In today’s briefing:
- China Vanke (2202 HK): Placement & Index Flows
- HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
- SET50 Index Rebalance: SAWAD Added; Buying at the Close Today
- SHL-Japan (4327 JP): JPY3,550 Tender Offer from SHL Group
- Sweden’s EQT to Acquire a 68% Stake in SK Shieldus – Positive Impact on SK Square
- Downer EDI: In Need Of A “Culture Reset”
- Quiddity Final Predictions for UK F100/250 March 2023 Regular Review & Other Intra-Review Changes
- Appreciate Group/Paypoint: Completion
- Selected European Holdcos and DLC: February‘23 Report
China Vanke (2202 HK): Placement & Index Flows
- News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
- The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.
- China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.
HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
- Reportedly (Bloomberg) Hong Kong broadband play HKBN Ltd (1310 HK) has received a takeover offer from I Square’s HGC Global Communications.
- HKBN’s shares were halted in the late afternoon trading session yesterday after gaining 11.6%. The reason stated for the suspension was “possible inside information“, not pursuant to the Takeovers Code.
- Last May, Bloomberg reported that KKR, PAG, and Stonepeak – amongst others – were considering bids for HKBN. The market cap at the time was US$1.6bn versus US$934mn now.
SET50 Index Rebalance: SAWAD Added; Buying at the Close Today
- Srisawad Power 1979 (SAWAD TB) has been added to the SET50 INDEX following the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger.
- Passive SET50 INDEX trackers will need to buy 9.7m shares (THB 534m; 1x ADV) of Srisawad Power 1979 (SAWAD TB) at the close of trading today.
- There could be two more changes in June with relatively new listings, Thai Life Insurance (TLI TB) and Betagro (BTG TB), being added to the SET50 INDEX.
SHL-Japan (4327 JP): JPY3,550 Tender Offer from SHL Group
- SHL Japan Ltd (4327 JP) has recommended SHL Group’s tender offer of JPY3,550 per share, a 32.2% premium to the undisturbed price (1 March).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 36.62% ownership ratio.
- Achieving the minimum 36.62% ownership ratio requires a 32% acceptance rate from minorities excluding irrevocables. This is not onerous as the tender price represents an all-time share price.
Sweden’s EQT to Acquire a 68% Stake in SK Shieldus – Positive Impact on SK Square
- On 1 March, it was announced that Sweden’s EQT will be acquiring a 68% controlling stake in SK Shieldus (393820 KS).
- EQT Partners is controlled by Sweden’s powerful Wallenberg family. EQT will invest a total amount of 2 trillion won (US$1.5 billion) in SK Shieldus.
- Our NAV analysis of SK Square suggests NAV of 7.9 trillion won or NAV per share of 55,507, representing a 45% upside from current levels.
Downer EDI: In Need Of A “Culture Reset”
- As per Downer (DOW AU)‘s website: “Our purpose is to create and sustain the modern environment by building trusted relationships with our customers“. They should extend that trust to shareholders.
- Having already announced accounting irregularities back in December, Downer further cut profit forecasts – and interim dividend – this week. After shares cratered 24%, Downer’s CFO promptly tendered his resignation.
- Allan Grey, which holds 6% in Downer, reckons the company has been inept and that a “culture reset” was in order.
Quiddity Final Predictions for UK F100/250 March 2023 Regular Review & Other Intra-Review Changes
- In this insight, we take a look at Quiddity’s final predictions for index changes for UK’s F100 and F250 indices for the March 2023 Rebalance.
- The index changes are likely to be confirmed after market close today and there could be more intra-review changes later this month.
- In this insight, we take a look at the recent price performance of names that can potentially be involved in index changes and our flow expectations for each name.
Appreciate Group/Paypoint: Completion
- On 1 March the shares of Appreciate were cancelled from AIM and the new shares of Paypoint were admitted to trading on the LSE.
- In my previous insight, I mentioned that although the offer price did not seem generous and liquidity limited, the risk/reward was favourable.
- In the end, shareholders saw a good opportunity to cash in after a sluggish performance since the pandemic outbreak.
Selected European Holdcos and DLC: February‘23 Report
- Discounts to NAV of covered holdcos have generally tightened during February. Discounts to NAV: C.F.Alba, 53.2%; GBL, 34.9%; Heineken Holding, 16.1%; Industrivärden C, 10.6%;
- Investor B, 11.2%; Porsche Automobile Holding, 50.5%. The spread of Rio Tinto DLC tightened to 12.6%. Spreads tend to tighten in favourable market conditions.
- Recommended trades are: GBL, Heineken Holding, Porsche Automobile Holding, and possibly CF Alba (long).
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