conducting a recent buyback of 5% and paying all its outstanding dividends/taxes.
- With an 80% payout, we can also expect a dividend yield of 14% for FY24 if prices average 2200 RMB/ton.
Rain Industries (RAIN.NSE)
Rain Industries is an Indian small-cap company (~$660M) that manufactures 2 carbon-based inputs for Aluminium Industry (10% of global market share).
It also has a cement & value-added chemical business
The Company is ignored by market likely due to its ‘commodity’ nature, debt on their balance sheet and small market cap which drives most investors away.
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