In today’s briefing:
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)
- ANA and NYK to Trade NCA, So JAL/ANA GTG
- TOPIX Inclusions: Who Is Ready (Mar 2023)
- K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment
- InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- Olam Group (OLG SP): EGM on 29 March Another Step to Realize Value
- InvoCare (IVC AU): TPG’s Non-Binding Offer
- Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
- Doosan Bobcat: Block Deal Sale of 4.8% of Outstanding Shares
- Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)
- The March 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.
- The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK).
- The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).
ANA and NYK to Trade NCA, So JAL/ANA GTG
- ANA announced their FY23-25 Mid-Term Corporate Strategy last month. In it, a plan to increase cargo.
- Today, Ana Holdings (9202 JP) and Nippon Yusen Kk (9101 JP) announced ANA would take over NYK sub Nippon Cargo Airlines 1 October 2023 – price and method TBD.
- This would add ~45-50% to ANA’s cargo volume, and more to its capacity. But it means NYK sells cheap OR it means a chunk of ANA cash/stock. Overhang.
TOPIX Inclusions: Who Is Ready (Mar 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.
- In February, names which appeared in our “B” list such as Amvis Holdings Inc (7071 JP) and AXXZIA Inc (4936 JP) announced they would be moving to the Prime Market.
- In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.
K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment
- Fresh after the courts rejected new share issuance, Kakao (035720 KS) has launched an Offer for S.M.Entertainment (041510 KS), less than a week after HYBE (352820 KS)‘s deal closed.
- Kakao, holding 4.9%, is seeking to lift its stake to ~40% via a tender offer at ₩150,000/share, a 25% premium to HYBE’s offer price.
- The key question is – will HYBE counter? I would not be so sure.
InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- Invocare Ltd (IVC AU) has received an unsolicited, preliminary, non-binding indicative offer from TPG Global to acquire the company at A$12.65/share in cash.
- TPG has also acquired 17.8% of the shares in Invocare Ltd (IVC AU) via a combination of stock and derivatives.
- With the company now in play, there could be competing offers. Already owning 17.8% of the company, TPG is now invested in ensuring they gain control.
Olam Group (OLG SP): EGM on 29 March Another Step to Realize Value
- Olam Group (OLG SP) has despatched the EGM circular to get shareholder approval for the next step in the restructuring exercise to unlock value – Olam Agri IPO.
- The Olam Agri IPO through a dual primary listing (SGX ST and Saudi Arabia) involves a primary (IPO shares are 20% of enlarged shares) and secondary (25% vendor sale) offering.
- The EGM marks a key step in the strategy to unlock value. Our SoTP valuation is S$2.13 per share, which is a 28% upside to the last close price.
InvoCare (IVC AU): TPG’s Non-Binding Offer
- PE outfit TPG has taken a 17.8% stake in InvoCare Ltd (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding indicative Offer via a Scheme.
- The Indicative proposal is subject to the completion of satisfactory due diligence, and FIRB.
- InvoCare, which has struggled to generate consistent profits in recent years, is mulling the proposal. Pricing is around the Covid cliff.
Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
- In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.
Doosan Bobcat: Block Deal Sale of 4.8% of Outstanding Shares
- On 7 March, Doosan Bobcat announced a block deal sale of 4.87 million shares, representing 4.8% of outstanding shares. The block deal discount range is from 6.11% to 8.03%.
- We have a Negative view on this block deal sale and we continue to have a Negative view on Doosan Bobcat’s shares.
- There are visible signs of the construction sector slowdown in North America and Europe driven by higher interest rates, housing price declines, and decline in the residential/commercial construction markets.
Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
- From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
- Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
- As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
