In today’s briefing:
- Quiddity Jun23 HSTECH Flow Expectations Update: SHORT AAC Vs LONG Lenovo Might Be Interesting
- Quiddity HSCEI Jun 23 Flow Expectations Update: Two Expected Changes, US$608mn One-Way Flow
- AAG Energy (2686 HK): AGM Results Suggest a Scheme Fail Was Inevitable
- JAPAN ACTIVISM: Murakami-San Goes Substantial on Arcland SHD (3085) Ahead of Merger Vote Record Date
- Liontown: Counter-Bid All But Baked In
- Golden Energy (GER SP): Two Conditions Satisfied, Now for the Hard Part
- NIFTY100 Index Rebalance Preview: Double/Triple Whammy for Some Stocks
- SET50 Index Rebalance Preview: Two Changes – One High Probability; One Has Possibilities
- Sell AAG (2686 HK). A Revised Scheme Will Fail
- Selected European HoldCos and DLC: April’23 Report
Quiddity Jun23 HSTECH Flow Expectations Update: SHORT AAC Vs LONG Lenovo Might Be Interesting
- In my previous insight in Mid-March 2023, we had a look at the potential index changes and the resultant capping flows for the HSTECH Index in June 2023.
- Since then, our flow expectations have changed with changes in prices and/or float and total share counts.
- Here are our latest flow expectations based on the current prices.
Quiddity HSCEI Jun 23 Flow Expectations Update: Two Expected Changes, US$608mn One-Way Flow
- In my previous insight in Mid-March 2023, we had a look at the potential index changes and the resultant capping flows for the HSCEI Index in June 2023.
- Since then, our flow expectations have changed with changes in prices and/or float and total share counts.
- Here are our latest flow expectations based on the current prices.
AAG Energy (2686 HK): AGM Results Suggest a Scheme Fail Was Inevitable
- Aag Energy Holdings (2686 HK)’s latest AGM results show a strong dissent from minorities. The number of NO votes per resolution varied from 590.9-652.5 million or 17.40%-19.22% of outstanding shares.
- The AGM voting shows that Xinjiang Xintai Natural Gas (603393 CH) will struggle to pass the scheme even if the record date is changed and some NO votes are invalidated.
- The risk-reward profile remains unfavourable as the downside to a scheme fail (12.1% to 17.0% downside) is greater than the upside to a scheme pass (+12.1% to HK$1.85 offer).
JAPAN ACTIVISM: Murakami-San Goes Substantial on Arcland SHD (3085) Ahead of Merger Vote Record Date
- Today, City index Eleventh, the corporate entity often used by noted activist Yoshiaki Murakami, announced (EDINET filing) they owned 1.756mm shares or 5.31% of Arcland Service (3085 JP)
- In mid-April, Arclands Corporation (9842 JP) announced it would merge with 55%-owned restaurant subsidiary Arclands SHD. Murakami-owned 5+% of Arclands at the time. Then it sold 9842 and bought 3085.
- This looks like a confusing set of moves. It is not as confusing when you think about it. He is setting up something for later.
Liontown: Counter-Bid All But Baked In
- On the 28 March, lithium play Liontown Resources (LTR AU) rejected Albemarle Corp (ALB US)‘s third proposal of $2.50/share, citing the revised terms as opportunistic.
- Since, that date, it’s been “crickets.” Preliminary due diligence was not provided to Albemarle. Liontown responded to media speculation today saying it has received no new takeover proposals.
- Yet behind the scenes, an interested party has been building a stake, paying up to $2.75/share, 1.5% above the last close.
Golden Energy (GER SP): Two Conditions Satisfied, Now for the Hard Part
- Dian Swastatika Sentosa (DSSA IJ)/DSS shareholders have approved the sale of DSS’ 77.49% stake in Golden Energy & Resources (GER SP) to the Widjaja family.
- No objection has also been received from the OJK and IDX. The make-for-break condition is the GEAR shareholder approval of the distribution resolution, which DSS will abstain from voting on.
- Minorities and SIAS rightly claim that the revised offer remains light. A bump to the offer, particularly to the delisting offer price is S$0.181, is required for a done deal.
NIFTY100 Index Rebalance Preview: Double/Triple Whammy for Some Stocks
- Halfway through the review period, we see 5 potential changes for the Nifty Next 50 Index (NIFTYJR INDEX)/ Nifty 100 Index (NSE100 INDEX) at the September rebalance.
- All the potential adds are expected to migrate from MidCap to LargeCap at the AMFI June reclassification, while we expect two of the potential deletes to move the other way.
- Of the potential deletes, one is a high probability deletion from the MSCI India Index at the May QCIR while there is another that is a lower probability deletion.
SET50 Index Rebalance Preview: Two Changes – One High Probability; One Has Possibilities
- Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
- Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
- JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.
Sell AAG (2686 HK). A Revised Scheme Will Fail
- In unprecedented fashion, AAG Energy Holdings (2686 HK)‘s board adjourned the Court Meeting on the 27 April due to some voting instructions not being duly processed.
- That reasoning had a whiff of nonsense. And just under a week later, there has been no update. Perhaps this is moot though.
- At yesterday’s AGM, disinterested shareholders turned up in record numbers to vote against stock-standard resolutions. If a similar turnout were present at the Court Meeting, the Scheme would have failed.
Selected European HoldCos and DLC: April’23 Report
- Discounts to NAV of covered holdcos have generally tightened during April. Discounts to NAV: C.F.Alba, 51.3%; GBL, 32.3%; Heineken Holding, 16.4%; Industrivärden C, 7.7%; Investor B, 9.5%; Porsche Automobile Holding, 49.7%.
- The spread of Rio Tinto DLC tightened to 16.8%. Rio Tinto is a candidate for an Australian top hat structure.
- Recommended trades: Heineken Holding, Investor AB (long Investor B/short main holdings) and Rio DLC.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
