In today’s briefing:
- India: Potential Free Float Changes & Passive Flows in August
- CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt
- Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off
- CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms
- Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program
- Quiddity Leaderboard ES50 Sep 24: Billion Dollar Flows Now in the Money
- KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today
- Nasdaq (NDAQ): $2.7bn Offering’s Global Index Implications
- Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing
- Solaria: The Next Big Takeover in Spanish Renewables?
India: Potential Free Float Changes & Passive Flows in August
- Companies in India have disclosed their shareholding pattern as of end-June in July. There are companies with significant float changes from end-December and/or end-March.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 12 stocks with passive inflows from global trackers while 5 could see passive outflows in August.
CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt
- Back on the 6th December 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer of $6.87/share, in cash, from SASAC/NCSSF-backed Champion.
- The Offer Document is now out. This is not a Composite Document. A “Response Document” is expected in two weeks, which will include the IFA opinion.
- All the above is moot. ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer is currently navigating the necessary regulatory approvals. With irrevocables, ORG has 46.44% in the bag.
Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off
- Earlier this month, WH Group (288 HK) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ,
- These ops accounted for 54% of WHG’s FY23 revenue and 22.4% of the operating profit; compared to 56% and 44.9% respectively in FY22.
- We’ve been here before. A Smithfield spin-off was touted in 4Q23 (in the media). WHG acquired Smithfield for US$4.7bn in 2013, ahead of its 2014 listing.
CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms
- Changping Industrial’s offer for CPMC Holdings (906 HK) opens at an unchanged HK$6.87, 4.7% below ORG Technology Co., Ltd. A (002701 CH)’s competing HK$7.21 offer.
- Changping Industrial thinks deal fatigue may tip the balance in its favour. However, minorities will call Changping’s bluff, as the offer at current terms has a low chance of success.
- Despite the current posturing, Changping Industrial will likely need to bump above ORG’s offer marginally to succeed. Expect more twists and turns in this contested battle.
Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program
- On 30 July, it was reported that IMM Private Equity (PE) sold a 2.3% stake (16.78 million shares) of Woori Financial Group (WFG), which was worth 264 billion won.
- Block deal sale price was 15,737 won (0.4% higher than current price). Today’s block deal sale represents a second block deal sale of Woori Financial by IMM PE in 2024.
- Under the mid-to-long term Value Up program, Woori Financial Group aims to achieve a sustainable ROE of 10% and total shareholder returns of 50%.
Quiddity Leaderboard ES50 Sep 24: Billion Dollar Flows Now in the Money
- The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
- In this insight, we take a look at Quiddity’s estimation of the latest ranks of potential ADDs and DELs for the upcoming index rebal event in September 2024.
- We have been tracking these movements for several months and it seemed like index changes were unlikely to take place but our expectations have changed now.
KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today
- The review period for the September rebalance ends today, the changes will be announced in the first week of September and implemented at the close of trading on 12 September.
- There is at least one change expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices.
- The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Celltrion, SKC Co, Kakao Corp, Douzone Bizon, Krafton and Samsung Biologics.
Nasdaq (NDAQ): $2.7bn Offering’s Global Index Implications
- The size of the offering is expected to trigger intra-quarter implementations for both main global indices to be announced on 30 July and become effective 1 August.
- Free float increase is estimated to take place due to Thoma Bravo – Nasdaq’s major strategic shareholder – offering almost half of its stake equivalent to ~$2.7bn.
- Total forecasted passive fund demand is ~5.3m shares, ~$368m and ~1.8 ADV. It is expected to materialize at close of 1 August 2024.
Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing
- On the 11th June, Southern Cross Gold (SXG AU) announced a proposed merger with Mawson Gold (MAW CN). It’s a novel approach to dual-list both companies in Australia and Canada..
- MAW intends to divest all its non-SXG assets, and reduce its shares out to mirror shares held in SXG. Then issue new shares to SXG shareholders on a one-for-one basis.
- Terms are now firmed for what the media calls a “reverse spin-out”, with a Scheme Meeting expected in October, and potential implementation late-October/early-November.
Solaria: The Next Big Takeover in Spanish Renewables?
- Solaria Energia y Medio Ambiente (SLR SM) faces stock market volatility amid takeover rumors. The controlling family reportedly won’t sell below €20/share, a 79% premium to current prices.
- After the takeover of other independent power developers, Solaria may now hold some scarcity value. Premia in comparable transactions range from 27% to 54%. Solaria trades at 11.2x fwd EBITDA.
- A 50% premium (€16.8/share, €3.1bn EV) takeover wouldn’t be irrational at 14.7x EBITDA. I believe the shares are undervalued and recommend buying SLR SM at current prices, anticipating a possible deal.
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