In today’s briefing:
- Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…
- Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
- New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek
- Hanwha Solutions: Biggest Restructuring Measures in 50 Years
- Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion
- EQD | NIFTY Index: Option Selling Strategies for Short-Term Yield (RIL,SBIN,SBILIFE,COAL,INFY,BRIT)
Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…
- In early Feb2020, the #1 shareholder of HK-based elderly home care provider Pine Care Group (1989 HK) sold a 52% stake at HK$1.647, keeping 14.99%. That triggered an Unconditional MGO.
- In Aug2022, much of the shareholder consortium which bought in 2020 agreed to sell 56.15% at HK$0.89/share to local privately-held developer Chinachem. That will trigger another Unconditional MGO.
- The business has suffered under covid, but it is not clear why the business would be better now. Revenues will spike when Causeway Bay opens, but…. Sell.
Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
- Highest spreads – Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), Infomedia Ltd (IFM AU), Ramsay Health Care (RHC AU), 21Vianet Group (VNET US), 111 Inc (YI US).
- Lowest spreads – OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), MACA Ltd (MLD AU), Link Net (LINK IJ), Dongzheng Automotive Finance (2718 HK).
New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek
- A South Korean lawmaker introduced legislation that would mandate that appraisal right exercise prices in split-off listings (equity carve-out) be based on asset/earnings value rather than market price (stock price).
- We may find an arb opening in DB Hitek. The appraisal price based on the asset/earnings value is at an 11.31% premium to the last close.
- If DB HiTek postpones the split-off listing to next year, FY22 earnings should be reflected. In this case, the appraisal price will be at a 90% premium.
Hanwha Solutions: Biggest Restructuring Measures in 50 Years
- On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.
- The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.
- We also like the company’s move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade.
Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion
- Onewo (2602 HK) is looking to raise between US$700m-US$784m by selling 116.714m shares at a price range of HK$47.1-52.7/share. Indications are that the IPO will be priced close to mid-point.
- Given the domestic shares and unlisted foreign shares will not be converted to H-shares, there is no chance of MSCI inclusion and a small chance of FTSE inclusion.
- Onewo (2602 HK) is also unlikely to be added to the HSCI and consequently will not be added to Stock Connect.
EQD | NIFTY Index: Option Selling Strategies for Short-Term Yield (RIL,SBIN,SBILIFE,COAL,INFY,BRIT)
- We screen the NIFTY Index components for yield enhancing opportunites
- We screen for expensive options and combine with stock performances to find the best candidates
- We identity 6 stocks where selling short-term premium makes sense
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