In today’s briefing:
- The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
- Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
- MSCI Korea May Review: Two New Names Are Emerging for Inclusion
- StubWorld: Swire Pac/Prop & Cathay FY22 Results
- Piedmont Lithium: General Mosquito & “Textbook Corruption”
- Yashili (1230 HK): It’s Taken a While – Pre-Condition Satisfied
- Hosokawa Micron (6277 JP) – Big Accretive Cross-Holder Share Buyback
- Yashili (1230 HK): China Mengniu’s Scheme Triggered
- Itaú Unibanco Offer for Itaú Corpbanca Minorities; Good Value or Value Trap?
The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
- Tomorrow is BOJ Governor Kuroda’s last Monetary Policy Meeting, capping a ten year run as one of the most dynamic central bankers in the world.
- Tomorrow is also the day BEFORE the first day on which the Japan Post Bank (7182 JP) mega offering could price and the last day of bookbuild indications.
- I am not saying this is not coincidence, but it is worth thinking about the interplay.
Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
- Elliott Management was noted several weeks ago to have bought near 5% of Dai Nippon Printing (7912 JP). The stock popped when people found out.
- Then the stock popped when the company said they’d announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.
- Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.
MSCI Korea May Review: Two New Names Are Emerging for Inclusion
- Two new names have emerged as likely candidates for inclusion in Korea: SM Entertainment and Cosmo Advanced Materials, whose YTD returns are approximately 104% and 83%, respectively.
- For SM Entertainment, the float rate may be adjusted downward depending on the tender offer results. Still, even if modified to 50%, it will surpass the float market cap hurdle.
- Cosmo still has a significant gap in the full market cap. However, we should note that the recent insane rally in Korea’s EV battery sector shows no signs of ending.
StubWorld: Swire Pac/Prop & Cathay FY22 Results
- There were some positive takeaways from Swire stable’s set of FY22 accounts; however, the Hong Kong office segment faces increased vacancy rates, and new supply in 2023.
- Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Piedmont Lithium: General Mosquito & “Textbook Corruption”
- Short seller Blue Orca is alleging Atlantic Lithium (ALL LN) is seeking to obtain a Ghanaian lithium mining licence via “textbook corruption”.
- Piedmont Lithium (PLL AU) is a substantial shareholder of Atlantic, together with a co-development agreement for the Ghanaian project, in which the mining license has yet to be ratified.
- Orca reckons the license ratification will fail the corruption sniff test, which in turn will jeopardise the Tennessee lithium offtake facility, currently awaiting a DOE grant.
Yashili (1230 HK): It’s Taken a While – Pre-Condition Satisfied
- Yashili International Holdings (1230 HK) announced that the pre-condition is satisfied – around 10 months since the 6 May 2022 announcement of China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer.
- Yashili has received an extension for the despatch of the scheme document to a date no later than 31 August. We think the scheme document is despatched by early April.
- The scheme risk is low. At the current price and for a late May payment, the gross and annualised spread is 2.6% and 12.2%, respectively.
Hosokawa Micron (6277 JP) – Big Accretive Cross-Holder Share Buyback
- Today after the close, Hosokawa Micron (6277 JP) – a company which is all about powders and particles – announced a ToSTNeT-3 buyback of 1.35mm shares (8.26% TSO) tomorrow AM.
- Nisshin Seifun Group (2002 JP) and subsidiary Nisshin Engineering said they would offer some shares in. The HM announcement said financial institutions might sell.
- Hosokawa Micron is cheap, and this is accretive. Worth a closer look.
Yashili (1230 HK): China Mengniu’s Scheme Triggered
- The 25% stake sale/acquisition in Yashili International (1230 HK) was expected five business days after the Dumex China Disposal – and that is what transpired. This satisfies the Scheme conditions.
- After ten months, Danone (BN FP) offloaded its chilled dairy business, acquired Yashili’s Dumex China baby formula ops, and offloaded its 25% stake in Yashili to China Mengniu (2319 HK).
- Now Yashili minority shareholders will get their chance to vote for China Mengniu’s Scheme, potentially in early May.
Itaú Unibanco Offer for Itaú Corpbanca Minorities; Good Value or Value Trap?
- At first sight, Itaú Unibanco’s offer for the minorities of Itaú Corpbanca is great value for Itaú Unibanco shareholders, but we do not believe that this is so clear cut
- In Chile, Itaú Corpbanca is addressing its scale issue through cost control and its digital banking strategy; Colombia is more of a challenge, not helped by President Petro’s anti-business attitude
- We see this as a fair offer for Itaú Corpbanca shareholders, given the drag from Colombia; yet it needs a successful Colombia disposal to create value for Itaú Unibanco shareholders
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