In today’s briefing:
- Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS
- Itoki (7972 JP) – Worth Thinking About Post Mega ToSTNeT-3 Buyback
- Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme
- Union Bank of India (UNBK IN) Placement: Using Index Inclusion Well
- Azure (AZS AU): MinRes’ Discounted Exit
- NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program
- China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
- TCM (570 HK): Sinopharm’s $4.60/Share Offer
- CSR Ltd (CSR AU): Saint-Gobain’s A$9/Share Offer
- CSR (CSR AU): Saint-Gobain’s Non-Binding Proposal at A$9.00
Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS
- NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
- The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
- The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.
Itoki (7972 JP) – Worth Thinking About Post Mega ToSTNeT-3 Buyback
- As discussed in Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump, the company was going to do a mega ToSTNeT-3 buyback between then and end-Feb. That happened this morning.
- The company bought back 7.966mm shares (13.96%) for ¥15.9bn. That should have cleared out the bulk of the risk of the original warrant holders who bought in 2020. But…
- The dilution/accretion don’t offset perfectly, and there is a clause suggesting how this might play out from here. But we can infer things from other data we now have.
Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme
- The AFR reports that JPMorgan is selling 14.5% of Azure Minerals (AZS AU) shares at A$3.42. The primary seller is said to be Mineral Resources (MIN AU), seeking to exit.
- MinRes’ decision to sell out a discount rather than accept the scheme A$3.70 offer reflects the cost of securing a say on Andover and the opportunity cost of capital.
- The transaction booklet will be despatched in early March. At the last close and for an early May scheme payment, the gross/annualised spread is 2.5%/13.4%.
Union Bank of India (UNBK IN) Placement: Using Index Inclusion Well
- Union Bank Of India (UNBK IN) is looking to raise up to INR 30bn (US$362m) with the floor price set at INR 142.78/share and a maximum discount of 5%.
- The stock has run up a lot and with index inclusion around the corner, this is as good a time as any to issue stock.
- Union Bank Of India (UNBK IN) trades cheaper than peers and could continue to outperform over the near-term.
Azure (AZS AU): MinRes’ Discounted Exit
- JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price.
- It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
- Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.
NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program
- On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the “corporate value up” program.
- NPS plans to accept proposals from the local asset management and investment advisory companies from 21 to 29 February. NPS is likely to finalize the selected candidates sometime in March.
- We provide a list of 34 companies where the NPS has at least 5% ownership stake, with PBR of 0.5x or less, and included in KOSPI 200.
China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
- China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
- The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final.
- Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn.
TCM (570 HK): Sinopharm’s $4.60/Share Offer
- $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
- As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
- Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.
CSR Ltd (CSR AU): Saint-Gobain’s A$9/Share Offer
- Cie De Saint-Gobain (SGO FP) has approached CSR Ltd (CSR AU) with a non-binding indicative offer to acquire all of CSR’s shares at A$9/share via a scheme of arrangement.
- At the last close of CSR (pre-trading halt) the gross spread to the offer price is 13.21%. That will close significantly once the stock resumes trading.
- Given the large premium to the last close, at a price higher than the highest high, and support from the CSR Board, the deal should go through.
CSR (CSR AU): Saint-Gobain’s Non-Binding Proposal at A$9.00
- In response to media speculation, Cie De Saint-Gobain (SGO FP) confirmed a non-binding proposal for CSR Ltd (CSR AU) at A$9.00, a 32.9% premium to the undisturbed price.
- Saint-Gobain is conducting confirmatory due diligence. CSR is at a trading halt concerning receiving a proposal regarding a potential material transaction involving CSR.
- Shareholders should be supportive as the offer represents a 15-year high. The timing of a binding agreement is the key risk.
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