In today’s briefing:
- S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)
- NTT Buying NTT Data Shares – ¥40bn to Go
- MVIS Australia A-REITs Index Rebalance: Cromwell Property (CMW) Is a Deletion
- Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue
- Haidilao’s Imminent SpinOff of the Super Hi Overseas Business – Index Treatment and Implications
- Origin Energy: Gas Price Cap Compromises Brookfield’s Offer
- Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities
- DTAC/True Merger: The Court Dismisses the Consumer Council’s Petition
- China ADRs Delisting – Friday Could Be Judgment Day for over US$800bn Mcap of Stocks
- EQD | Alibaba (BABA US): Revisiting the December Call Ratios
S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)
- We currently see one change each for the ASX20 and ASX100 indices, 4 changes for the S&P/ASX 200 and 10 adds/ 6 deletes for the ASX300 Index in March.
- There could be an addition to the S&P/ASX 200 (AS51 INDEX) in January following Pendal Group (PDL AU)‘s acquisition by Perpetual Ltd (PPT AU).
- PEXA Group (PXA AU) is a potential inclusion to the S&P/ASX 200 (AS51 INDEX) if Link Administration (LNK AU)‘s in-specie distribution of PEXA shares to its shareholders is approved.
NTT Buying NTT Data Shares – ¥40bn to Go
- NTT (Nippon Telegraph & Telephone) (9432 JP) and NTT Data Corp (9613 JP) did a deal earlier this year to sell NTT’s global data business to NTT Data. Discussed here.
- NTT sold 55% of its current overseas business in NTT Communications, Dimension Data, and NTT Security Group, in return getting 45% of NTT Data’s current global business, plus ¥112bn.
- NTT would then spend ¥100bn of the ¥112bn increasing its stake. So far it has spent ¥58.39bn buying 18% of volume every day since Oct 1.
MVIS Australia A-REITs Index Rebalance: Cromwell Property (CMW) Is a Deletion
- Cromwell Property (CMW AU) is a deletion from the MVIS Australia A-REITS Index at the close on 16 December.
- Passive trackers will need to sell 13.9m shares (5 days ADV) of Cromwell Property (CMW AU) and there appears to be little to no pre-positioning on the stock.
- There are a few other stocks that will have over 0.5 days of ADV to buy from passive trackers.
Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue
- In March, Toyo Construction (1890 JP) agreed to be bought out by INFRONEER Holdings (5076 JP) for ¥770/share. One activist objected, and bought 28%. They then said they’d pay ¥1,000.
- The Infroneer deal failure started an acrimonious back and forth. The hostility lessened over the summer, but despite activist Yamauchi Family Office’s protestations of love, no deal as of November.
- Today saw another press release, delaying things. The contents are 🌶🌶🌶. NOW things are getting more interesting. Hostility is back. Medium-spicy. Three 🌶 out of five.
Haidilao’s Imminent SpinOff of the Super Hi Overseas Business – Index Treatment and Implications
- On 11 July, Haidilao (6862 HK) announced it would propose to spin off its international restaurant business (13-15% of revenue) to shareholders and employees. Shareholders approved in August.
- There were interim announcements and indeed interim reports with some information, but not a lot. But Super Hi International Holding was headed for separate listing in HK.
- Last week, Haidilao said it was going ahead with a Listing by Introduction pending listing approval by HKEX. Haidilao shares go ex- 16 December. Index providers have announced treatment.
Origin Energy: Gas Price Cap Compromises Brookfield’s Offer
- On the 10 November, Brookfield and EIG/MidOcean offered Origin Energy (ORG AU) shareholders $9.00/share, a 54.9% premium to last close, by way of a Scheme. The Offer is non-binding.
- On the 9 December, the Aussie government said it would take action to limit the worst impacts of the forecast gas price increases to protect Australian households, industry, and manufacturers.
- This includes a temporary price cap on new domestic wholesale gas contracts by east coast producers, such as Origin, for 12 months.
Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities
- Small machine tool maker OKK used to be good for about ¥2bn in EBITDA, then that dropped to the low ¥1bns on average, then the last two years were negative.
- A year ago, Nidec agreed to inject capital and buy 66.6% of OKK – Now Nidec OKK – for peanuts. Yesterday, the two agreed a scrip merger on 1 March.
- The process and ratio leave a LOT to be desired but they only need 66.67% and with 66.66% already, it’s a done deal. Nothing you can do about it.
DTAC/True Merger: The Court Dismisses the Consumer Council’s Petition
- The Administrative Court has dismissed the Thai Consumers Council petition to impose an injunction on the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger.
- Telenor ASA (TEL NO) and CP Group are currently seeking clarification on certain NBTC conditions such as tariff adjustments and MVNOs network capacity.
- Completion is targeted for 1Q23. The current share price ratio of 9.072x vs exchange ratio of 10.221x is attractive. Timing and tweaks to the exchange ratio are risks.
China ADRs Delisting – Friday Could Be Judgment Day for over US$800bn Mcap of Stocks
- PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
- The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
- In this note, we’ll talk about the latest developments, possible outcomes and implications.
EQD | Alibaba (BABA US): Revisiting the December Call Ratios
- In November we published on the upside potential in Alibaba
- Stock has rallied and the call ratio we recommended has performed very well
- We evaluate the trade and look at potential trade options
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