In today’s briefing:
- What Should We Do About the Futures Basis Spread Caused by Hanwha Ocean’s Rights Offering?
- Hollysys (HOLI US): In Court Today …
- Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?
- Haitong International (665 HK): Vote on 15 December
- Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
- Nice Holdings: Material Increase in Dividends and Share Cancellations
- DMA ONE: JSE December ‘23 Rebalance Rankings
- Haitong Sec (665 HK) 15th Dec Scheme Vote
- H.I.G./DX (Group): Recommended Offer with Possibility of Bump-Up
What Should We Do About the Futures Basis Spread Caused by Hanwha Ocean’s Rights Offering?
- The day the basis spread disappears is this Friday, the 24th of November. This mirrors a comparable pattern observed during Korean Air’s rights offering in 2020.
- If the spot price does not fall below the futures price of our entry until this Friday, we could potentially be in a profitable range.
- There has been a notable pattern where the spread continues to exist until just before the moment when new share selling becomes feasible.
Hollysys (HOLI US): In Court Today …
- A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
- There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
- That hearing took place today. So I went along to hear first-hand the key arguments from both sides.
Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?
- Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the December rebalance.
- This ETF inclusion for Alchip Technologies (3661 TT) could come back-to-back with another index inclusion scheduled for the end of November.
- Shorts in Alchip Technologies (3661 TT) have been building up while shorts in Feng Tay Enterprise (9910 TT) have surged over the last few months.
Haitong International (665 HK): Vote on 15 December
- Haitong International Securities Group (665 HK)’s scheme meeting is on 15 December. The IFA considers Haitong Securities Co Ltd (H) (6837 HK)’s HK$1.52 per share offer fair and reasonable.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
- The high takeover premium ensures a done deal. At the last close and for the 18 January 2024 payment, the gross and annualised spread is 2.7% and 18.2%, respectively.
Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
- Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
- The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
- In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.
Nice Holdings: Material Increase in Dividends and Share Cancellations
- On 21 November, Nice Holdings (034310 KS) announced new shareholder return policies that included material increase in dividends and share cancellations.
- First, Nice Holdings has decided to raise dividends by more than 10% every year for the next three years. Nice Holdings paid dividend per share of 410 won last year.
- Nice Holdings also announced that it will cancel more than 1% of total outstanding shares every year for the next three years.
DMA ONE: JSE December ‘23 Rebalance Rankings
- We do not expect any constituent changes for the following indices: Top 40, Top 40 SWIX, FINI, FINDI or INDI.
- HAR is expected to enter the RESI and AMS is expected to fall out.
- After much anticipation, ANG’s indicative free float came in at 75%, 21.9 percentage points lower than the current SWIX float of 96.8%.
Haitong Sec (665 HK) 15th Dec Scheme Vote
- Once the pre-cons were satisfied on the 15th November, it seemed pessimistic to stick to the delayed 29 December dispatch date for Haitong International Securities Group (665 HK)‘s Scheme Document.
- And right on cue, the Doc was issued last night (21 Nov). The Court Meeting is the 15 December. with an expected cash despatch on or around the 18 January.
- Trading at a gross spread to terms of 2.7%. The headcount test applies. But this should comfortably get up.
H.I.G./DX (Group): Recommended Offer with Possibility of Bump-Up
- DX Group PLC (DX/ LN) agreed to a 47.5p/share offer (plus 1p dividend, ex-dividend 16 November) from H.I.G., 33% premium, 8.8x 2023a EBITDA, to be conducted via scheme of arrangement.
- DX had a substantial improvement in revenue and profitability in 2018-2023. Although irrevocables represent 33.1% of the share capital, some shareholders have some doubts and letters of intent total 21.5%.
- Some shareholders will try to extract more: DCF-based 50p could be defended, 5.2% above current offer. Spread 1.05%/3% (gross/annualised, assuming 30 March settlement). I’d be long in case of bump-up.
💡 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
