In today’s briefing:
- MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- Toshiba (6502) – Whoop! There It Is!
- AGC (5201 JP) – A Big Buyback
- Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
- Adani Ports – Earnings Flash – 9M FY 2022-23 Results – Lucror Analytics
- Ihara Science (5999 JP): JPY2,980 MBO Tender Offer
MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
- The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
- Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.
Toshiba (6502) – Whoop! There It Is!
- As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
- The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
- Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.
AGC (5201 JP) – A Big Buyback
- AGC Inc (5201 JP) today announced Q4 earnings where revenues were great, OP was slightly disappointing, and Net Profits were awful because of significant impairments.
- The company, however, announced a large buyback – its first in 5 years and equivalent to all the buybacks in the previous five years.
- The buyback should have impact on what is an interesting name with broad institutional ownership and not overwhelming liquidity.
Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.
- Ihara Science (5999 JP) announced an MBO by the chairman.
- It’s at an all-time high, but it is not especially attractive. The register is also really interesting.
- This is a smallcap but i would not be surprised to see a bumpitrage effort. In fact, I’d be surprised if we didn’t.
Adani Ports – Earnings Flash – 9M FY 2022-23 Results – Lucror Analytics
Adani Ports and Special Economic Zone’s 9M/22-23 results were broadly stable. The main takeaway was management’s commitment to reduce debt by INR 50 bn using FCF in FY 2023-24, supported by lower capex and limiting new acquisitions. This would cover the INR 16 bn in repayments for onshore bonds maturing in H1/23-24, as well as the prepayment of certain bank debt. Management expects the company to generate the same amount of FCF in FY 2024-25, which would be channelled to repay the USD 650 mn ADSEZ 3.375 24 due in July 2024.
Ihara Science (5999 JP): JPY2,980 MBO Tender Offer
- Ihara Science (5999 JP) has recommended an MBO tender offer (Chairman and Toku Corporation) of JPY2,980 per share, a 31.3% premium to the undisturbed price (7 February).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.25% ownership ratio.
- While the tender price represents an all-time share price, it is light in comparison to peer and historical multiples. This suggests deal risk. The offer runs from 9 Feb-24 Mar.
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