In today’s briefing:
- Azure Min’s (AZS AU)’s “Boost” As Gina Ups Stake in Lynas
- Shinko Electric (6967 JP): Widening Spread Is an Opportunity
- Inageya (8182 JP): Share Exchange Offer from USMH (3222 JP)
- SoftBank (9984 JP): Arm Out-Stretched (On Valuation) And Is JPY Depreciation Largely Done?
- NPN X PRX: Discounts Widen as Fed Pivots on Rate Outlook
Azure Min’s (AZS AU)’s “Boost” As Gina Ups Stake in Lynas
- On the 8th April, Azure Minerals (AZS AU) shareholders overwhelmingly approved the Sociedad Quimica y Minera (SQM US)/Gina Rhinehart’s Hancock transaction. Shares promptly closed down 7% on regulatory approval fears.
- Those fears are unwarranted. China’s Tianqi Lithium would indirectly own just ~11% in Azure post-deal. China has recently lifted anti-dumping tariffs on a range of Aussie products. FIRB won’t block.
- An expected approval may have spurred Gina to buy more shares in Lynas (LYC AU). Why buy now if FIRB dings Azure; that outcome would push the whole sector lower.
Shinko Electric (6967 JP): Widening Spread Is an Opportunity
- Shinko Electric Industries (6967 JP)‘s pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread widened from a low of 3.1% on 14 March to 7.0%.
- The widening spread can be attributed to China SAMR approval timing, earnings risk, Ibiden Co Ltd (4062 JP)’s material underperformance lowering the break price and a large fund liquidating positions.
- The deal break risks remain low with the timing remaining the key risk. The current 7.0% spread is an attractive opportunity to add.
Inageya (8182 JP): Share Exchange Offer from USMH (3222 JP)
- Inageya Co Ltd (8182 JP) announced a share exchange offer by United Super Markets (3222 JP) at 1.46 USMH shares per Inageya share.
- The share exchange aligns with Aeon Co Ltd (8267 JP)’s well-flagged intention of making Inageya a wholly-owned subsidiary of USMH.
- Aeon’s 50%+ shareholding in Inageya and USMH facilitates the two EGM votes. The deal metrics are broadly fair for both sets of shareholders.
SoftBank (9984 JP): Arm Out-Stretched (On Valuation) And Is JPY Depreciation Largely Done?
- Arm – which we estimate accounts for 45% of SoftBank group’s equity value – is experiencing limits to its “growth at any price” stock status; the shares fell 12% yesterday
- The JPY’s depreciation is supportive of the group NAV, but with the Fed’s hawkish stance well known and BoJ expected to raise interest rates, JPY weakness may be largely done
- SoftBank shares trade at a wide 53%+ discount to the estimated NAV; yet we see downside risks to Arm’s valuation, along with the potential for JPY weakness to reverse
NPN X PRX: Discounts Widen as Fed Pivots on Rate Outlook
- The discounts of both Naspers and Prosus have widened during the last 5 trading sessions.
- We see current levels as attractive entry points for trading the rump.
- In our view, there are a number of fundamental factors that could act as positive catalysts to a further structural narrowing of the discount.
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