In today’s briefing:
- Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer
- Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
- Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
- Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG
Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
- That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.
AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer
- Aag Energy Holdings (2686 HK) disclosed a pre-conditional privatisation offer from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.85 per share, a 10.1% premium to the undisturbed price.
- The pre-condition is Xinjiang Xintai shareholder approval. Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The price is final but light.
- The total privatisation cost is HK$2,704 million vs AAG’s net cash of HK$2,270 million. The offeror is betting that minorities will not be able to launch a concerted NO vote.
Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
- Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
- There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.
AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
- On the 14 May 2018, coalbed methane producer AAG Energy Holdings (2686 HK) announced a partial offer (50.5%) from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.75/share.
- Xinjiang Xintai has returned to the pit with a $1.85/share Offer by way of a Scheme. The Cancellation Price will NOT be increased.
- This is hardly a knockout price, at a 10.1% premium to undisturbed; and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year.
Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
- While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here.
Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen
- S.M.Entertainment Co (041510 KS) is trading through the partial offer terms as HYBE (352820 KS) and Kakao Corp (035720 KS) jostle for control.
- The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.
- Star Entertainment Group (SGR AU) is an extraordinarily toxic company. But just how much negative news is already baked into the share price?
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG
- There are 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
- Onr new deals was discussed on Smartkarma this past week – AAG Energy (2686 HK)‘s Scheme. Jiangnan (1366 HK) also suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
- Key updates took place for: Toshiba Corp (6502 JP), Newcrest Mining (NCM AU), Yashili International Holdings (1230 HK), Sembcorp Marine (SMM SP), and O2Micro International (OIIM US).
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