In today’s briefing:
- The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)
- What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?
- NWS Holding (659 HK): Pre-Conditional VGO from the Cheng Family
- Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75
- Redox (RDX AU) IPO – Offering Details & Index Inclusion
- PCOMP Index Rebalance Preview: Just the Ad Hoc Change
- Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer
- Quiddity Leaderboard TDIV Sep 23: Potential ~US$130mn Flows Caused by T100 DEL and AUM Change
- Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- Quiddity Leaderboard T50/100 Jun 23: Wisdom Marine Facing TDIV Deletion
The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)
- In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
- In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
- In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue.
What Arb Trading Opportunities Should We Target in SK Innovation’s Rights Offering?
- We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation’s SSF is highly liquid, being traded at nearly 0.5x spot.
- The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
- The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.
NWS Holding (659 HK): Pre-Conditional VGO from the Cheng Family
- Nws Holdings (659 HK) announced a pre-conditional voluntary general offer from the Cheng family at HK$9.15 or HK$9.47 per share (with a potential 2HFY2023 dividend of HK$0.32 per share).
- The pre-condition related to regulatory approval from the Insurance Authority of Hong Kong and the Bermuda Monetary Authority is a formality due to the Cheng family’s current sway over NWS.
- The key condition is approval by independent New World Development (17 HK) shareholders which is likely as the offer is attractive, reduces NWD’s gearing and results in a special dividend.
Dali Foods (3799 HK): Founder’s Privatisation Offer at HK$3.75
- Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
- Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal.
Redox (RDX AU) IPO – Offering Details & Index Inclusion
- Redox (RDX AU), a leading chemical and ingredients distributor, is looking to raise A$402m (US$268m) in its IPO and is expected to start trading on the ASX on 3 July.
- With the float expected to be over 30%, the stock is eligible for inclusion in the S&P/ASX indices but limited trading history could only mean S&P/ASX300 inclusion in March 2024.
- With 70% of the shares subject to lock-up arrangements, buying from ASX300 passive trackers will be small and there will be limited inclusion in other indices too.
PCOMP Index Rebalance Preview: Just the Ad Hoc Change
- With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August.
- However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
- Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.
Poly Culture (3636 HK): HK$8.88 Per H Share Privatisation Offer
- Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation offer from Poly Group at HK$8.88 per H Share, a 77.6% premium to the undisturbed price of HK$5.00.
- The pre-condition of regulatory approvals is a formality as Poly Group is an SOE. The key condition is approval by at least 75% of independent H Shareholders (<10% rejection).
- The offer price is final. There is no minimum acceptance condition. No independent H Shareholder holds a blocking stake. The offer is attractive, waving the way to success.
Quiddity Leaderboard TDIV Sep 23: Potential ~US$130mn Flows Caused by T100 DEL and AUM Change
- In this insight, we take a look at Quiddity’s flow expectations for the September 2023 index rebalance.
- Since the semi-annual rebalance events are in June and December, there will not be any “regular” changes caused by dividend-yield rankings.
- However, external factors such as deletion from the selection universe and a shift in tracking AUM assumptions can still trigger US$130mn capping flows in September 2023.
Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- Invest Chosun recently reported that the three Celltrion Group companies including Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm are close to announcing a merger in July.
- Although Celltrion was not included this time as suppliers of Humira biosimilar products by OptumRX, there is still a potential for Cigna Express Scripts to include Celltrion’s product this year.
- We think Celltrion Inc and Celltrion Healthcare’s share prices are oversold.
Quiddity Leaderboard T50/100 Jun 23: Wisdom Marine Facing TDIV Deletion
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the September 2023 Rebalance.
- At present, I see two changes for the T50 index and one change for the T100 index.
- The T100 change is an important one as the expected DEL Wisdom Marine Lines (2637 TT) could also get deleted from the TDIV index.
💡 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
