In today’s briefing:
- Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level
- Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote
- Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive
- SK Innovation’s Merger with SK E&S: Bad Timing for SK Innovation and Higher Risks from RCPS
- Quiddity Leaderboard STAR 50 Sep 24: Final Ranks; Some Question Marks over Ninebot Re-Inclusion
- Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)
- Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): An Improved Image – Now Firmed
- Liquid Universe of European Ordinary and Preferred Shares: July‘24 Report
- S&P 500 September Forecasts: Saved by the Dell?
Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level
- KT’s foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
- Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT’s 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
- Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.
Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote
- Huafa Property Services Group (982 HK)’s IFA opines that Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. The offer price is final.
- No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%.
Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive
- Thai Beverage(THBEV SP) has proposed a share swap-deal with a promoter company to acquire additional stake in FraserAnd Neave(FNN SP) in exchange for Frasers Property at negotiated valuations, not market prices.
- Post-Completion of the swap deal with the promoter-owned entity, which requires shareholder approval, Thai Bev will hold a 69.6% stake in F&N and no stake in Fraser Property (FPL).
- If the stake swap were valued at yesterday’s closing share prices, it would imply a drop in the total stake value for Thai Bev after the proposed deal.
SK Innovation’s Merger with SK E&S: Bad Timing for SK Innovation and Higher Risks from RCPS
- On 17 July, SK Innovation (096770 KS) officially announced a merger with SK E&S. The merger ratio between SK Innovation and SK E&S has been set at 1 to 1.1917417.
- We believe this is the wrong timing for this merger from SK Innovation’s point of view. SK Innovation is trading at near three year lows.
- This merger is likely to generate backlash from KKR which holds SK E&S redeemable convertible preferred stock (RCPS) worth 3.1 trillion won.
Quiddity Leaderboard STAR 50 Sep 24: Final Ranks; Some Question Marks over Ninebot Re-Inclusion
- 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.
- Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
- With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.
Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)
- Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
- The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
- The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%.
Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): An Improved Image – Now Firmed
- Back on the 17th June, diagnostic imaging provider Capitol Health (CAJ AU) announced it had entered into a process deed with Integral Diagnostics (IDX AU). Terms are now firmed.
- IDX will issue 0.12849 new IDX shares for each Capitol share. Scrip terms are unchanged from that announced previously. Upon completing the transaction, Integral would hold 63% in the NewCo.
- Apart from ACCC signing off, this transaction looks priced to complete.
Liquid Universe of European Ordinary and Preferred Shares: July‘24 Report
- Since mid-June, share-price spreads have generally tightened across our European liquid universe of ordinary and preferred shares (13 have tightened, 5 widened, 1 remained at same level).
- Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols (see section on the company), Media-for-Europe, Sixt.
- Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.
S&P 500 September Forecasts: Saved by the Dell?
- Dell Technologies (DELL US) is the main candidate for addition-transition with uncertainty arising from the ‘Multiple Share Classes’ criterion. Forecasted demand is ~$7bn and ~4 ADV.
- Williams Sonoma (WSM US) is one of the top candidates for addition-migration with uncertainty due to the migrations’ inconsistent market cap selection pattern. Forecasted demand is $840m and ~2.6 ADV.
- American Airlines Group (AAL US) is one of the main candidates for deletion with uncertainty due to price hence ranking fluctuations until cut-off. Forecasted supply is $290m and ~0.8 ADV.
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