In today’s briefing:
- Golden Energy (GER SP): Revised Offer Is Still Not Good Enough
- Merger Arb Mondays (20 Mar) – Toshiba, AAG Energy, Tyro, Newcrest, InvoCare, Pushpay, Golden Energy
- Recruit: Share Price Continues to Fall as Labour Markets Facing Challenges
- Golden Energy: Offer Bumped. Still Insulting
- Air China (753 HK): Set to Accelerate
- [ZTO Express (ZTO US) Earnings Review]: Striding Towards Ecosystem Development
Golden Energy (GER SP): Revised Offer Is Still Not Good Enough
- Golden Energy & Resources (GER SP)‘s revised proposal from the Widjaja family – distribution proposal (1.3936 GEMS share per share or IDR6,500 per GEMS share) and the delisting proposal (S$0.181).
- The revised offer addresses the issue around the previous offer’s unattractive distribution cash alternative and unfavourable FX. However, the revised offer remains light but is not declared final.
- The revised offer fails to address the issue concerning the decline in Golden Energy Mines (GEMS IJ) share price and the value of Stanmore Coal (SMR AU) stake.
Merger Arb Mondays (20 Mar) – Toshiba, AAG Energy, Tyro, Newcrest, InvoCare, Pushpay, Golden Energy
- 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), 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Newcrest Mining (NCM AU), Aag Energy Holdings (2686 HK).
- Lowest spreads – Nitro Software Ltd (NTO AU),Norwest Energy NL (NWE AU), GK Goh Holdings (GKG SP), Boustead Projects (BOCJ SP), Nippon Steel Trading Corporation (9810 JP), Nissin Electric.
Recruit: Share Price Continues to Fall as Labour Markets Facing Challenges
- Recruit Holdings (6098 JP) share price is down 18% YTD and the valuation multiples have more than halved since their peak in November 2021.
- The company’s recent 3QFY03/2022 earnings pointed towards declining profitability with mismatch in the labour markets easing off.
- The job openings in the US have further declined in January suggesting that Recruit’s share price has more room to fall as consensus has further downgraded estimates.
Golden Energy: Offer Bumped. Still Insulting
- The Widjaja family has responded to criticism from various quarters over its low-balled Offer for Golden Energy & Resources (GER SP) and revised terms.
- The all-cash payout for the 62.5% stake in Golden Energy Mines (GEMS IJ) is now 15.5% higher at S$0.792/share. The exit offer is 13% higher at S$0.18.1.
- No matter how you slice it, the bump is petty. GEAR’s “rump” is currently worth at least S$0.63/share.
Air China (753 HK): Set to Accelerate
- Air China (H) (753 HK) underperformed China Southern (1055 HK) YTD as domestic traffic recovery is faster than international, but its momentum will accelerate in the rest of the year.
- With Jan-Feb domestic traffic returned to 92.6% of 2019, CSA’s upside is relative limited. Air China, instead, will benefit from more profound international rebound which only back by 10.3%.
- Recent developments including resumption of visa issuance and outbound international group travels, removal of pre-flight negative PCR tests and recovery of visitors to HK all bode well for Air China.
[ZTO Express (ZTO US) Earnings Review]: Striding Towards Ecosystem Development
- ZTO guided at least 1.5ppt market share gain in 2023, which exceeds our previous expectation.
- ZTO, leveraging its highest market share, is the most likely to expand its own end-to-end ecosystem, which leads to improvement in operating efficiency, increase of doorstep delivery, and pricing power.
- Maintain BUY and TP due to share gain, efficiency improvement, and early-mover advantage in expanding ecosystem. Our TP implies 23x P/2023E.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
