In today’s briefing:
- Auckland Airport (AIA NZ) Placement: Index Impact
- Seven & I Holdings (3382 JP): Core Designation Does Not Change Couche-Tard’s Calculus
- Insights on the Odds of MBK Ramping up the Tender Price by 20%
- Latin Resources (LRS AU)’s Scheme With Pilbara Minerals
- Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
- EQD | The Nikkei 225’s Trend Is Not Looking Good
- Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer
Auckland Airport (AIA NZ) Placement: Index Impact
- Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
- The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
- We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.
Seven & I Holdings (3382 JP): Core Designation Does Not Change Couche-Tard’s Calculus
- On 13 September, the Ministry of Finance of Japan added 7&I to a list of “core” designated companies based on results of voluntary inquiries to all listed companies.
- Several media reports suggest that the change in 7&I’s designation to core would complicate the proposed acquisition by Alimentation Couche-Tard (ATD CN). The core designation will not change Couche-Tard’s strategy.
- The change to 7&I’s designation to core will paradoxically push Couche-Tard to firm up its revised offer. An undemanding valuation protects the downside of a no-deal situation.
Insights on the Odds of MBK Ramping up the Tender Price by 20%
- MBK can cut their target volume to 12% and, with 2 trillion won, raise the tender price to ₩800,000, leaving them a 20% cushion.
- MBK’s tight schedule aims to hit the 6.98% target while minimizing price volatility and market risk by shortening the offer window.
- MBK plans to sweeten the deal by about 20%, similar to Hankook, aiming for a 6.98% target with a 20% price hike from the start.
Latin Resources (LRS AU)’s Scheme With Pilbara Minerals
- Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with significantly larger peer, Pilbara Minerals (PLS AU). Timing appears fortuitous.
- PLS is offering 0.07 new PLS shares for each LRS share held. LRS shareholders will own ~6.4% of the combined entity. LRS’ largest shareholder, José Luis Manzano (7.9%), is supportive.
- The scrip terms back out an implied price of A$0.20/share or a 67% premium to last close. This is done. And trading accordingly. Expected implementation late November, early December.
Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
- Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.
EQD | The Nikkei 225’s Trend Is Not Looking Good
- Although the Nikkei 225 INDEX was rallying strong early in the year, from mid-March the rally started to falter, and after a fake recovery into July, it fell again, lower.
- Should the index go lower from last week’s Close at 36581.76, the next paragraphs of this insight will indicate what price levels are strong support to buy.
- The only doubt we have is that the index’s overall trend does not look good. A correction to 33000 (or lower) is a possibility – a negative YEARLY performance.
Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer
- After Crescent Capital ‘s National Dental Care’ (NDC) A$2.05/share Offer, by way of Scheme, failed on the 9 August. it was just a question of when Genesis re-loaded its Offer.
- Genesis has now announced a A$1.90/share off-market Offer ( its 29 July A$1.90/share approach was a Scheme), conditional on a 90% minimum acceptance. Pricing falls within the IE’ fair value range.
- Pacific Smiles (PSQ AU)‘s board previously gave unanimous support for NDC’s prior A$1.90/share Offer. The question is whether the 90% hurdle is met. I think it will.
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