In today’s briefing:
- Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- Li Ning (2331 HK): Value Trap Play?
- Li Ning (2331 HK): Evaluating a Potential Privatisation
- KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group
- KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations
- Alumina (AWC AU): Alcoa’s Binding Proposal Aided by Alcoa’s Re-Rating
- Quiddity Leaderboard SSE50/180 Jun 24: Some New Trade Ideas
- QV Equities (QVE AU): WAM Leaders (WLE AU)’s Binding Scheme Proposal
- StubWorld: Keisei’s ToSTNeT-3 Buyback. Stay Bearish
- MS&AD Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell
Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- In late February, Keisei Electric Railway Co (9009 JP) announced a 5.0mm share (2.96%) ¥33bn buyback, to be executed in the following 3 months. That meant likely ToSTNeT-3.
- I thought that mildly bullish. Shares rose 0.05% the next day. Then we got an OLC offering announcement. I thought that bearish. The stock popped early but fell hard.
- Today the announcement. It IS a ToSTNeT-3. tomorrow. At ¥6,320/share. But it is an Accelerated Share Repurchase. Which changes things. Or it doesn’t. But it bears watching closely, maybe acting.
Li Ning (2331 HK): Value Trap Play?
- As the Hong Kong bourse languishes, recent Hong Kong privatisation include mainland Chinese firms such as Vinda International (3331 HK) and China Traditional Chinese Medicine (570 HK) .
- Reportedly (Reuters) Li Ning (2331 HK) is now in the crosshairs. Shares are up 7.8% as I type.
- Olympic champion Li Ning holds ~10.5% in his self-named company, which was recently in the news after acquiring a HK$2.2bn commercial building from Henderson Land (12 HK) as its headquarters.
Li Ning (2331 HK): Evaluating a Potential Privatisation
- Reuters reported that due to the steep share price declines, Mr Li Ning is considering leading a consortium to privatise Li Ning (2331 HK).
- The shares have been weighed down by concerns about channel inventory, steep retail discounts, and unauthorised distributor sales. To counter this, Li Ning aims to achieve RMB50bn sales by 2028.
- The probability of an offer is low as funding the scheme consideration could prove challenging. Nevertheless, the downside is low as Li Ning trades at an undemanding valuation.
KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group
- There is an increasing probability that KCC Corp is closer to separating the ownership structures of the three Chung brothers regarding the various KCC Group related companies.
- KCC’s 9.17% stake in Samsung C&T is worth 2.8 trillion won. KCC’s stake in Samsung C&T is worth 117% of KCC’s own market cap.
- According to our valuation analysis, it suggests NAV of 355,925 won per share, representing a 30% upside from current levels.
KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations
- The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.
- Ecopro Materials’ SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.
- We should also be wary of a pattern akin to last July’s in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.
Alumina (AWC AU): Alcoa’s Binding Proposal Aided by Alcoa’s Re-Rating
- Alumina Ltd (AWC AU) has entered a scheme implementation deed with Alcoa (AA US) at 0.02854 Alcoa shares per Alumina share. The scheme meeting is targeted for 3Q.
- While the offer is not a knockout bid, the 15% increase in Alcoa shares lowers the headcount risk from retail opposition and lowers the bump potential.
- Regulatory approvals are a formality, and Citic Resources Holdings (1205 HK) lack of support reflects HKEx listing requirements. At the last close, the gross spread was 3.4%.
Quiddity Leaderboard SSE50/180 Jun 24: Some New Trade Ideas
- SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
- In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
- I continue to expect 5 changes for SSE 50 and 18 changes for SSE 180 but some names have changed since my last insight.
QV Equities (QVE AU): WAM Leaders (WLE AU)’s Binding Scheme Proposal
- QV Equities Ltd (QVE AU) has disclosed a binding scheme proposal from WAM Leaders Ltd (WLE AU) consisting of a cash and scrip consideration pegged to pre-tax NTA per share.
- The indicative value of the cash proposal is A$1.02, and the scrip is A$1.058 (0.7609 WLE shares per QVE share). Shareholders are entitled to an A$0.013 March quarter dividend.
- The offer is attractive, and the shareholder structure facilitates the vote. At the last close, the gross spread of the scrip + dividend offer is 8.1%.
StubWorld: Keisei’s ToSTNeT-3 Buyback. Stay Bearish
- Keisei Electric Railway Co (9009 JP)‘s previously announced buyback is now confirmed to be a ToSTNeT-3 buyback. But also an accelerated share repurchase.
- Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
MS&AD Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell
- The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
- MS&AD Insurance (8725 JP) had a stake over US$100m in at least 29 listed Japanese stocks, amounting to a total of US$17.4bn.
- In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.
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