In today’s briefing:
- Thoughts On Swire Properties (1972 HK)’s Buyback
- Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?
- Targeting Spreads by Leveraging the High Predictability of the Celltrion Merger
- Block Deal Sale of About 98 Billion Won Worth of Acushnet Holdings by Fila Holdings
- Reddit (RDDT): Post-IPO Inclusion in US & Global Indices
- EQD | The HSI Rebound Can Reach Higher Prices in August
Thoughts On Swire Properties (1972 HK)’s Buyback
- Swire Pacific (A) (19 HK), 82%-held Swire Properties (1972 HK), and Cathay Pacific Airways (293 HK) all announced interim results this week.
- Of interest was Swire Prop announcing a HK$1.5bn share buyback. Shares popped 12% on the news.
- Swire Pac remains cheap on a look-through P/B of 0.34x. However, the implied stub and simple ratio (Pac/Props) have just rolled over from multi-year peaks.
Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?
- A Reuters article overnight says Trend Micro might be up for sale. This caused the ADRs to jump 10% overnight. The remaining co-founders are 65 and 70 this year.
- The stock has effectively gone sideways the last few years as Value Act has been activisting. Now one has to exercise one’s imagination to think about a possible sale price.
- On a DCF basis, a PE fund couldn’t reasonably do this. Multiples are too high. That means a strategic buyer would be more likely. But Who? Why? And How much?
Targeting Spreads by Leveraging the High Predictability of the Celltrion Merger
- Local market views Celltrion’s shareholder survey as the start of the merger process, with a decision expected from the boards within two to three months if there’s no major opposition.
- Under Korean law, if Celltrion Pharm’s market cap is under one-tenth of Celltrion’s, the merger can proceed as a small-scale merger, allowing Celltrion to avoid shareholder approval and appraisal rights.
- We should leverage the merger’s high predictability to proactively target merger swap and appraisal rights spreads and build a strategy in advance.
Block Deal Sale of About 98 Billion Won Worth of Acushnet Holdings by Fila Holdings
- Fila Holdings announced that its subsidiary Magnus Holdings plans to sell a 1.8% stake in Acushnet Holdings in a block deal sale worth about 98 billion won.
- Our NAV valuation of Fila Holdings suggests an implied value per share of 49,192 won, representing 18.2% upside from current levels. Fila Holdings’ 51.9% stake in Acushnet Holdings.
- The block deal sale of Acushnet Holdings by Magnus Holdings is likely to have a positive impact on Fila Holdings as it could result in higher capital returns to shareholders.
Reddit (RDDT): Post-IPO Inclusion in US & Global Indices
- Reddit (RDDT US) is ineligible for inclusion for the upcoming August review because of fcap failing the fcap threshold if it qualifies for the standard segment.
- Reddit (RDDT US) is ineligible for inclusion for the upcoming September review because of failing the minimum public voting rights threshold.
- The IPO lock-up expiry increases the probability for inclusion in November and December review for US and Global indices. Forecasted demand in December is ~$360m and 2.1 ADV.
EQD | The HSI Rebound Can Reach Higher Prices in August
- In a previous insight we forecasted a rally for the Hang Seng Index in August. The picture has not changed, a positive close above 17344.60 is still possible.
- Looking at our MRM SHORT WEEKLY model for the HSI we can see that it has not yet reached overbought levels, so it could rise further in the next weeks.
- Conversely a SHORT trade will be possible from the levels we will indicate below.
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