In today’s briefing:
- StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down
- Boart Longyear’s (ASX:BLY) Ignominious Exit
- ADNOC/Covestro: Bargaining On
- EQD | The Nikkei Will Pullback Within 1-3 Weeks
- HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu
StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down
- Swire Pacific (19 HK)‘s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
- Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Boart Longyear’s (ASX:BLY) Ignominious Exit
- Drilling services company Boart Longyear (BLY AU) has agreed to a takeover by American Industrial Partners. Boart’s five largest shareholders – collectively holding 98.86% of shares out – are supportive.
- Highly-Leveraged Boart copped the brunt of the GFC, and never fully recovered. American Industrial Partners’ Offer values Boart at A$543mn against its 2007 IPO value of A$2.3bn.
- The takeover is expected to be completed in the first quarter of 2024. This is done.
ADNOC/Covestro: Bargaining On
- Covestro AG (1COV GR) has been the subject of a potential takeover from ADNOC since Bloomberg reported on 20 June. The last reported potential offer is €60/share (c.€11.3 billion).
- ADNOC could be willing to offer €64.5 (7.1x EV/EBITDA on mid-cycle €2,110 million EBITDA), but Covestro is rumoured to seek €70/share (typical chemicals 6x on €2,675 million EBITDA, likely demanding).
- Considering a takeout price of €60, gross spread is 11.7% and the shares are pricing a 64% probability of deal completion. I’d be long at €53/share, as downside seems limited.
EQD | The Nikkei Will Pullback Within 1-3 Weeks
- The Nikkei 225 (NKY INDEX) is about to close up for the 3rd consecutive week (CC=+3), it’s towards the Q3 resistance level at 33984: it’s short-term overbought.
- There is a good chance that the index will pull back in the next 1-3 weeks, at the moment it looks like the rally has “stalled”.
- The pullback may be an opportunity to buy again, and ride a rebound to previous highs, we will discuss LONG levels in a separated insight.
HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight is Li Ning (2331 HK) and Meitu Inc (1357 HK).
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