In today’s briefing:
- The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Kirin Looks To Take Blackmores Private
- PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
- Metro Pac (MPI PM): Delisting Offer from First Pac & Co
- One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
- AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote
- ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big
- Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
- The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
- The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.
Kirin Looks To Take Blackmores Private
- Japan’s Kirin Holdings (2503 JP) has proposed taking Aussie vitamin play Blackmores Ltd (BKL AU) private by way of a Scheme at A$95/share.
- That’s a 23.7% premium to last close, and represents 23.1x LTM December 2022 EBITDA.
- Irrevocables are 18% of shares out. This Scheme requires clearance from ACCC, FIRB – and China’s SAMR.
PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
- Based on data to the close on 27 April, we do not expect any changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the August rebalance.
- However, the Metro Pacific Investments Co (MPI PM) tender offer and voluntary delisting will open up an index spot that will need to be filled.
- At the current time, Bloomberry Resorts (BLOOM PM) is the highest ranked non-index constituent and is the most likely replacement.
Metro Pac (MPI PM): Delisting Offer from First Pac & Co
- First Pacific Co (142 HK), together with three other entities, are proposing to delist Metro Pacific Investments Co (MPI PM) at PHP 4.63/share, a 22% premium to the 12-month VWAP.
- The four bidders hold a combined stake in MPIC of 63.4%. The Offer is conditional on First Pac shareholder approval, a tendering threshold, and an MPIC shareholder vote.
- Elsewhere, First Pac continues to trade cheap to its NAV. Nothing new there.
One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
- Due to the matched order fraud incident in recent days, there has been a significant change in the KOSDAQ top 50 rankings, presenting a great opportunity for Yunsung F&C.
- The estimated size of the passive inflow that it is likely to receive is approximately 0.5-0.8x ADTV for ETFs alone, and 1.2-1.5x when expanded to all passive funds.
- We should note that the level of market exposure to inclusion possibility has been significantly low. Therefore, we can expect a significant price impact at the time of the announcement.
AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote
- The 27 April vote was adjourned as Aag Energy Holdings (2686 HK) Board was notified by “certain beneficial owners indicating that their latest voting instructions were not duly processed.”
- The meeting would not be adjourned if the YES vote was going to sail through. A delay helps the offeror as these owners will vote YES and deal fatigue sets in.
- Risk-Reward is still unfavourable at the last close. The deal break fair value range is HK$1.37-1.45 per share, with 16.0%-11.0% downside. This compares to the 13.5% upside from the offer.
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- With 1 trading day left in the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
- Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
- The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We’d be inclined to trim positions.
BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big
- Fujitsu earnings are out. Forecasts are in, lighter than consensus.
- But there is a buyback. Looking at the way last year’s was executed is not that informative but it may be useful.
- This one is big enough to matter but not big enough to get excited about until we get confirmation.
Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- Kirin Holdings (2503 JP) is eyeing the vitamin game with a proposal to buy Blackmores at AU$95 per share, representing a 23.7% premium over the stock’s most recent closing price.
- Blackmores Ltd (BKL AU)‘s expertise in navigating China’s stringent regulations could be the missing piece for Kirin to gain access to the lucrative supplement market in China.
- Our main concern is Kirin’s history of unsuccessful overseas business acquisitions, particularly outside of its core beer business.
JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
- Today, JVC KENWOOD (6632 JP) announced earnings, its forecast for this next year, and the outlines of its new Mid-Term Management Plan.
- That plan has the run to 2025 seeing sales rise slightly, Operating margins rising slightly. EBITDA margins at last year’s level or better, and Operating CF like last year.
- They also announced a buyback which they hoped would help them boost ROE and PBR to 1.0x as quickly as possible. The TSE pressure is working.
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