In today’s briefing:
- Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value
- NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
- Best World (BEST SP): The 19th July Vote Will Be Close
- Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing
- Quiddity Leaderboard STAR 50 Sep 24: Two Changes; US$681mn One-Way; New Trade Ideas
- NCSoft: Corporate Split-Off of Two Divisions
- NIFTY Bank Index Rebalance Preview: Canara Bank Should Replace Bandhan Bank
Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value
- On 25 June, Midea Real Estate Holding (3990 HK) disclosed an in-specie distribution of its PD&S business through a scrip or cash (HK$5.90 per share, 57.33% premium to undisturbed price).
- The key condition will be approval of the distribution by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection).
- Midea RE will remain listed with an asset-light retained business, which is estimated to be worth HK$1.93. The Group’s estimated value is HK$7.83, a 17.6% upside to the last close.
NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
- Naspers and Prosus released results for FY24 yesterday morning. The initial market reaction was positive, both discounts closed narrower for the day.
- Since the appointment of Fabricio Bloisi was announced in May, both discounts have widened.
- JSE indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R58bn, R38bn traded in the closing auction (66%).
Best World (BEST SP): The 19th July Vote Will Be Close
- Two years of suspension, an “okay” Offer (following the bump), family members selling prior to and after the Offer – Best World International (BEST SP) is anything but dull.
- The Circular is now out for the $2.56/share Exit Offer from Best World’s founders Dora Hoan and Doreen Tan. The Offer Price will not be increased.
- Independent shareholders go to the vote on the 19th July. The IFA says fair & reasonable. Payment is possible late-July. But the vote is by no means a sure thing.
Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing
- The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
- Henlius’ share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
- As usual, Fosun doesn’t consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.
Quiddity Leaderboard STAR 50 Sep 24: Two Changes; US$681mn One-Way; New Trade Ideas
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the September 2024 index rebal event.
- We currently see two ADDs and two DELs for the STAR 50 index resulting in one-way flows of US$681mn.
NCSoft: Corporate Split-Off of Two Divisions
- On 24 June, NCSoft announced a corporate split-off of two divisions called named NC QA Company and NC IDS Company.
- NCSoft plans to hold a shareholders meeting where to vote on the split off decision on 14 August. Effective date of the company split is scheduled for 1 October 2024.
- The consensus estimates sales of 2.0 trillion won (up 19.2% YoY) and operating profit of 272 billion won (up 155.2% YoY) in 2025.
NIFTY Bank Index Rebalance Preview: Canara Bank Should Replace Bandhan Bank
- Despite the recent rally in Bandhan Bank Ltd (BANDHAN IN), the stock should be deleted from the NSE Nifty Bank Index (NSEBANK INDEX) in September.
- Canara Bank (CBK IN) should be added to the NSE Nifty Bank Index (NSEBANK INDEX) and passive trackers will need to buy 1x ADV and over 2x delivery volume.
- Bandhan Bank Ltd (BANDHAN IN) is safe for now but could be deleted from a large global index in the next few months on further underperformance.
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