In today’s briefing:
- ESR Group (1821 HK): Inching Closer to a Binding Proposal
- 7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
- WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
- WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade
- Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
- CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
- Merger Arb Mondays (07 Oct) – GA Pack, Henlius, Canvest, Samson, T-Gaia, Descente, Platinum
- EQD | Asia Monthly Vol Roadmap: Elevated IV’s in CSI300 and Hang Seng Present Tactical Opportunity
- EQD / NSE Vol Update / Skew & Smile Unmoved by Equity Selloff – Options Market Ill-Prepared for More
- Temasek’s USD1Bn+ Bite into India’s Booming Snack Food Sector.Top Listed Stocks to Watch
ESR Group (1821 HK): Inching Closer to a Binding Proposal
- ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
- The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.
- The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.
7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
- Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
- The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
- Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish.
WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
- The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
- The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
- There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.
WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade
- The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
- The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
- There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.
Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
- MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
- Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
- We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.
CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
- Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer
- ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
- If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.
Merger Arb Mondays (07 Oct) – GA Pack, Henlius, Canvest, Samson, T-Gaia, Descente, Platinum
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Capitol Health (CAJ AU).
- Lowest spreads: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Xingda International (1899 HK), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP).
EQD | Asia Monthly Vol Roadmap: Elevated IV’s in CSI300 and Hang Seng Present Tactical Opportunity
- Hang Seng Index (HSI INDEX), Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) and Nikkei 225 (NKY INDEX) all have elevated implied vols vs their peers and vs historical observations for October.
- NIFTY Index (NIFTY INDEX) , S&P 500 INDEX (SPX INDEX) and S&P/ASX 200 (AS51 INDEX) implied vols are on the low end of what is typically realized in October.
- Most markets see price weakness in the 3rd week of the month with realized volatility underperforming over the back half of the month.
EQD / NSE Vol Update / Skew & Smile Unmoved by Equity Selloff – Options Market Ill-Prepared for More
- Nifty50 Monthly IVs post +2.6 vol jump as risk premia gets marked higher on return from 02.10.2024 holiday – China-induced Index selloff & FII Options-buying being the main drivers.
- Vol Term-Structure has switched from Contango to Backwardation in the front end for Nifty50 options. BankNifty Vol Curve flattens due to 11th hour IV markdown.
- Options Market looks ill-prepared for another leg lower in indices – Smile & Skew subdued in spite of IV-jump.
Temasek’s USD1Bn+ Bite into India’s Booming Snack Food Sector.Top Listed Stocks to Watch
- Temasek Holdings Pte Ltd (TMSK SP), Singapore’s state investment firm, is reportedly eyeing a 10-15% stake in India’s top snack maker Haldirams (Unlisted), valued at $11 billion.
- India’s packaged and processed food sector is booming, driven by modern retail growth, improved food standards, rising convenience demand, and greater affordability.
- Big acquisitions, upcoming IPOs, and strong growth prospects keep this sector in the spotlight, with listed companies offering investors opportunity to play the upswing.
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