In today’s briefing:
- Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- StubWorld: Swire’s Latest Buyback
- Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Eoflow Vs Insulet: Round II
- CPMC Holdings (906 HK): Pre-Conditional Voluntary Offer at HK$6.87
- Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
- WHSP’s Non-Binding Indicative Offer for Perpetual Turned Down
- China: Consolidated Flows at the Close Tomorrow
- Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720
- CPMC (906 HK): SASAC Takeover
Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
- Yesterday afternoon, Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) announced a new buyback program. The last one was announced August 2022 and ran until the AGM.
- That was HK$4bn. In the meantime the company paid an HK$8.12 special div on the Swire As (14%) in September (on top of the HK$1.20 regular div).
- Now they have announced a new HK$6bn buyback buying both A Shares and B shares. Details, index impact, historical B/A trading patterns, etc, below.
StubWorld: Swire’s Latest Buyback
- Yesterday afternoon (5th Dec), Swire Pacific (A) (19 HK) (and Swire Pacific (B) (87 HK)) announced a large (HK$6bn) buyback.
- The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.
- I still like the idea of buying Swire A and Swire B outright here.
Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
- Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
- The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
- There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.
Eoflow Vs Insulet: Round II
- This insight provides a detailed analysis of Eoflow’s appellant brief (released on 4 December) on Insulet Corp (PODD US)’s lawsuit.
- We provide the following three major reasons why we believe Eoflow will win versus Insulet in this lawsuit.
- One of the most important arguments on Eoflow’s appellant brief is the DTSA three years statute of limitations.
CPMC Holdings (906 HK): Pre-Conditional Voluntary Offer at HK$6.87
- CPMC Holdings (906 HK) has announced a pre-conditional voluntary offer from Changping Industrial at HK$6.87 per share, a 32.1% premium to the undisturbed price (16 August).
- The pre-condition mainly relates to Chinese approvals. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.
- The 50% minimum acceptance condition should be met due to COFCO’s irrevocable and the second-largest shareholders’ past dealings with COFCO. At the last close, the gross spread was 6.0%.
Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.
- Yesterday, Tokyo Rakutenchi (8842 JP)‘s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
- The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
- The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR >1.0, but Price/NAV of the takeover is 0.7x, without synergies included.
WHSP’s Non-Binding Indicative Offer for Perpetual Turned Down
- On 21 November, Washington H. Soul Pattinson and Co. Ltd (SOL AU) submitted a non-binding, indicative offer to acquire Perpetual Ltd (PPT AU) at ~A$27/share.
- A few hours ago, that offer was rejected by Perpetual Ltd (PPT AU)‘s Board citing a material undervaluation, conditional on demerger of the Asset Management business and execution risk.
- If the deal goes through, there will be small passive buying in Washington H. Soul Pattinson and Co. Ltd (SOL AU). No major index changes expected.
China: Consolidated Flows at the Close Tomorrow
- Local indices in China including the CSI 300 Index, CSI 500 Index, STAR50 Index and SSE50 Index will rebalance at the close tomorrow.
- There are many changes for the indices and there are stocks that are adds and/or deletes from multiple indices which results in cumulative or offsetting flows.
- We estimate turnover at the close tomorrow in China will be around US$7.5bn with big impact on a lot of stocks.
Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720
- Tokyo Rakutenchi (8842 JP) has recommended Toho Co Ltd (9602 JP)’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high.
CPMC (906 HK): SASAC Takeover
- Packaging play CPMC Holdings (906 HK) has announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China.
- The joint offerors have offered $6.87/share, an okay 32.1% premium to last close. Pre-cons involve the standard PRC regulators. The Offer itself is contingent on a 50% acceptance hurdle.
- China Foods (506 HK) has given an irrevocable for its 29.7% stake. This will turn unconditional. The timing of the Offer is interesting as a VP is under graft investigation.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
