In today’s briefing:
- ENM (128 HK): Chinachem Takeover
- TOPIX Inclusions: Who Is Ready (Jun 2023)
- Yitai Coal (3948 HK): Offer Open with H Share Class Meeting on 30 June
- EOFLOW/Medtronic Tender: Risk/Reward Profile
- Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names
- Austal (ASB AU): Privatisation on the Cards?
- Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June
ENM (128 HK): Chinachem Takeover
- Fashion wear retailer ENM Holdings (128 HK) has received a delisting Offer from major shareholder, Chinachem.
- The Scheme consideration of HK$0.58 is a 24.7% premium to last close, although shares popped 24% prior to suspension.
- The Offer price is final. There is probably enough here for the Offer to get up. But there is potentially significant value to be unlocked from recent land rezoning.
TOPIX Inclusions: Who Is Ready (Jun 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Zuiko Corp (6279 JP), Anycolor (5032 JP), and Lifedrink (2585 JP) will have TOPIX Inclusion events at the end of June (Zuiko) or July 2023 (the other two).
- One of our pre-event TOPIX Inclusion candidates CELSYS (3663 JP) has experienced sharp price moves over the last few weeks.
Yitai Coal (3948 HK): Offer Open with H Share Class Meeting on 30 June
- Inner Mongolia Yitai Coal Company Ltd (3948 HK)‘s H Share buyback offer at HK$17.50 per H Share is open. The H class meeting is on 30 June.
- The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is a 90% minimum acceptance condition.
- The de-rating of the peers, likely supportive substantial H Shareholders and no major retail opposition should help hit the 90% threshold. At the last close, the gross/annualised spread is 4.7%/23.9%.
EOFLOW/Medtronic Tender: Risk/Reward Profile
- Medtronic Plc (MDT US) aims to acquire Eoflow (294090 KS) through share purchase agreements (SPA), a share subscription agreement (SSA) and a public tender offer at KRW30,000.
- The shares are trading wide to terms due to key risks – regulatory approvals and the minimum acceptance condition (Medtronic owns 53.02% of the post-SSA outstanding shares).
- The regulatory approvals should be forthcoming due to minimum competition issues. The minimum acceptance condition requires a minority acceptance rate of 15.7%, which is achievable due to an attractive offer.
Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names
- The Nikkei 225 Sep 2023 review has 2 months left of data collection. That means the rankings are quasi-fixed. So then the question is what to do with them.
- There is a consultation in progress. You still have one week to respond, but that doesn’t change the names.
- The top inclusion is the big one in dollar terms but low in liquidity. The next two are likely to be consumer names, and much more impactful.
Austal (ASB AU): Privatisation on the Cards?
- Media reports indicate that Austal Ltd (ASB AU) is in the crosshairs of investors looking to take the company private.
- In an announcement, Austal Ltd (ASB AU) said it is regularly involved in discussion with strategic parties to create value for shareholders.
- The recent large contract from the US Navy, potentially more contracts in the pipeline and a weak AUD could result in investors paying up to take the company private.
Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June
- Back on the 9 May, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced an H-share buyback at HK$17.50/share.
- With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August.
- The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.
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