In today’s briefing:
- LX Semicon (108320 KS) – Section Change, Index Flow and KOSDAQ150 Replacement
- Giordano (709 HK): Interim Divy – But Perhaps Not If You Tender
- Ping An A/H Premium: Near The High End
- Japan Excellent REIT (8987) – Possible Sustained Flow Event
- MACA (MLD AU): NRW’s Offer Rejected
- Giordano’s Improving Outlook and Surprising Dividend Provide Deal-Break Support
- Alliance Aviation – Selloff Provides Optionality on ACCC Approval
- Genex Opens Its Books After Farquhar Bumps
- PTT (PTT TB): Asset Sales And Solid Results
- Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report
LX Semicon (108320 KS) – Section Change, Index Flow and KOSDAQ150 Replacement
- LX Semicon (108320 KS) is looking to transfer from the KOSDAQ market to the KOSPI market. Shareholder meeting is 23 September and the transfer will happen soon after if approved.
- LX Semicon (108320 KS) will be deleted from the KOSDAQ 150 Index on the suspension date. There is zero chance of the stock being included in the Kospi 200 Index.
- Nextin (348210 KS) is a high probability inclusion to the KOSDAQ 150 Index in December but could be an early inclusion in September to replace LX Semicon (108320 KS).
Giordano (709 HK): Interim Divy – But Perhaps Not If You Tender
- Giordano International (709 HK) has announced 1H22 net profit of HK$97mn compared to HK$60mn in 1H21.
- Of interest is the declaration of an interim dividend of HK$0.085/share.
- The ex-dividend date is the 20 September. Whether you get the dividend plus the Offer Price depends when the Offer closes (or is extended), and/or whether the Offer turns Unconditional.
Ping An A/H Premium: Near The High End
- The Ping An AH premium has moved from 1-2% to near 10% over the last month while the HSAHP Index has stayed around the same level.
- The Ping AH premium is now nearing the level from where reversals take place. Interim results on 23 August could be a trigger for a reversal.
- Northbound Stock Connect holdings on the A-shares have been decreasing, while Southbound Stock Connect holdings on the H-shares have been increasing over the last month.
Japan Excellent REIT (8987) – Possible Sustained Flow Event
- Japan Excellent (8987 JP) has been the worst-performing Office J-REIT amongst the existing crop since the end of 2019.
- Today, we got news of a possible flow event – a buyer.
- There is room here for Japan Excellent to outperform over the next several months.
MACA (MLD AU): NRW’s Offer Rejected
- MACA Ltd (MLD AU) has indicated that NRW Holdings (NWH AU)‘s A$1.085/share Offer is inferior to Thiess’ conditional A$1.025/share takeover offer.
- The reasons for the rejection are expected to be fleshed out at MACA’s full years results briefing.
- NRW’s Offer is higher, has a lower shareholder approval, and provides MACA shareholders the option of cash, scrip or a combination of both. But is subject to scaling.
Giordano’s Improving Outlook and Surprising Dividend Provide Deal-Break Support
- Giordano International (709 HK)’s 1H22 net profit of HK$97 million was within the HK$91-101 million positive profit range. The IFA noted that interims do not change its advice.
- The Board surprisingly declared an interim dividend of HK$0.085 per share. As the ex-div falls after the final closing date, shareholders who accept the offer will not receive the dividend.
- The incrementally positive outlook and dividend highlight Giordano’s value. The results have pushed our deal break/intrinsic value to align with the VGO price.
Alliance Aviation – Selloff Provides Optionality on ACCC Approval
- The ACCC has raised concerns about Qantas Airways (QAN AU) proposed acquisition of Alliance Aviation Services (AQZ AU). The ACCC’s final decision is on 17 November.
- Qantas knew a lengthy ACCC approval process was highly likely and committed to an additional special dividend in the SID to reflect this risk.
- Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas securing ACCC approval.
Genex Opens Its Books After Farquhar Bumps
- On the 25 July, renewable energy play Genex Power Ltd (GNX AU) announced a non-binding indicative proposal from Atlassian’s Scott Farquhar and Stonepeak, by way of a Scheme, at A$0.23/share.
- Genex subsequently rejected the proposal less than a week later on the grounds the Offer undervalued the company.
- Farquhar, via Skip Essential Infrastructure Fund, and Stonepeak have increased their non-binding proposal to A$0.25/share. Genex has now provided confirmatory due diligence.
PTT (PTT TB): Asset Sales And Solid Results
- Thailand’s state-owned energy firm PTT (PTT TB) recently announced a ~67% and ~13% increase yoy in 1H22 revenue and net profit, buoyed by higher average selling prices and sales volume.
- Earlier this month PTT also announced the divestment of its Indonesian coal mining business as the company transitions towards clean energy.
- PTT’s goal is to make Thailand a liquified natural gas hub in Asia. The market appears to be fully pricing in this ambitious roadmap.
Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report
- Since mid-July, spreads have generally tightened across our liquid universe, including those flagged in July (Investor AB, Roche and Volkswagen).
- Trade recommendations long ords / short prefs: Fuchs Petrolub, SSAB Svenska Stal.
- Recommendations Long prefs / short ords: Sixt, VW, MFE-Media for Europe, Telecom Italia, Ericsson.
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