In today’s briefing:
- TCM (570 HK): Likely Rush for The Exits As Deal Busts
- Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter
- (Mostly) Asia-Pac M&A: GJS/Haitong, Fuji Soft, Bossini, Dyna-Mac, Beijing Capital Grand, TCM
- A/H Premium Tracker (To 18 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- HK Connect SOUTHBOUND Flows (To 18 Oct 2024); Net Flows Big, Selling in Brokers, Buying in Props
- Last Week in Event SPACE: Seven & I/Couche-Tard, Intouch, SAMTY, Korea Zinc/Young Poong
- Weekly Deals Digest (20 Oct) – China TCM, GA Pack, Tokyo Metro, Rigaku, CR Beverage, Horizon Robotic
TCM (570 HK): Likely Rush for The Exits As Deal Busts
- China Traditional Chinese Medicine (570 HK) (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
- As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
- This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next? The immediate question now is downside support on Monday.
Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter
- On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
- Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
- Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.
(Mostly) Asia-Pac M&A: GJS/Haitong, Fuji Soft, Bossini, Dyna-Mac, Beijing Capital Grand, TCM
- I tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- One new deals discussed this week: Bossini International (592 HK) low-balled scrip Offer from Viva Goods (933 HK). Beijing Capital Grand (1329 HK) also suspended due to the Takeovers code.
- Key updates took place on: GJS (2611 HK)/Haitong Securities (600837 CH), Fuji Soft Inc (9749 JP), Hotel Property Investments (HPI AU), TCM (570 HK) and Dyna Mac Holdings (DMHL SP)
A/H Premium Tracker (To 18 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- Huge volumes traded on the mainland, Southbound volumes dropped, AH Premia contracted a little bit, but not much. Things are starting to stabilise.
- Average AH pairwise volatility is super high. Intracorrelation of spreads quite low. Lots of room to market-make wide spreads/high premia. High premia may continue to contract on speculation.
- Continuing different onshore and offshore opinion regarding the nature and vibe of Chinese stimulus will continue to lead to interesting dispersion. Identify the trend, then market make around it.
HK Connect SOUTHBOUND Flows (To 18 Oct 2024); Net Flows Big, Selling in Brokers, Buying in Props
- This past week saw mainland investors trade HK$476bn of stock. Not as big as last “week” but still big. BABA buying has slowed, but net buying was still HK$24.4bn
- The buying is starting to see a longer tail of net positive names, and properties this week saw big net buying, even before the Sunac placement which added more.
- High-Div SOEs are seeing outflows as beta sees inflows. I expect this to continue.
Last Week in Event SPACE: Seven & I/Couche-Tard, Intouch, SAMTY, Korea Zinc/Young Poong
- Couche-Tard execs do the rounds in Tokyo, complaining about not being able to do the rounds. This sounds like they are trying to make themselves sound nice. For now
- First the low-balled VTOs for AIS (ADVANC TB) and Thaicom (THCOM TB). Then the Intouch (INTUCH TB)/Gulf Energy (GULF TB) amalgamation. Then, arguably, the next unorthodox development will take place.
- Investors buying SAMTY HOLDINGS (187A JP) in size may withhold shares, either they’ll try to become the fulcrum investor to get into the Bidco OR they will try for a bump.
Weekly Deals Digest (20 Oct) – China TCM, GA Pack, Tokyo Metro, Rigaku, CR Beverage, Horizon Robotic
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), Horizon Robotics (9660 HK), China Resources Beverage (2460 HK) and Hyundai Motor India (1342Z IN) IPOs.
- Event-Driven developments: China Traditional Chinese Medicine (570 HK), Greatview Aseptic Packaging (468 HK), Sun Art Retail (6808 HK), Fuji Soft Inc (9749 JP), Dyna Mac Holdings (DMHL SP).
💡 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
