In today’s briefing:
- Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- Kotak Mahindra Bank – US$1.2 Billion Lockup Release
- CIMC Vehicles (1839 HK): Possible H Share Buyback Offer
- Hang Seng Indices (HSI, HSCEI, HS Tech) Recapping the Recaps – A Bit More To Trade
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2023)
- CIMC Vehicles (1839 HK): Parent Privatisation?
- CIMC Vehicles (1839 HK): $7.00/Share Indicative Offer From Parent – Really?!
- Asahi Offering: Discount Presents a Good Entry Point As Price Hikes & Tax Reforms Strengthen Asahi
- Quiddity Leaderboard F100/250 Dec 23: Final Expectations; Two Trading Days for Announcement
Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- As per Reuters, Toyota Motor (7203 JP) could look to sell up to 10% of Denso Corp (6902 JP) to raise around US$4.7bn before the end of the year.
- Toyota is the company’s largest shareholder and its largest customer.
- In this note, we will talk about the deal dynamics.
Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- There could be a US$4.6bn secondary placement in Denso Corp (6902 JP) before year-end as Toyota Motor (7203 JP), Toyota Industries (6201 JP) and Aisin Corp (7259 JP) unwind cross-holdings.
- Denso Corp (6902 JP) was down 4.85% yesterday (and even more intra-day) and the stock could remain under pressure for the next few weeks.
- There will be limited passive buying in conjunction with the secondary offering and active investors will need to buy a lot of stock.
Kotak Mahindra Bank – US$1.2 Billion Lockup Release
- In Jun 2023, CPPIB raised around US$750m via selling a 1.6% stake in Kotak Mahindra Bank (KMB IN). Prior to that it had sold a similar amount in Mar 2022.
- CPPIB will be released from its placement linked lockup early next month.
- In this note, we will talk about the lockup dynamics and past deals performance.
CIMC Vehicles (1839 HK): Possible H Share Buyback Offer
- CIMC Vehicle Group Co Ltd (1839 HK) possible H Share buyback offer, excluding China International Marine Cntnrs Gp (2039 HK)’s shares, is HK$7.00, an 8.7% premium to the undisturbed price.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There could also be a 90% minimum acceptance condition.
- The offer is light, but independent H shareholders holding blocking stakes will likely be supportive. The final offer will be made on “same or better terms”, suggesting a potential bump.
Hang Seng Indices (HSI, HSCEI, HS Tech) Recapping the Recaps – A Bit More To Trade
- The final datapoints for the December Hang Seng Indices rebalances were recorded today, slightly altering the initially expected weights and flows.
- The expected flows have slightly increased since the initial estimates on 15 then 17 November.
- Across all three indices, I see a net total of roughly HK$13.4bn a side to trade.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2023)
- The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- Li Auto (2015 HK) will have the largest inflows due to the HSI inclusion while Xiaomi (1810 HK) will have the largest outflow due to HSTECH capping.
- There will be passive selling in HSBC Holdings (5 HK) for yet another rebalance due to capping of the stock in the Hang Seng Index (HSI INDEX).
CIMC Vehicles (1839 HK): Parent Privatisation?
- CIMC Vehicles (1839 HK) is currently suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
- SOE-Backed CIMC Group controls ~74% of CMIC Vehicle’s H-shares. Presumably, if any Offer was to unfold, it would be from the parent.
- And what price for the H-shares? Around HK$9/share, a life-time high, would be in keeping with premiums seen in precedent PRC-incorporated privatisations.
CIMC Vehicles (1839 HK): $7.00/Share Indicative Offer From Parent – Really?!
- After CIMC Vehicle Group Co Ltd (1839 HK) was suspended yesterday pursuant to Hong Kong’s Takeover Code, the expectation was an H-share Offer from its parent, SOE-backed CIMC Group.
- CIMC subsequently announced an indicative Offer yesterday evening, from its parent, at a $7.00/share for each H-share, a pitiful 8.6% premium to last close. There is no concurrent A-share Offer.
- CIMC traded around $7.00 late September, and comfortably traded through the indicative terms for most of July.
Asahi Offering: Discount Presents a Good Entry Point As Price Hikes & Tax Reforms Strengthen Asahi
- Two weeks ago, Asahi Group Holdings (2502 JP) revealed plans for a secondary offering, aiming to sell 33.48m common shares in international markets.
- In this insight, we delve into the fundamentals of the business, identifying an opportunity if the offering is priced at a decent discount compared to Asahi’s current price.
- We think recent price hikes and ongoing alcohol tax reforms position Asahi to outperform Kirin Holdings (2503 JP) in the next 3-4 years.
Quiddity Leaderboard F100/250 Dec 23: Final Expectations; Two Trading Days for Announcement
- The F100 and F250 December 2023 index changes are likely to be announced after the close on Wednesday 29th December 2023.
- In this insight, we take a look at the potential index changes for F100 and F250 based on rankings as of 27th November 2023.
- There could be one change for the F100 index and six separate changes for the F250 index. Some names lurking close to the border can still make it.
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