In today’s briefing:
- HSCEI: Index Handling Changes for Secondary & Dual-Primary Listings
- Acotec Scientific Holdings: Boston Scientific’s Partial Offer
- Acotec Scientific (6669 HK)’s Partial Offer of HK$20 from Boston Scientific
- HSTECH: Index Handling Changes & Flows in March
- Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger
- Home Consortium (HMC AU) FTSE EPRA Index Deletion – Underperforming but STILL Expensive
- St Barbara’s Reverse Merger Of Genesis
- Dongkuk Steel Mill: Demerger Details & Passive Outflow Trading
HSCEI: Index Handling Changes for Secondary & Dual-Primary Listings
- Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
- The changes could lead to an increase in the index weighting for Li Auto (2015 HK) and the inclusion of XPeng (9868 HK) at the March rebalance.
- The improved rankings for the Secondary and Dual Primary listings will lead to other changes to the index in March.
Acotec Scientific Holdings: Boston Scientific’s Partial Offer
- Acotec Scientific Holdings (6669 HK), a Chinese medical technology company, has announced a Partial Offer from Boston Scientific (BSX US).
- The Offer Price for up to 65% of shares out is HK20/share, a 31.6% premium to last close, but below last year’s IPO price of HK$23.80/share.
- Irrevocables who intend to tender a total of up to 60.14% of shares out. This includes the CEO and the key pre-IPO investor.
Acotec Scientific (6669 HK)’s Partial Offer of HK$20 from Boston Scientific
- Acotec Scientific Holdings (6669 HK) disclosed a partial offer from Boston Scientific (BSX US) to acquire a maximum of 203.7 million shares at HK$20 per share.
- The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders. Irrevocables represent a minimum of 55.14% of outstanding shares.
- Despite the recent share price pop on the back of FDA approval for Vericor, the partial offer represents an all-time share price high. Therefore, the offer will be declared unconditional.
HSTECH: Index Handling Changes & Flows in March
- Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
- The change could result in Tencent Music Entertainment Group (1698 HK) replacing Ming Yuan Cloud Group (909 HK) in the index.
- There could be passive buying on Li Auto (2015 HK) and XPeng (9868 HK) due to an increase in the index shares with outflows on other index constituents.
Genesis Minerals (GMD AU) And St Barbara (SBM AU) Merger
- St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) will merge via a scheme at a gross exchange ratio of 2.0338 SBM shares per GMD share.
- The deal metrics are favourable for GMD shareholders. The gross exchange ratio is attractive and values GMD at a slight premium to mid-cap ASX peers on an EV/Resource basis.
- The likely pushback from SMB shareholders is that the terms were struck from a position of share price weakness. However, the low SMB shareholder voting threshold (50%) will help.
Home Consortium (HMC AU) FTSE EPRA Index Deletion – Underperforming but STILL Expensive
- Home Consortium Ltd (HMC AU) is a Super Stapled Security, having developed HomeCo Daily Needs REIT (HDN AU), overseen the Aventus Group (AVN AU) merger, IPOed HealthCo REIT (HCW AU).
- The current market cap is 1.6x book and probably closer to 2x tangible book as a large “management and development capability premium” is baked in.
- There is a FTSE EPRA Nareit index deletion on Friday. That could prompt further underperformance.
St Barbara’s Reverse Merger Of Genesis
- Gold miners St Barbara Ltd (SBM AU) and Genesis Minerals (GMD AU) have agreed to merge via a Scheme. Inter-conditionally, SBM will demerge Atlantic, Simberi, and other assets.
- SBM will issue 2.0338 of its own shares for each GMD share. Conditional on the Scheme and asset demerger, Genesis will raise $275m to fund the merged entity.
- At completion, SBM shareholders will hold 38% in the combined group, current Genesis shareholders 41%, with the remaining 22% held by participants in the capital raising.
Dongkuk Steel Mill: Demerger Details & Passive Outflow Trading
- The size of treasury shares in the Dongkuk Steel demerger event is not too large to expect a value accretion to the combined market cap after the split.
- Based on the current market cap, all three companies will likely leave the KOSPI 200. To this end, K200 trackers must dispose of Dongkuk Steel right before the trade suspension.
- The size of rebalancing trading before trade suspension should be about ₩40T. We should consider setting our entry into flow trading as early as two weeks towards the trade suspension.
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