In today’s briefing:
- Japan’s Governance Changes I – The PBR 1.0 Target
- Newcrest: Newmont Bumps And Granted DD
- StubWorld: Ecopro’s Spike Makes No Sense
- Lian Beng (LBG SP): Ong Family’s Derisory Unconditional Offer at S$0.62
- TOPIX Inclusions: Who Is Ready (Apr 2023)
- Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate
- Newcrest Mining (NCM AU): Newmont Returns with a Revised Offer
- Lian Beng: Family Takeout At <50% of NAV
Japan’s Governance Changes I – The PBR 1.0 Target
- The TSE went through a multi-year period of planning a “Market Restructuring” which ended on 4 April 2022 as the TSE split into three Sections, TSE Prime, Standard, and Growth.
- After that, the TSE formed a “Council of Experts” (some very senior people) that would follow up on the changes, and recommend new measures. In January, new rule proposals dropped.
- There was talk of a hard end to the transition period. Also, the Council harped on Awareness of Capital Cost and Efficiency. Most notably, for companies with PBR < 1.
Newcrest: Newmont Bumps And Granted DD
- Under the revised proposal, Newmont (NEM US) has bumped the all-scrip terms for Newcrest Mining (NCM AU) to 0.400 Newmont shares – from 0.380 – for each Newcrest share held.
- Including a permissible franked special dividend of up to US$1.10/share, the revised proposal represents an implied value of A$32.87/share. Newmont indicated the revised bid represents its best and final price.
- Newcrest has granted Newmont confirmatory due diligence to put forward a binding proposal.
StubWorld: Ecopro’s Spike Makes No Sense
- Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials.
- Preceding my comments on Ecopro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Lian Beng (LBG SP): Ong Family’s Derisory Unconditional Offer at S$0.62
- Lian Beng (LBG SP)/LBG has disclosed a voluntary unconditional offer from the Ong family at S$0.62 per share, an 8.8% premium to the undisturbed price (6 April).
- The offer price is unattractive in comparison to peer multiples and precedent transactions. The price is not final. As the family aims to privatise LBG, a bump is likely.
- The offer will likely follow the Boustead Projects (BOCJ SP) playbook, where Boustead Singapore Limited (BOCS SP) tabled a take-it-or-leave-it derisory 5.6% bump to its low-balled offer.
TOPIX Inclusions: Who Is Ready (Apr 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 the last two months, Amvis Holdings Inc (7071 JP), AXXZIA Inc (4936 JP), and Sosei Group (4565 JP) have confirmed their moves to the Prime Market.
- These names appeared in our lists (A or B) of candidates with high “readiness” for TOPIX Inclusions in our recent insights.
Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate
- Overall, the sentiments are extremely negative with most sell-side analysts having a Sell/Neutral rating on the stock.
- We believe either A) Revenue and earnings growth will pick up under the new management team, or B) Temenos will be taken over by some private equity firm.
- While revenue growth has remained subdued, the company’s moat remains intact in our view.
Newcrest Mining (NCM AU): Newmont Returns with a Revised Offer
- Newcrest Mining (NCM AU) disclosed a revised non-binding indicative privatisation proposal from Newmont Mining (NEM US) at 0.400 Newmont shares per Newcrest share + US$1.10 special dividend.
- Since the 6 February announcement, the average implied value of the revised offer is A$29.14 per share, which is 11.6% higher than the average of the previous offer of A$26.12.
- The offer is attractive in terms of historical prices and VWAP ratios but carries the volatility risk around Newmont shares and FX rates. Expect a binding proposal.
Lian Beng: Family Takeout At <50% of NAV
- Singaporean construction firm Lian Beng (LBG SP) has announced a voluntary unconditional cash Offer from the controlling Ong family, via investment holding company OSC Capital.
- The Offer Price of S$0.62/share (not declared final) is a mediocre 8.8% premium to last close and a 59.7% discount to the 30 November 2022 NAV of S$1.538/share.
- The announcement fails to mention the NAV/share. The IFA considered the 2021 Mandatory Offer of S$0.50/share not fair and not reasonable. Expect a similar conclusion
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