In today’s briefing:
- Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- Quiddity Leaderboard for Straits Times Index Mar 23: SMM Could Miss Addition
- North Holdings 3/Caverion: Fair Enough
- Airbus: Early-Stage Revenue, Margin, and Cashflow Recovery
Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- The Adani Enterprises (ADE IN) Further Public Offering (“FPO”) expected to raise Rs 200bn has its first leg publicly complete with anchor investors taking Rs 59.849bn.
- Noted shortseller Hindenburg Research published a long report suggesting Adani Enterprises and indeed the Adani Group were over-priced according to fundamentals and were the result of a “con.”
- Now the book build starts. Deal structure and Adani Group CFO comments continue to suggest that Liquidity is a Bug, not a Feature.
Quiddity Leaderboard for Straits Times Index Mar 23: SMM Could Miss Addition
- In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
- Previously, I expected the Sembcorp Marine (SMM SP) – Keppel Corp (KEP SP) deal to complete in time for SMM to be added to STI during the March 2023 review.
- However, that is looking less likely. SMM’s addition could get delayed to June 2023 and there might be a longer-period overhang in SMM once the deal completes.
North Holdings 3/Caverion: Fair Enough
- The Bain’s consortium announced an agreed sweetened offer (Alternative Consideration, shares exchanged for a zero-coupon debt instrument redeemable at €8.5 by mid-December), 6.25% premium to Triton’s offer.
- The Alternative Consideration (illiquid) corresponds to 16.3x EV/Fwd EBIT and 19.3x Fwd P/E. There are high chances that the bidding process will stop, but would still be long the shares.
- The Bain’s consortium has now all regulatory approvals. Gross spread is 0.82%, with an estimated annual return of 0.90% assuming settlement of the Alternative Consideration Instrument by 29 December.
Airbus: Early-Stage Revenue, Margin, and Cashflow Recovery
- As air traffic improves, the combination of increased production rates and strong price increases should partly offset supply related costs.
- The Company’s FCF levels further improve as margins recover, inventory delivered, and pre-payments received
- The share buyback program will resume once €10bn of free cash flow is generated. Airbus is a high-quality Company with a strong management team in place.
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