In today’s briefing:
- Toshiba – 3D Stake Reduction Reduces and Increases Risk
- Nikkei 225 March 2023 Rebal Tomorrow
- Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)
- Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
- Mincor: Did Twiggy Thwart BHP Offtake?
- Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
- Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto
- Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
- SK Inc: Shares Cancellation & Updated NAV Valuation
Toshiba – 3D Stake Reduction Reduces and Increases Risk
- An EDINET filing yesterday revealed that 3D Investment Partners had reduced their stake in Toshiba from 7.2% to 4.9%.
- This significantly derisks the possibility of 3D becoming a forced seller and alters the risk reward here.
- Nevertheless, it is still difficult to be especially bullish here given uncertainty regarding the tender vote is now a little higher.
Nikkei 225 March 2023 Rebal Tomorrow
- The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy.
- The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps.
- One trade – long an ADD vs a Peer – is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.
Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)
- SK Innovation will buy back its shares, worth about 10% of the total issued shares, through a tender offer and offer SK On stocks as consideration instead of cash.
- Even if there is allocation risk, as only 10% of SO are targeted, expectations that pricing discrepancy can sufficiently offset this should be the factor driving up the price today.
- Additional trading openings? This depends on the disparity widening between the intrinsic value of SK On and the exchange ratio.
Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
- Sembcorp Marine (SMM SP) is a month in to its new existence as a business more than twice as large as its old business after absorbing Keppel O&M.
- There have been some noises about cost-cutting, which could be key to an early return to profitability.
- Today, mid-day, we get news of the biggest ever offshore renewables contract win in a JV with General Electric – a deal worth €6bn (SGD 8.64bn). It’s big.
Mincor: Did Twiggy Thwart BHP Offtake?
- Earlier today (30 March), Mincor Resources NL (MCR AU) said BHP Group (BHP AU) would not agree to amend off-take agreement specifications, and will no longer accept lower-quality ore.
- Mincor delivers 100% of its ore to BHP. It will continue to deliver on-specification ore to BHP, but has withdrawn its forward guidance.
- Shares rolled over 5.7% to close at A$1.42/share, above Wyloo’s unconditional A$1.40/share. Offer.
Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
- After the market close today, Samsung Sds announced a block deal of 1.51 million shares at a discount range of 3.5% to 4.5% to the closing price of 117,900 won.
- Lee Seo-Hyun, the daughter of the late Samsung Chairman Lee Kun-Hee, is selling her 1.51 million shares of Samsung SDS (1.95% of oustanding shares) in a block deal.
- The company faces continued overhang on additional stake sale due to the inheritance tax issue in the next 2-3 years. As a result, we would avoid the block deal sale.
Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- Stocks mentioned include Tian An China Investment (28 HK), CSPC Pharmaceutical Group (1093 HK), and Li Auto (2015 HK).
Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-March 2023.
SK Inc: Shares Cancellation & Updated NAV Valuation
- On 29 March, SK Inc announced that it will cancel 0.95 million in treasury shares, which represents 1.3% of the company’s outstanding shares and 5% of treasury shares.
- One of the concerns about SK Inc in the past several weeks has been lower DPS of 5,000 won in 2022 versus DPS of 8,000 won in 2021.
- Our base case valuation of SK Inc is NAV of 19.7 trillion won (NAV per share of 266,113 won), representing a 54% upside from current levels.
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