In today’s briefing:
- The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023)
- L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price
- Itochu Takeout of Daiken (7905) – Too Low at Â¥3,000/Share But May Be Tough To Oppose
- Where & How to Check CFD Trading Data Starting Sept 1st
- MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes
- Weekly Deals Digest (13 Aug) – Toshiba, Kyoden, Eoflow, Chindata, Estia, InvoCare, OreCorp, Origin
- MVIS Australia A-REITs Index Rebalance Preview: One Delete, One Close Delete & Capping
- Daiken Corporation (7905 JP): Itochu’s JPY3,000 Tender Offer
- Merger Arb Mondays (14 Aug) – Eoflow, Chindata, OreCorp, Origin, Estia, InvoCare, Daiken, Kyoden
- EQD | Nikkei 225 (NKY) WEEKLY Resistance Targets
The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023)
- This is the Brand Spanking New and Extra Spiffy H/A-Share Discount/Premium Weekly designed to help investors see the relationships easily. We used to do it.Â
- We decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 19 Trade Recommendations.Â
- We hope this new version serves readers even better. Feedback is actively solicited to see if we can improve it from here.Â
L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price
- In response to media speculation, L’Occitane (973 HK) has clarified that Reinold Geiger, the Chairman and the largest shareholder, is contemplating a possible transaction through a voluntary general offer.
- However, the rumoured offer of HK$35 per share is false. Mr Geiger has confirmed that the potential offer price would be no less than HK$26.00 per share.
- The floor price of HK$26 is light and needs a bump (towards HK$30), particularly if Mr Geiger wants 95% of voting rights to exercise the right of compulsory acquisition (squeeze-out).
Itochu Takeout of Daiken (7905) – Too Low at Â¥3,000/Share But May Be Tough To Oppose
- Itochu owns 36.3% of building materials and engineering firm Daiken Corp (7905 JP). They have launched a tender with gimmicky Majority-of-Minority to buy the rest at Â¥3,000/share, 4.7x FY2024e EBITDA.Â
- That’s low-ish, but given securities holdings, inventory, and net receivables at 4+x EBITDA it’s probably too cheap, but it gets quite close to the minimum threshold just with cross-holders.
- This deal price doesn’t include synergies (according to the valuations and the SC) but a bump would need an agitator. Hope alone won’t get it.
Where & How to Check CFD Trading Data Starting Sept 1st
- The CFD balance information (both overall and individual stock) will be provided by KOFIA and KOSCOM, starting from September 1st.
- September 1st also marks the day when local brokerages that temporarily suspended CFD trading services will resume them.
- With the disclosure of individual stock CFD balances starting from September 1st, there’s a high probability of another volatility turning point.
MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes
- There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.
- Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.
- Short interest has been increasing on Charter Hall (CHC AU) and JB Hi-Fi Ltd (JBH AU) and could be partially driven by potential index deletions.
Weekly Deals Digest (13 Aug) – Toshiba, Kyoden, Eoflow, Chindata, Estia, InvoCare, OreCorp, Origin
- 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 – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH)Â IPOs.
- Event-Driven developments – Eoflow (294090 KS), Kyoden Co Ltd (6881 JP), Toshiba Corp (6502 JP), Metro Pacific Investments Co (MPI PM), Estia Health (EHE AU), Origin Energy (ORG AU).Â
MVIS Australia A-REITs Index Rebalance Preview: One Delete, One Close Delete & Capping
- There should be one deletion from the index in September. And there could be another deletion. And there will be capping changes for a few stocks.
- The index changes will lead to a one-way turnover of 2.12% resulting in a one-way trade of A$13m. There is only one stock with over A$5m to trade.
- Following the spinoff, Abacus Group (ABG AU) and Abacus Storage King (ASK AU) will be the lowest ranked index constituents and at risk of deletion from the index.
Daiken Corporation (7905 JP): Itochu’s JPY3,000 Tender Offer
- Daiken Corp (7905 JP) has recommended Itochu Corp (8001 JP)’s tender offer of JPY3,000 per share, a 28.8% premium to the undisturbed price (10 August).
- 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 31.83% ownership ratio.
- The minimum acceptance condition (lower limit) requires a 50.0% minority acceptance rate (majority of minority condition). The tender offer is light vs historical multiples but represents a 5-year high price.
Merger Arb Mondays (14 Aug) – Eoflow, Chindata, OreCorp, Origin, Estia, InvoCare, Daiken, Kyoden
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads Daiken Corp (7905 JP), 111 Inc (YI US), Eoflow (294090 KS), Kyoden Co Ltd (6881 JP), Orecorp Ltd (ORR AU), Symbio Holdings (SYM AU), ENM Holdings (128 HK).
- Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Yaizu Suisankagaku Industry (2812 JP), Allkem Ltd (AKE AU), Itochu Techno Solutions (4739 JP), Penguin International (PBS SP).   Â
EQD | Nikkei 225 (NKY) WEEKLY Resistance Targets
- The Nikkei 225 index closed up last week and it has a good probability to rise further this week: the MRM tool has identified the current pattern as “bullish”.
- Resistance targets are located past 33500, the index could reach that target this week.
- If the index rises for 3 weeks or more, it could breakout from the previous resistance range around 33700, and reach targets past 34000.
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