In today’s briefing:
- A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening
- HK Connect SOUTHBOUND Flows (To 28 Feb 2025); Big Volumes, HUGE Net Buys on Blue Chips, Tech-Y Names
- Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%
- Merger Arb Mondays (03 Mar) – Seven & I, Makino, Aeon Delight, Tonami, Tam Jai, Vesync, Insignia
- Pentamaster (1665 HK): Pricing WAS Fair As Offer Comfortably Gets Up
- Aeon Mall (8905 JP): Aeon (8267 JP)’s Potential Share Exchange Offer
- Weekly Update (MIDD, SNDK, RHLD, SNRE)
- SSI Weekly Newsletter Highlights: SWTX and NATH Potential Buyouts, LQDA FDA Update and More
- Strategic Reviews, Mergers, and Asset Sales: Analyzing Upside Potential in Active Portfolio Ideas
A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening
- AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best.
- Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have ever had. By a long ways.
- This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.
HK Connect SOUTHBOUND Flows (To 28 Feb 2025); Big Volumes, HUGE Net Buys on Blue Chips, Tech-Y Names
- Gross SOUTHBOUND volumes cleared HK$800bn for the second week in a row. NET buying by SOUTHBOUND was HK$75bn which was perhaps a new record.
- Notable again is the HUGE back-and-forth. If HK$865bn traded and SOUTHBOUND “only” bought HK$75bn, HK$395bn was round-tripped for short-term purposes.
- Last week I flipped to short Alibaba Group Holding (9988 HK). Sentiment may worsen and there’s lots to sell later this week. Staying short Alibaba for now.
Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%
- Sparx on Friday announced a Tender Offer at 0.55x book and an EV of less than inventory (<20% of revenue) for Snt Corp (6319 JP) – another metal monozukuri company.
- Last year they did it on IJTT Co., Ltd. (7315 JP). That one got bumped. This one could too, but cross-holders own nearly 60%.
- This kind of company has skill-sets which may be portable but the product line is tied to old Japan. The takeover
Merger Arb Mondays (03 Mar) – Seven & I, Makino, Aeon Delight, Tonami, Tam Jai, Vesync, Insignia
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Tonami Holdings (9070 JP), Seven & I Holdings (3382 JP), Aeon Delight (9787 JP), Smart Share Global (EM US), Insignia Financial (IFL AU), Tam Jai International (2217 HK).
- Lowest spreads: Millennium & Copthorne Hotels Nz (MCK NZ), Shibaura Electronics (6957 JP), Makino Milling Machine Co (6135 JP), Domain Holdings Australia (DHG AU), Proto Corp (4298 JP).
Pentamaster (1665 HK): Pricing WAS Fair As Offer Comfortably Gets Up
- Pentamaster International (1665 HK)‘s Scheme overwhelmingly gets up after a wild week of trading.
- After touching an intra-day low of HK$0.78/share on the 25th Feb – 28% adrift of the HK$1.00/share terms – shares closed at HK$0.97/share prior the results of the Scheme Meeting.
- 58.2% of disinterested shareholders opted to vote. Just 0.5% of those shareholders present voted against the Scheme; or just 0.29% of total disinterested shareholders. Not even close.
Aeon Mall (8905 JP): Aeon (8267 JP)’s Potential Share Exchange Offer
- AEON Mall (8905 JP) and Aeon Co Ltd (8267 JP) announced a MoU for the potential privatisation of Aeon Mall through a share exchange offer.
- The terms of the share exchange are expected to be announced in early April and be implemented in July.
- Aeon’s 58.16% shareholding facilitates passing the Aeon Mall shareholder vote. My analysis suggests a potential share exchange (Aeon Mall/Aeon) ratio range of 0.60x-0.69x.
Weekly Update (MIDD, SNDK, RHLD, SNRE)
On Monday, Western Digital (WDC) spun off its NAND flash business, Sandisk (SNDK).
On Friday, CompoSecure (CMPO) spun off its management company, Resolute Holdings (RHLD).
During the week, we got earnings from Howard Hughes (HHH) and Sunrise Communications (SNRE).
SSI Weekly Newsletter Highlights: SWTX and NATH Potential Buyouts, LQDA FDA Update and More
- SpringWorks Therapeutics (SWTX) is in late-stage acquisition talks with Merck KGaA, with a potential buyout offer at $85/share.
- Liquidia (LQDA) had its FDA case denied, delaying Yutrepia’s market entry until May 2025, with commercialization on track.
- ContextLogic (LOGC) received a $150m strategic investment from BC Partners, enhancing its cash balance and NOL monetization potential.
Strategic Reviews, Mergers, and Asset Sales: Analyzing Upside Potential in Active Portfolio Ideas
- Sage Therapeutics rejected Biogen’s $7.22/share offer, initiating a strategic review for potential sale, indicating a possible higher premium.
- SPAR Group’s merger with Highwire Capital faces uncertainty due to funding issues, with potential for significant stock price decline.
- Kronos Bio’s strategic review follows clinical trial discontinuation, with potential sale or reverse merger, trading below net cash value.
Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
Unlock all research summaries