In today’s briefing:
- Oz Minerals Rejects BHP’s Opportunistic Foray – Expect More
- Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback
- EVOC’s Privatisation Offer of HK$1.75 a Case of Third Time’s the Charm?
- FTSE Japan: Potential Inclusions in March Following TSE Restructure
- Introducing KRX Sector Indices: SK Square & Iljin Hysolus Deserve Attention for Rebalancing
- Foosung: Excessive Decline in Share Price Due to Spin-Off & IPO of Its Foosung Global Subsidiary
- EVOC (2308 HK)’s Merger By Absorption
Oz Minerals Rejects BHP’s Opportunistic Foray – Expect More
- Early 8 August, OZ Minerals Ltd (OZL AU) announced it had rejected BHP Group Ltd (BHP AU)‘s indicative acquisition proposal at A$25.00/share, after BHP had bought less than 5%.
- The Board took a quick look over the weekend and decided “the Indicative Proposal significantly undervalues OZ Minerals” and rejected it out of hand.
- It has been an obvious deal for years. This may not be BHP’s last go, but they will probably need to pay more like A$30/share to get it.
Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback
- Today Inpex Corp (1605 JP) announced Q2 earnings (results, presentation), a revised full-year forecast due to higher crude and lower yen, an 11%-above-guidance dividend, and a big buyback.
- The buyback is for up to 120mm shares spending up to ¥120bn, to run through year-end. Practically speaking, it is limited to 80mm shares or so at current price.
- This should be a non-negligible portion of Real World Float, and I expect the buyback to have impact over the next five months.
EVOC’s Privatisation Offer of HK$1.75 a Case of Third Time’s the Charm?
- EVOC Intelligent Technology Company Limited H (2308 HK) announced a privatisation offer from Mr Chen Zhi Lie, the ultimate controlling shareholder, at HK$1.75 per H share.
- The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
- The offer price is final. The offer is attractive in comparison to long-term historical share prices and multiples. We think that Mr Chen’s third privatisation attempt will likely succeed.
FTSE Japan: Potential Inclusions in March Following TSE Restructure
- Stocks that migrated from the JASDAQ and Mothers Boards to the Standard Market in April will be eligible for inclusion in the FTSE All-World/All-Cap indices at the March 2023 SAIR.
- Currently, we see 4 potential inclusions to the All-World Index and 12 potential inclusions to the All-Cap Index. There are some close adds on market cap and liquidity.
- The potential adds underperformed the TOPIX Index from April to June, but there has been a significant outperformance since then.
Introducing KRX Sector Indices: SK Square & Iljin Hysolus Deserve Attention for Rebalancing
- The correlation and sensitivity between passive flow and price impact have been significantly high for adds/deletes. So, we need a basket-trade setup focusing on potential adds/deletes.
- We will see 12 changes for Semicon and 6 for Autos. Bank won’t present any change.
- SK Square and Iljin Hysolus are the most prominent names to join the KRX Sector Indices this time. They will have a passive impact of 2.03x and 3.97x ADTVs, respectively.
Foosung: Excessive Decline in Share Price Due to Spin-Off & IPO of Its Foosung Global Subsidiary
- On 4 August (after market close), it was reported that Foosung Co plans to IPO its subsidiary Foosung Global. The timing is to complete the IPO in 2023.
- After this news came out, Foosung’s share price has declined by 17%. Since its share price peak in May 2022, its share price has declined by 42%.
- Recent share price decline has presented a more attractive investment opportunity. Foosung is currently trading at EV/EBITDA multiple of 7.7x in 2022, which is much lower than 20.9x in 2021.
EVOC (2308 HK)’s Merger By Absorption
- After shares were suspended on the 1 August, electronics play and property developer EVOC Intelligent Technology Company Limited H (2308 HK) has announced a privatisation at HK$1.75 per H-share.
- This Offer is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
- The premium to last close is just 15.13%; however, it is a 42.28% premium to the five-day closing average. This is EVOC’s third privatisation attempt in the past five years.
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