In today’s briefing:
- 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
- Acotec (6669 HK): Boston Scientific’s Partial Offer Open For Tendering
- What Is NPS Buying & Selling?
- Futu Holdings: Cross-Border Broking In Crosshairs
- Halcyon Agri (HACL SP) MGO: SPA Effective, Next Is Satisfaction of Conditions Precedent
- Japfa Ltd: Trading Cheap After AustAsia In-Specie Distribution
- HSI Index Rebalance Preview: Better Late Than Never?
- Warrego (WGO AU): Has MinRes Gatecrashed the Party?
- Appreciate Group/Paypoint: There May Be Higher Rewards in Vouchers
2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
- SBI Shinsei Bank (8303 JP) was my High Conviction reco in late 2020 for 2021 at ~¥1200/share. It was my High Conviction reco in late 2021 for 2022 at ¥1900/share.
- I did not get around to writing it in late December 2022, but on the first day of trading I offer Shinsei as a 2023 high conviction recommendation.
- What’s new? Not a lot, but Reading Between The Lines is still top drawer stuff.
Acotec (6669 HK): Boston Scientific’s Partial Offer Open For Tendering
- On the 12 December, Acotec Scientific (6669 HK) announced a HK$20/share partial Offer from Boston Scientific, a 31.6% premium to last close, but below August 2021’s IPO price of HK$23.80/share.
- Boston Scientific will acquire at least 156.7mn shares (50.01%), up to 203.7mn (65%). Irrevocables total 60.14%, comprising shares held by CA Medtech/CPE Investment, Jing Li (chairman, CEO), and Bliss Way.
- The Composite Doc is now out and the Offer is open for acceptances. This Offer is done. The key question is the final proration.
What Is NPS Buying & Selling?
- In this insight, we discuss a list of 60 stocks in Korea where NPS recently added or reduced 1% or more stake (27 adds and 33 reduce).
- Among the stocks NPS increased its stake, many of them are clear beneficiaries of the end of zero COVID policies in China including Hotel Shilla, Amorepacific Corp, and GKL.
- Among the top market cap stocks where the NPS decreased its stake by 1% or more, they include Lg Innotek, Hyundai E&C, Hyundai Mipo, and Posco International.
Futu Holdings: Cross-Border Broking In Crosshairs
- Just one day ahead of its dual primary listing in Hong Kong, Futu Holdings Ltd (FUTU US) postponed its Listing by Introduction.
- According to the China Securities Regulatory Commission, Futu has been illegally operating cross-border securities trading without approval.
- Suitably, the share prices of Futu and UP Fintech (TIGR US), another online brokerage forced to quit accepting new onshore investors. It’s probably too premature to buy the dip.
Halcyon Agri (HACL SP) MGO: SPA Effective, Next Is Satisfaction of Conditions Precedent
- The SPA for China Hainan Rubber Industry (601118 CH) to acquire 36.00% of Halcyon Agri (HACL SP)’s outstanding shares from Sinochem International Corporation A (600500 CH) at US$0.315 is effective.
- Conditions precedent which relate to Chinese regulatory approvals should be satisfied shortly. Completion will trigger an MGO at US$0.315 or S$0.423 (US$/S$ rate fixed on the closing date).
- The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities acceptance rate. We think that this is achievable as the offer is attractive.
Japfa Ltd: Trading Cheap After AustAsia In-Specie Distribution
- Agri-Food play Japfa Ltd (JAP SP) recently distributed in-specie its 62.5% stake in AustAsia Group (2425 HK).
- Japfa continues to hold a 55.4% stake in Japfa Comfeed Indonesia (JPFA IJ), together with unlisted ops focused on animal proteins in Vietnam, India, Bangladesh, and Myanmar.
- Japfa is estimated to be trading at around a 41% discount to NAV and ~4x EV/EBITDA.
HSI Index Rebalance Preview: Better Late Than Never?
- There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
- We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
- All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.
Warrego (WGO AU): Has MinRes Gatecrashed the Party?
- The AFR reports that Mineral Resources (MIN AU) was the buyer of 15% of outstanding shares at A$0.35, 25.0% above Hancock and 4.5% above Strike Energy (STX AU)’s offer.
- MinRes’ move is motivated by the desire to have a say in the recent Perth Basin consolidation. It recently lobbed an all-scrip takeover offer for Norwest Energy NL (NWE AU).
- Warrego Energy (WGO AU)‘s three largest shareholders are now the three suitors. The emergence of MinRes (if confirmed) suggests that the takeover battle is far from done.
Appreciate Group/Paypoint: There May Be Higher Rewards in Vouchers
- PayPoint has launched an agreed cash and shares offer for closest rival Appreciate. On completion, PayPoint shareholders will hold c. 95% and Appreciate shareholders c. 5% of the merged firm.
- The offer price doesn’t seem generous (my fair value estimate is 53p vs. 43.45p package value). Event-driven investor Samson Rock is the top shareholder with a 19.7% stake.
- Gross spread is 5.9% (including dividend). I believe there are grounds for an offer sweetening, and although both stocks are illiquid, the risk/reward looks appealing, in my view.
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