In today’s briefing:
- No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea
- Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco
- Infratil (IFT NZ): NZ$850m Placement & Index Implications
- CR Power (836 HK): Upside From Clean Energy Spin-Off
- Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang
- Higher Private Market Valuation of SK On: Positive Impact on SK Innovation
- Challenger Technologies (CHLG SP): Unconditional and Final Offer at S$0.60
- Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise
- Challenger Tech: Offer Bumped & Declared Final
- Tencent Investee Selldown – JD.com Done, Meituan Done, Two More Still Left
No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea
- The abolition of the foreign investor registration system was approved in a Cabinet meeting. They will be promulgated on June 13th and implemented starting December 14th of this year.
- This change is not just about reducing administrative tasks, as it also eliminates the reporting obligations of foreign investors, thereby reducing their position exposure risk.
- This could improve event outcome and price prediction accuracy. Therefore, it is crucial to keep a close eye on event trading when this measure takes effect in December.
Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco
- On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In this note, we will talk about some of the company’s investments and how the overall Holdco would look post restructuring.
Infratil (IFT NZ): NZ$850m Placement & Index Implications
- Infratil Ltd (IFT NZ) is acquiring Brookfield Asset Management Lt (BAM US)‘s 49.95% stake in One NZ for NZ$1.8bn. This will be partly funded through a NZ$850m placement.
- There will be a NZ$750m underwritten placement at NZ$9.2/share (an 8.9% discount to the last close) and a retail offering of NZ$100m.
- There will be passive buying from index trackers post the completion of the placement and the settlement of the shares and that will remove some of the overhang.
CR Power (836 HK): Upside From Clean Energy Spin-Off
- Late March, SOE-backed power play China Resources Power Holdings Co Ltd. (836 HK) announced it intends to spin off its energy unit via an A-share listing.
- Shares gained 4.9% on the news – gains which were promptly given back over the ensuing fortnight.
- Renewable energy profits have been the driving force behind CRP’s bottom line strength the last two years. But how best to assign a value to the remaining loss-making thermal ops?
Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang
- On 1 June, Lifedrink (2585 JP), which listed in early 2022, announced it would move to TSE Prime in late June, leading to a TOPIX inclusion in late July.
- The offset to that was an announcement of an offering, whereby the PE Fund which brought the company to market would sell up to 3.87mm shares, effectively doubling float.
- The offering is larger than the TOPIX inclusion. The stock fell the next day, rebounded, then rebounded 11% Monday. Now it’s up more and hit a lifetime closing high.
Higher Private Market Valuation of SK On: Positive Impact on SK Innovation
- It has been reported that SK On received 1.2 trillion won investment from a consortium led by MBK Partners and SNB Capital, valuing SK On at about 25 trillion won.
- Our SoTP valuation of SK Innovation suggests a target price of 274,738 won per share, which represents a 38% higher levels than current price.
- SK Innovation’s 96.5% stake in SK On (24.1 trillion won in value) is 130% higher than SK Innovation’s current market cap.
Challenger Technologies (CHLG SP): Unconditional and Final Offer at S$0.60
- Challenger Technologies (CHLG SP) has disclosed a final voluntary unconditional offer from Dymon Asia and the Loo Family at S$0.60 per share, a 7.1% premium to the previous S$0.56 offer.
- As predicted, the offer followed the recent SGX unconditional offer playbook – a lowball offer followed by declaring the offer final after a cursory bump.
- The modest offer premium will still leave minorities aggrieved. Hitting the 90% compulsory threshold implies a minority acceptance rate of 31.3%. At the last close, the gross spread is 3.4%.
Quiddity Flow Expectations for DAX Jun 23 Rebal: Evotec Is the Main Surprise
- The June 2023 index changes for the DAX index family were confirmed after the close yesterday.
- As expected, there were no changes announced for the DAX index.
- There will be four changes for MDAX, one change for SDAX, and one change for TecDAX.
Challenger Tech: Offer Bumped & Declared Final
- After consumer electronics retailer Challenger Technologies (CHLG SP) announced a voluntary unconditional cash offer of S$0.56/share on the 30 May, it has closed through terms every day.
- At a 3.1% and 4.3% to undisturbed and one-month VWAP, the Offer was low-balled. The Offeror (Dymon Asia and Challenger’s CEO Loo Leong Thye) have now bumped to S$0.60/share.
- The price has been declared final. It is still only a 9.1% premium to undisturbed. But it is a lifetime high.
Tencent Investee Selldown – JD.com Done, Meituan Done, Two More Still Left
- Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.
- In our earlier note in 2022, Tencent Investee Selldown – The US$120bn Global Overhang, we had looked at its overall investment portfolio.
- With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.
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