In today’s briefing:
- Benefit One (2412): The Plot Thickens
- Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
- KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
- Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
- Hyundai Hyms IPO Bookbuilding Results Analysis
- Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition
- Airport of Thailand (AOT): Near Term Gain
- Orient Overseas Intl (316 HK): Is It Time for a Reversal?
- European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024
Benefit One (2412): The Plot Thickens
- Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
- Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
- The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
- Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
- The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
- The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
- With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
- There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
- The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.
Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
- In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
- There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
- For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.
Hyundai Hyms IPO Bookbuilding Results Analysis
- Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
- A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
- Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading.
Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition
- The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
- Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
- In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.
Airport of Thailand (AOT): Near Term Gain
- Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
- Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months, AOT earnings could lag their peers.
- Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.
Orient Overseas Intl (316 HK): Is It Time for a Reversal?
- The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
- There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish.
- OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout.
European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024
- Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
- EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
- Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.
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