In today’s briefing:
- Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
- JCNC’s Logic-Defying Valuation
- Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
- Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer
- Industrivärden: Q1 Results and Discount to NAV
Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
- There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
- If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
- This implies an essential premise for us to set up a more aggressive preemptive position on KT.
JCNC’s Logic-Defying Valuation
- Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
- The simple ratio of JCNC/ Astra International (ASII IJ) is also the highest level outside the brief spikes post-Covid and during the 2008 GFC.
- There is no apparent justification for the current valuation. And a takeover from Jardine Matheson Holdings (JM SP) at these levels appears unrealistic.
Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
- Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month.
- This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
- There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.
Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer
- Golden Energy & Resources (GER SP)’s valuation is dependent on three key assets – Golden Energy Mines (GEMS IJ), Stanmore Coal (SMR AU) and Ravenswood. GEMS/SMR have observable values.
- The valuation of GEAR’s 50% stake in Ravenswood gets little publicity largely as it is unlisted. However, the annual report provides data points to value this key gold asset.
- Based on peer EV/Resource and EV/Reserve multiples, Ravenswood 50% stake is worth S$200-465 million. Using the midpoint valuation, the SoTP valuation is S$1.40 (39% upside to the last close).
Industrivärden: Q1 Results and Discount to NAV
- Industrivarden AB (INDUA SS) is resilient: NAV on 31 March was SEK 138.3 billion, or SEK 320/share, an increase q-o-q of SEK 27/share, +9%, with some minor additions to the portfolio.
- The balance sheet is strong, with a debt/equities ratio kept at 4%. A+ rating was confirmed on 27 March. 5-year total return was 67.5% vs. 66% for the OMX30.
- The discount to NAV of C shares is 8.1% (vs. 10.7% average over the last 8 years). During Q1 the discount has tightened from 13.6% on 31 December.
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