In today’s briefing:
- Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
- Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
- Malaysia Airports (MAHB MK): Pre-Conditional Voluntary Offer at RM11.00
- S Line (9078 JP) TOB/MBO at 0.57x Book – Wrong Price by Far but Only AGGRESSIVE Activism Blocks It
- Lock & Lock: Second Tender Offer by Affinity Equity Partners
- SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024
- Quiddity Leaderboard SET50 Jun 24: BANPU Vs SAWAD Has to Be Monitored Closely
- Liquid Universe of European Ordinary and Preferred Shares: May‘24 Report
- Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure
Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
- Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP).
- There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
- The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
- Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
- There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
- Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.
Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
- Along with its fiscal 2024 results, Alibaba (9988 HK) announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.
- If the conversion is completed by the end of August, Alibaba (9988 HK) could be added to Southbound Stock Connect in September and that could bring in significant flows.
- We do not forecast any passive inflows due to the change with Alibaba Group Holding (9988 HK) capped at 8% of the HSI, HSCEI and HSTECH indices.
Malaysia Airports (MAHB MK): Pre-Conditional Voluntary Offer at RM11.00
- Malaysia Airports Holdings (MAHB MK)’s pre-conditional voluntary conditional offer from a four-member consortium is RM11.00, a 5.8% premium to the last close.
- Despite the offer representing an all-time high, the 90% minimum acceptance condition could be challenging due to the low takeover premium and discount to historical and peer multiples.
- The consortium can overcome issues satisfying the minimum acceptance condition by bumping the offer or lowering the acceptance condition.
S Line (9078 JP) TOB/MBO at 0.57x Book – Wrong Price by Far but Only AGGRESSIVE Activism Blocks It
- Today, S Line Co Ltd (9078 JP) announced its CEO would conduct a Tender Offer MBO to buy out the ¥50bn-target revenue logistics company, at 0.6x book.
- The company announced results with revenues up. But withdrew its existing MTMP which said revenues would be up 10% from here to March 2025 and ROE would be higher.
- This is the wrong price. It should engender some upset, but active investors own almost nothing it seems.
Lock & Lock: Second Tender Offer by Affinity Equity Partners
- On 15 May, it was reported in the local media that Affinity Equity Partners (AEP) is expected to launch a second tender offer for Lock & Lock (115390 KS).
- The tender offer price in this second tender offer is 8,750 won (same as the first tender offer). The second tender offer will last from 16 May to 5 June.
- In the first tender offer, only about half of the target was reached. There was a strong backlash from investors due to low tender offer price.
SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024
- According to Maekyung Business Daily, SK Innovation maybe planning to sell its controlling interest in SK IE Technology (SK IET) which produces separators for rechargeable batteries.
- SK On is experiencing financial difficulties due to the sluggish demand for EVs. SK Innovation’s 61.2% stake in SK IET is worth 2.5 trillion won.
- SK IE Technology had an earnings shock in 1Q 2024. It had sales of 46.2 billion won (67.8% lower than consensus) and operating loss of 67.4 billion won 1Q 2024.
Quiddity Leaderboard SET50 Jun 24: BANPU Vs SAWAD Has to Be Monitored Closely
- The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
- In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
- Although 80% of the 3-month reference period is now complete, it is still possible for the rankings to change.
Liquid Universe of European Ordinary and Preferred Shares: May‘24 Report
- Since mid-April, spreads have generally tightened across our European liquid universe of ordinary and preferred shares (12 have tightened, 7 widened). Views are unchanged.
- Recommended trades long preferred / short ordinary shares: Atlas Copco, Danieli, Grifols (see section on the company), Media-for-Europe, Sixt, Volkswagen.
- Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal, Roche.
Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure
- EcoPro Materials (450080 KS) raised around US$320m in its Korean IPO, after pricing the deal at KRW36,200/share. Its six-month IPO lockup will expire on 17th May 2024.
- Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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