In today’s briefing:
- Sanrio (8136 JP) – Kitty Behaving Badly
- Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
- Goodman Group (GMG AU) Placement: Limited Index Flows
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- Auckland Airport (AIA NZ) Placement: Potential Index Flows
- A Review of Tender Offers in Korea in 2024
- Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Latin Resources (LRS AU): 16th January Merger Vote
- Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand
Sanrio (8136 JP) – Kitty Behaving Badly
- Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
- There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
- There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.
Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
- Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
- The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
- Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.
Goodman Group (GMG AU) Placement: Limited Index Flows
- China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
- Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
- There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
Auckland Airport (AIA NZ) Placement: Potential Index Flows
- Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
- The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
- There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.
A Review of Tender Offers in Korea in 2024
- In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
- What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
- The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.
Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
- Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
- Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next.
Latin Resources (LRS AU): 16th January Merger Vote
- Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with Pilbara Minerals (PLS AU). PLS offered 0.07 new PLS shares for every LRS share.
- The Scheme Booklet was slightly delayed to reflect Pilbara’s recently adjusted FY25 guidance – nothing deal/project related.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 16th Jan. Expected implementation on the 4th Feb. The IE (BDO) says fair & reasonable.
Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
- Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.
- We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).
Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand
- Newjf’s Yuan Xunjun and Guo Xiaohong are both lawyers. They should be more familiar with the Pre-Condition requirements. Newjf has obtained SAMR clearance and we think Newjf will fulfill Pre-Conditions.
- Bi Hua and Hong Gang’s “new initiative” based on Nov.28 announcement may not necessarily succeed, since Newjf has a lot of room for rebuttal here and its Offer is attractive.
- Greatview’s chairman and Cloudview are in discussions with financial advisers to make a counterbid.Considering that this may be a “noise”,we recommend prioritizing Newjf’s Offer before any higher Offer from Greatview.
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