In today’s briefing:
- Sun Art Retail (6808 HK): COFCO Offer?
- Latest Forecast for Korea Zinc’s Tendering Rate
- Commerzbank Enters Talks with Unicredit
- Hana Financial (086790 KS); Error of Omission from the Value-Up Index?
- EQD | The Nikkei At The Top
Sun Art Retail (6808 HK): COFCO Offer?
- Alibaba Group Holding (9988 HK)-backed hypermarket play Sun Art Retail (6808) is currently suspended pursuant to the Takeovers Code.
- Reportedly, SASAC-backed COFCO Group may acquire Alibaba’s 78.7% stake. Sun Art’s shares are up 45% since the middle of the month.
- Alibaba exiting – if true – follows JD.com (9618 HK) (and DFI Retail Group Holdings (DFI SP)) selling their respective stakes in Yonghui Superstores Co., (601933 CH) earlier this week.
Latest Forecast for Korea Zinc’s Tendering Rate
- Overseas institutions might tender around 4%, locals about 6%, giving a realistic max of 10%. MBK may struggle to even reach that minimum of 7%.
- Mirae Asset and Samsung Life, holding the largest portion of the targetable stakes, hinted they’ll participate in the tender but won’t tender all their shares.
- Allocation risk for the tender is minimal, but cancellation risk remains. MBK may barely exceed the 7% minimum, making predictions tough and reducing chances of a post-tender stock price drop.
Commerzbank Enters Talks with Unicredit
- Commerzbank’s incoming CEO Bettina Orlopp announced talks with UniCredit on September 27 regarding a potential merger. Despite opposition from management and Chancellor Scholz, some investors support the discussions.
- Since UniCredit’s entry into Commerzbank on September 10, Commerzbank’s stock has surged 30%, outperforming UniCredit’s 9.2% rise and the European banking sector’s 6.3% gain.
- Buying Commerzbank is strategically and financially logical. In conclusion, I maintain my recommendation to buy Commerzbank speculatively.
Hana Financial (086790 KS); Error of Omission from the Value-Up Index?
- Hana Financial, along with KB Financial did not make the cut for the Korea Value-up index announced on the 24th September; Hana apparently fell short of the PBV ratio threshold
- Despite being excluded from the Value-up Index, Hana remains our core South Korean bank pick for its attractive valuations, low PEG, solid core capital ratio and strong credit quality credentials
- We believe Hana stands out positively on fundamentals and return trends versus its peers, and there is also potential for its inclusion in a planned rebalancing scheduled in December
EQD | The Nikkei At The Top
- The last 2 weeks’ upswing in the Nikkei 225 INDEX does not change our view: it is WEEKLY overbought and October is a coin flip according to our seasonal models.
- The index could rise further at this point, herd behavior may force investors to pile up into the rally, but our models say rising well past 40k will be hard.
- A pullback is not necessarily a great occasion to buy, as already explained in our previous insight, the N225’s trend does not look good, at the moment.
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