In today’s briefing:
- Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
- Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (22 September 2022)
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (23 September 2022)
- A Detailed Summary of Hanwha Solutions Demerger & Tender Offer
- Porsche AG: IPO Set for Success
- Itausa (ITSA4 BZ); Attractive NAV Discount, Dividend Yield & Portfolio Diversification Are Positives
Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
- Leapmotor (9863 HK) is looking to raise between US$800m-US$1.03bn by selling 130.82m shares at a price range of HK$48-62/share. Between 30-39% of the shares will be taken by cornerstone investors.
- The continued slide in its closest peers could put pressure on the stock post listing, though there could be some passive buying in December.
- Leapmotor (9863 HK) could be added to the HSCI and Hang Seng Tech Index (HSTECH INDEX) in December. Stock Connect could come online in December too.
Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
- Apparently prospects for a high valuation on a potential Arm IPO are so staggeringly, AI-rifically good that Masayoshi Son is now sounding out Samsung on a strategic partnership.
- Samsung itself has not been having the greatest time of late with Micron and SK Hynix making serious inroads against its prior technological leadership in memory.
- So as desperate and desperate-er ponder an alliance we can only be thoroughly convinced that this move absolutely, positively has nooooothing to do with trying to prop up share prices.
Shanghai/Shenzhen Northbound Connect: Weekly Moves (22 September 2022)
- Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
- Overall, net outflow over the past week was ~US$1.4bn, split between Shanghai (-US$0.8bn) and Shenzhen (-US$0.6bn).
- The largest inflows were into Tianqi Lithium (002466 CH) and Midea Group (000333 CH). The largest outflows were in East Money Information (300059 CH) and Kweichow Moutai (600519 CH).
Shanghai/Shenzhen Southbound Connect: Weekly Moves (23 September 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, the net inflow over the past week was ~US$1.1bn, split (+US$0.8bn) for Shanghai and (+US$0.3bn) for Shenzhen.
- The largest inflows were into Wuxi Biologics (2269 HK) and Tencent (700 HK). The largest outflows were in Geely Auto (175 HK) and HKEX (388 HK).
A Detailed Summary of Hanwha Solutions Demerger & Tender Offer
- There is no unlocking of treasury shares, so a flow betting on dramatic value accretion will not occur. For tendering, the proration risk appears to be relatively high.
- Passive trackers will sell at the close on February 24 and repurchase (likely only for Solutions) at the close on March 31. The flow size would be around 5.5x ADTV.
- ECO risk wouldn’t be a concern as the new rule will grant appraisal/preemptive rights to the existing shareholders. Also, Hanwha hinted at the possibility of choosing private placement over ECO.
Porsche AG: IPO Set for Success
- Volkswagen sets the price range for the Porsche AG IPO between €76.50 and €82.50. The books are covered several times. Porsche AG will begin trading on September 29.
- Through a holding chain, the Pïech and Porsche families will control 25% of the votes of Porsche AG directly and 39.975% indirectly (total of 64.975%), with just a 24.275% economic interest.
- The IPO looks set for success, with possible DAX inclusion, and pricing likely towards the top-end. This should favour Volkswagen’s re-rating and tighten the discount to NAV of Porsche SE.
Itausa (ITSA4 BZ); Attractive NAV Discount, Dividend Yield & Portfolio Diversification Are Positives
- Itausa has acquired a 10.3% stake in toll road company CCR, in a diversification move away from its core financials holdings; yet financials still account for 90%+ of holdings value
- Itausa’s stated NAV discount is over 26%, and we believe this discount is slightly under-estimated; Itausa’s indirect XP stake adds to the NAV, implying a discount of close to 28%
- Reinvesting the proceeds of XP disposals in CCR makes good diversification sense; aside from the historically high NAV discount, Itausa has an attractive LTM dividend yield of over 5%
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