In today’s briefing:
- StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- Zhihu (2390 HK/ZH US)’s Cheeky Buyback
- Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
- Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780
- EQD | WHAT IF The NIFTY Starts to Pullback This Week?
- STOXX 600: First September Forecasts for Europe and Eurozone
StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
- Preceding my comments on Amorepacific 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%.
Zhihu (2390 HK/ZH US)’s Cheeky Buyback
- Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS).
- Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares).
- The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated.
Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
- On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
- The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone.
- We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire.
Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780
- ENEOS Holdings (5020 JP) has increased the Tatsuta Electric Wire & Cable (5809 JP) tender offer price by 8.3% to JPY780 and extended the offer period to 19 August.
- Eneos tried to get the required acceptances by refusing to bump and subsequently extending the offer period. The tactics failed as minorities required a bump due to the market re-rating.
- While the revised offer remains light, the token bump and deal fatigue should suffice to nudge the marginal vote to accept. At the last close, the gross/annualised spread was 5.0%/85.8%.
EQD | WHAT IF The NIFTY Starts to Pullback This Week?
- The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
- While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
- Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.
STOXX 600: First September Forecasts for Europe and Eurozone
- Koninklijke Vopak Nv (VPK NA) & Shaftesbury PLC (SHB LN) are currently passing the entry rank of SXXP. Forecasted passive fund demands are $22m-$34m and 3-5 ADV.
- Indivior PLC (INDV LN) is currently the only one below the exit rank of SXXP. Forecasted passive fund supply is $11.5m and 1.4 ADV.
- ‘Most liquid stock’ criterion can cause a ‘switch‘ of share lines in the index as it happened with Lindt (LISP SW) and Lindt (LISN SW) in September 2022.
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