In today’s briefing:
- T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility
- SK Innovation: Update on Its Rights Offering Subscription Allocation
- A Fresh Short-Selling Target in Korea: Youlchon Chemical
- T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake
- Pact Group (PGH AU): Raphael Geminder’s Opportunistic Proposal
- Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%
- Longboat Energy PLC – Expansion in South East Asia. Simplifying Malaysia.
T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility
- Last year, 20% owner Dalton approached T&K Toka Co Ltd (4636 JP) for an MBO, but walked when questioned. Then in January bid ¥1300 to double their stake to 44%.
- They were not successful. The firm held a beauty contest. Bain won at ¥1400 despite ¥1300 getting no response and markets up big since. It’s possible not everyone was invited.
- Since the Bain deal announcement, the stock has mostly traded at/through terms. Now we find out Dalton has been buying (now 23.77%). This increases the chances of a bump.
SK Innovation: Update on Its Rights Offering Subscription Allocation
- On 13 September, SK Innovation announced that the subscription rate for the rights offering allocated to ESOA and existing shareholders was 87.66%.
- The rights offering price is 139,600 won, which is 12.7% lower than current price of 159,900 won.
- There is likely to be a strong demand for the subscription of rights offering forfeited shares for the general investors scheduled to take place on 14 to 15 September.
A Fresh Short-Selling Target in Korea: Youlchon Chemical
- Youlchon Chemical’s CFD balance accounts for 3.54% of SO, with approximately 2x leverage trading. It is one of the few in the top CFD balance list that can be short-sold.
- Our primary concern should lie with the upcoming December rebalancing of the KOSPI 200 index. Youlchon Chemical finds itself perilously close to the borderline within the Materials sector.
- When proactive flow trading targeting KOSPI 200 is set to influence prices early October, we must remain vigilant regarding the potential trades aimed at exploiting a CFD balance squeeze.
T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake
- Nippon Active Value Fund/Michael 1925/Dalton has increased their T&K Toka Co Ltd (4636 JP) shareholding from 22.23% to 23.77% of outstanding shares (22.25% to 23.79% of ownership ratio including share options).
- T&K Toka shares have traded above Bain’s JPY1,400 pre-conditional offer, fuelling speculation of a bump. A rival proposal at least 5% above triggers the “Counter Tender Offer” clause.
- The four possible scenarios with declining probabilities are: Bain calls Dalton’s bluff, Bain marginally bumps, Dalton launches a rival offer or Dalton rollovers its stake into a privatised T&K Toka.
Pact Group (PGH AU): Raphael Geminder’s Opportunistic Proposal
- Pact Group Holdings (PGH AU) has disclosed an unconditional takeover proposal from Raphael Geminder at A$0.68 per share, a 0.7% premium to the undisturbed price (12 September).
- Mr. Geminder’s justification for a little-to-no premium offer is based on the premise that minorities are clambering for a liquidity event to exit a no-hope situation.
- The offer price is unattractive on any reasonable metric. A successful privatisation would require a bump. The shares closed 6.6% higher than the offer.
Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%
- Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates.
- Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing.
- We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents FY22: 43 cents).
Longboat Energy PLC – Expansion in South East Asia. Simplifying Malaysia.
- Longboat is acquiring Topaz Number One, its partner in Malaysia for an initial consideration of US$0.1 mm in shares in Longboat.
- The transaction will boost Longboat’s WI in the Production Sharing Contract over Block 2A offshore Sarawak from 36.75% to 52.5%.
- The 15.75% WI in the block is the only asset of Topaz Number One.
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