In today’s briefing:
- Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy
- Genetron Holdings (GTH US): Clear Diagnosis
- Medley (4480) To Buy Out Guppy’s (5127) At ¥3,250 (9.4x Aug26 EV/FCF)
- Meaty Target
- EQD | NIFTY Pullback Already OVERSOLD: Prepare for WEEKLY LONG Trade
Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy
- The Korean government has introduced policies ahead of April’s elections, with a recent notable announcement addressing the “Korea Discount” by enhancing low PBR stock valuations.
- A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
- Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, & DL E&C.
Genetron Holdings (GTH US): Clear Diagnosis
- Back on the 11th October 2023, Genetron Holdings Ltd (GTH US), a precision oncology platform, entered into a definitive take-private transaction, at $4.08/ADS, a 15% premium to undisturbed.
- The EGM for shareholders to vote on the transaction will be held on the 21 February. The record date is the 9 Feb.
- This merger requires approval from at least two-thirds of the votes cast, and 59.7% are supportive. Trading at a gross spread of 7.7%. This is a clean deal.
Medley (4480) To Buy Out Guppy’s (5127) At ¥3,250 (9.4x Aug26 EV/FCF)
- Medley (4480 JP) operates recruitment platforms in healthcare, elsewhere. GUPPY’s Inc (5127 JP) does too. They also offer exam prep for two niches where they have super-high market share.
- GUPPY’s was listed 18mos ago, and the founder wants out. The deal is a nice premium (+86%) but it isn’t as generous a deal as it could be.
- That said, the shareholder structure looks like this deal gets done pretty easily.
Meaty Target
- Marel HF (MARL IR) announced a third proposal from John Bean Technologies (JBT US) for a cash and shares offer, equivalent €3.60/share, to be launched in Q1, with 24.7% irrevocable undertakings.
- There is strong market growth potential, due to growing middle-class demanding a higher proportion of animal protein in their diet. The overall sector, despite global economic woes, seems piping hot.
- My base-case fair value estimate is €3.54 (9.0% WACC, 2% implied perpetuity growth rate). The median IBES consensus TP is €3.50. On this basis, the offer price seems fair. Buy.
EQD | NIFTY Pullback Already OVERSOLD: Prepare for WEEKLY LONG Trade
- Last week at Close the NIFTY Index was OVERBOUGHT, this week it became quickly OVERSOLD, bouncing off from a price area near the Inner Fence support levels for CC=-1.
- Another week down is possible but we see strong support in the 21250-20800 price area.
- Should that support area be reached, it would be a good opportunity to re-enter this index’s Bull market.
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