In today’s briefing:
- Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
- Adani Group Has a Significant Liquidity Gap to Bridge
- Halcyon Agri (HACL SP): Offer Document Out, Offer Closes 24 March
- Merger Arb Mondays (27 Feb) – Jiangnan, Origin Energy, Pushpay, Nitro, Norwest, Halcyon, Boustead
- Weekly Deals Digest (26 Feb) – Sembcorp Marine, Jiangnan, Origin Energy, Nitro, Boustead, Fujitec
- Pacific Basin Shipping (2343 HK): Bad Times Behind, What’s Setup for 2023?
- Halcyon Agri: Offer Doc Out. No New News Otherwise
- Sembcorp Marine Buy Target/Support
Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
- The Fujitec Co Ltd (6406 JP) EGM where activist Oasis Management wanted to spill the independent board members took place Friday.
- Results were mixed, but generally a success for Oasis, with 9 of the 13 votes won. Preliminary analysis of “uncertain voter” split interesting, and “Glass Lewis Effect” stronger than expected.
- The real shocker, however, was a footnote at the end of the announcement. This could (and should) have further repercussions.
Adani Group Has a Significant Liquidity Gap to Bridge
- Short-Term borrowing plays an important role in the Adani group
- Rescinding of Adani Enterprises FPO and meltdown in share prices heightened liquidity concerns of the group
- This analyst estimates the liquidity gap to be around US$ 8 bn for FY2023 which needs to be bridged by long-term funds and/or cash flow from operations
Halcyon Agri (HACL SP): Offer Document Out, Offer Closes 24 March
- China Hainan Rubber Industry (601118 CH) has despatched the offer document relating to its Halcyon Agri (HACL SP) MGO at US$0.315 or S$0.413 per share. The offer closes on 24 March.
- The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate (47% excluding the Gondobintoro Family).
- We think that this is achievable as the offer is attractive. At the last close and for an early-April payment, the gross and annualised spread is 0.7% and 7.3%, respectively.
Merger Arb Mondays (27 Feb) – Jiangnan, Origin Energy, Pushpay, Nitro, Norwest, Halcyon, Boustead
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Golden Energy & Resources (GER SP), Origin Energy (ORG AU), Toyo Construction (1890 JP).
- Lowest spreads – Ihara Science (5999 JP), Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Boustead Projects (BOCJ SP), Nissin Electric (6641 JP), Techno Associe (8249 JP).
Weekly Deals Digest (26 Feb) – Sembcorp Marine, Jiangnan, Origin Energy, Nitro, Boustead, Fujitec
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Pertamina Geothermal Energy (PGEO IJ) has a flat debut and Star Entertainment Group (SGR AU) aims to raise A$800 million to fix its balance sheet.
- Event-Driven developments – Sembcorp Marine (SMM SP), Halcyon Agri (HACL SP), Fujitec Co Ltd (6406 JP), Jiangnan (1366 HK), Techtronic Industries (669 HK), Origin Energy (ORG AU), Nitro, Pushpay.
Pacific Basin Shipping (2343 HK): Bad Times Behind, What’s Setup for 2023?
- The decline in 2H22 profit (53.1% YoY and 43.8% HoH) for Pacific Basin Shipping (2343 HK) is a matter of the past. Market rates have already rebounded from the trough.
- Demand recovery on China re-opening, good forward cargo cover, reduction in operating costs, strengthened financial position and diversified customer base are Pacific Basin’s key merits.
- Lower profit for FY23 should be well anticipated by the market, yet it still generates ROE of 20.9%, making its 1.0x P/B inexpensive. Moreover, yield will stay at 10% level.
Halcyon Agri: Offer Doc Out. No New News Otherwise
- The Offer Document for China Hainan Rubber Industry (601118 CH)‘s mandatory Offer for Halcyon Agri (HACL SP) has been dispatched.
- Hainan Rubber holds 36% and needs 14% out of 34.8% available – or ~40% to tender. The first close is the 24 March.
- There is no IFA opinion in the Offer Doc. This will be present in the Circular which is expected to be sent out by the 10th March, at the latest.
Sembcorp Marine Buy Target/Support
- Sembcorp Marine shows interesting bull support at 0.12 where price and trendline meet but does face global cycle headwinds in March. Sell near term above 14.
- MACD trendline support under pressure and a must hold level for the bull case. An MACD would spell trouble for price.
- Current weakness if viewed as a pullback after the May to June bull triangle breakout. 11 is the key pivot level to hold.
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