In today’s briefing:
- Korea’s New SSF/SSO Listing on July 25 & LG Energy’s Massive Lockup Release on July 27
- SOHO China (410 HK): Still Toxic
- Tianqi Lithium: Upcoming Events & AH Premium
- LG Energy IPO Lock-Up – Largest Lockup Release of the Lot at US$3bn
- Hong Kong CEO & Director Dealings – 18th July 2022
- Suncorp’s Banking Sale to ANZ Will Unlock Value
- Excelpoint’s Scheme Meeting on 10 August, IFA’s Opinion
- Excelpoint Tech (EXLP SP): Scheme Doc Out. 10th August Shareholder Meeting
- FTSE UK Quiddity Leaderboard Sep 2022 (2.0): Multiple Intra-Review Changes in the Next Two Weeks
Korea’s New SSF/SSO Listing on July 25 & LG Energy’s Massive Lockup Release on July 27
- The KRX will list 20 new single stock futures (SSF) and 5 single stock options (SSO) next Monday, July 25, including LG Energy Solution (373220 KS).
- It seems very probable that the replacement demand for futures (short) will increase substantially due to a possible saturation of the loan market.
- This situation, coupled with local pensions’ basis trading, can lead to a significantly distorted basis. We should do basis trading or play pair trading (with LG Chem) on this.
SOHO China (410 HK): Still Toxic
- Ten months after China’s SAMR torpedoed Blackstone’s Offer, SOHO China (410 HK) has fallen 61%. Its portfolio of high-quality properties are currently trading at 0.2x P/B.
- Recent woes concern electricity price violations, tax evasion, and now an investigation into CFO Ni Kuiyang’s alleged insider trading.
- SOHO is trading cheap on a standalone basis; and to peers. This is still not a good reason to get involved.
Tianqi Lithium: Upcoming Events & AH Premium
- Tianqi Lithium (002466 CH) trades at an 84% premium to Tianqi Lithium (9696 HK) and the AH premium has been volatile since listing.
- Tianqi Lithium (002466 CH)‘s potential inclusion in the MSCI China and FTSE All-World Index could keep the AH premium at a higher level as compared to its peers.
- Tianqi Lithium (9696 HK)‘s inclusion to Southbound Stock Connect in August and potential inclusion to the MSCI and FTSE indices will help keep a lid on the AH premium.
LG Energy IPO Lock-Up – Largest Lockup Release of the Lot at US$3bn
- LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO. The stock was listed on 27th Jan 22. Its six-month lockup is set to expire soon.
- LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Hong Kong CEO & Director Dealings – 18th July 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights also flags those companies where shares have been pledged, both recently and ongoing.
Suncorp’s Banking Sale to ANZ Will Unlock Value
- Suncorp (SUN AU) agreed to sell its banking business (Suncorp Bank) to Australia and New Zealand Banking Group (ANZ) (ANZ AU) for A$4.9 billion in cash. Completion targeted for 2HCY2023.
- Suncorp Bank’s sale price is attractive. We estimate that New Suncorp (ex-banking) is currently valued at a 24% discount to Insurance Australia (IAG AU) on an FY2023 P/E basis.
- Post-Completion, New Suncorp will be a leaner and more efficient business which will be better positioned to close (or even exceed) the valuation gap to Insurance Australia Group.
Excelpoint’s Scheme Meeting on 10 August, IFA’s Opinion
- Unsurprisingly, the independent financial advisor (IFA) considers WT Microelectronics (3036 TT)‘s S$1.93 offer for Excelpoint Technology (EXLP SP) to be fair and reasonable. We think that IFA’s valuation approach is sound.
- The key condition is approval from shareholders and regulatory authorities (Taiwan pending). The scheme meeting is scheduled for 3:00 pm on 10 August.
- We continue to think that offer is attractive. At the current price and for the 15 September payment date, the gross and annualised spread is 0.5% and 3.1%, respectively.
Excelpoint Tech (EXLP SP): Scheme Doc Out. 10th August Shareholder Meeting
- On the 13 April, WT Microelectronics (3036 TT) entered into an agreement to acquire electronic component distributor Excelpoint Technology (EXLP SP) by way of a Scheme.
- The cash consideration of S$1.93/share was a 7.8% premium to last close, but a 21.4% premium to the undisturbed price.
- The Scheme Doc is out. The Scheme Meeting will be held on the 10th August. The IFA considers the terms to be fair. Settlement is expected by the 15th September.
FTSE UK Quiddity Leaderboard Sep 2022 (2.0): Multiple Intra-Review Changes in the Next Two Weeks
- This insight is a follow-up to FTSE UK Quiddity Leaderboard Sep 2022: Sanne Group Deletion Seems Likely in 3Q 2022.
- GSK’s spin-off of Haleon (HLN LN) and the completion of Vivo Energy (VVO LN) and Ultra Electronics Holdings (ULE LN) Deals could cause intra-review changes in the next two weeks.
- There could be more in the subsequent weeks too. Below is a closer look at the timeline and the potential replacement names for these index events.
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