In today’s briefing:
- Big Yuexiu Property (123 HK) Rights Issue – 3 Capital Actions from Here to Mid-June
- Flow Trading Opportunities on LG Chem with Potential Inclusion in Battery ETFs
- Wesfarmer’s Non-Binding Offer For Silk
- Update on the Trading Opportunities Post OCI Spin-Off
- Quiddity Leaderboard-DAX Jun 23: SMA Solar, Hochtief, Adtran, Aroundtown
- Apollo/John Wood Group: Due Diligence Access
Big Yuexiu Property (123 HK) Rights Issue – 3 Capital Actions from Here to Mid-June
- After being halted this morning before the start of trade, post-close, Yuexiu Property (123 HK) announced a fully-underwritten Rights Offering.
- The Rights Offering intends to raise HK$8.36bn issuing 30 Rights for every 100 Shares held, at a subscription price of HK$9.00, a 23.3% discount to TERP.
- This will take a moderately-levered property/services/leaseco and add more capital to it. Not terribly bullish. Looks opportunistic. And one has to look through 3 capital actions to see dividends ahead.
Flow Trading Opportunities on LG Chem with Potential Inclusion in Battery ETFs
- We now have an environment that allows Korea’s battery ETFs to include LG Chem in upcoming reviews. KODEX is in June, and TIGER is in July.
- If LG Chem is included in each review, the expected one-day inflow is at 0.7-0.8x DTV, which can lead to a price impact similar to that of SKIET in 2021.
- We should consider setups targeting this, including Long Short, which utilizes LG Energy Solution or LG Corp as a hedge.
Wesfarmer’s Non-Binding Offer For Silk
- Wesfarmers Ltd (WES AU) has made a non-binding indicative Offer, by way of a Scheme, for Silk Laser Australia (SLA AU), an operator of specialist clinic networks across Australia.
- The Offer Price of $3.15/share is a decent 30.2% premium to last close. Wilson Asset Management, with 9.3% of shares out, is supportive.
- Wesfarmers has been granted 30 days to undertake due diligence on an exclusive basis.
Update on the Trading Opportunities Post OCI Spin-Off
- The Korea Exchange announced today (20 April) the change in index constituents and major dates for the Oci Co Ltd (010060 KS) spin-off.
- Oci Co Ltd (010060 KS)’s shares will be suspended from trading from 27 April to 26 May 2023.
- After the spin-off and relisting of holdco/opco shares, we believe that there is a greater probability of OCI Co (opco) shares outperforming OCI Holdings (holdco).
Quiddity Leaderboard-DAX Jun 23: SMA Solar, Hochtief, Adtran, Aroundtown
- In this insight, we take a look at Quiddity’s estimates for the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.
- At present, I do not see any movements between the DAX and MDAX indices.
- However, there could be two changes between the MDAX and SDAX index and there could be one more ADD/DEL for the SDAX index.
Apollo/John Wood Group: Due Diligence Access
- “Feedback” from shareholders overturned numantine resistance from the Board of Wood, which has reluctantly decided to grant due diligence access to Apollo. New PUSU deadline is 17 May.
- As top shareholder of Vallourec, Apollo knows the sector. At the 240p offer proposal, Wood would be valued at an undemanding 5.7x EV/Fwd EBITDA on consensus numbers.
- My fair value estimate is 261.7p (average of SOTP-multiples and DCF). There is value in the sector and Apollo may have turned a corner. Long.
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