In today’s briefing:
- Toyo Construction AGM : YFO Wins on Dramatic Foreign Shareholder Discontent
- HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- KRX’s Official Selection Results of SSF & SSO Adds/Deletes: New Rules & Trading Ramifications
- United Malt (UMG AU): Malteries Soufflet’s Binding Offer
- Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- CSI300 Index Rebalance Preview: Early Look at Potential Changes in December
- Weekly Deals Digest (02 Jul) – JSR, Dali Foods, NWS, Poly Culture, Yitai, DDH1/Perenti, Tryt
- Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder
- Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage
Toyo Construction AGM : YFO Wins on Dramatic Foreign Shareholder Discontent
- In my piece Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO I said I thought YFO would lose, but it would be close.
- I thought it hinged on the shape of the register. It turns out it did. And it turns out they won, and it was close. Analysis is presented.
- What next? The new board takes its seats and may entertain a new takeover offer. I could see a buyout price a fair bit higher than here.
HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
- We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
- There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.
KRX’s Official Selection Results of SSF & SSO Adds/Deletes: New Rules & Trading Ramifications
- The latest update will feature the addition of 25 single stock futures, as well as five single stock options from KOSPI. Eight single stock futures will be removed.
- The selection will now take place twice a year, in March and September. Also, the selection requirement includes being included in the KOSPI 200 and KOSDAQ Global.
- The shortened selection cycle and the significant potential for the change range to vary based on index review results can indeed have a notable impact.
United Malt (UMG AU): Malteries Soufflet’s Binding Offer
- The AFR reports that United Malt Group Ltd (UMG AU) has received a binding offer from Malteries Soufflet at A$5.00 per share, a 13.6% premium to the last close price.
- The high spread reflected the risk of a no-deal or price cut due to the weak 1HFY23 results and lack of updates since the end of the 10-week due diligence.
- The offer is conditional on shareholders and FIRB approval. Shareholders will be supportive and breathe a sigh of relief at receiving a binding offer with unchanged terms.
Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), United Malt Group Ltd (UMG AU), Chindata Group (CD US), ENM Holdings (128 HK), Tesserent Ltd (TNT AU), Poly Culture.
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Musgrave Minerals (MGV AU), Metro Pacific Investments Co (MPI PM), Kenedix Residential Investment (3278 JP).
CSI300 Index Rebalance Preview: Early Look at Potential Changes in December
- Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
- We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
- The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.
Weekly Deals Digest (02 Jul) – JSR, Dali Foods, NWS, Poly Culture, Yitai, DDH1/Perenti, Tryt
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Tryt Inc (9164 JP), Amman Mineral Internasional (1416286D IJ), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH) IPOs.
- Event-Driven developments – JSR Corp (4185 JP), Dali Foods Group (3799 HK), Nws Holdings (659 HK), Poly Culture Group Corp H (3636 HK), Yitai Coal, DDH1 (DDH AU).
Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder
- 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.
- The key stock mentioned in this regular insight is Red Star Macalline Group Corp (1528 HK).
Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage
- On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for Applus Services SA (APPS SM), whose shares rose to €9.9, in the hope of a counter offer.
- The market is capable of forcing Apollo to sweeten its proposal to reach 75% acceptances. Many risk arbitrageurs have positions in Applus and may not settle for the current premium.
- This situation has been flagged for a while. If already long, it is worth holding for a possible better offer, which could come around €10/share, a 5.2% increase.
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