In today’s briefing:
- SHL-Japan (4327 JP): JPY3,550 Tender Offer from SHL Group
- Downer EDI: In Need Of A “Culture Reset”
- Meilan Airport (357 HK): Profit Warning Removed Share Price Overhang
- Quiddity Final Predictions for UK F100/250 March 2023 Regular Review & Other Intra-Review Changes
- Downer EDI (DOW AU): Down or Out
SHL-Japan (4327 JP): JPY3,550 Tender Offer from SHL Group
- SHL Japan Ltd (4327 JP) has recommended SHL Group’s tender offer of JPY3,550 per share, a 32.2% premium to the undisturbed price (1 March).
- 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 36.62% ownership ratio.
- Achieving the minimum 36.62% ownership ratio requires a 32% acceptance rate from minorities excluding irrevocables. This is not onerous as the tender price represents an all-time share price.
Downer EDI: In Need Of A “Culture Reset”
- As per Downer (DOW AU)‘s website: “Our purpose is to create and sustain the modern environment by building trusted relationships with our customers“. They should extend that trust to shareholders.
- Having already announced accounting irregularities back in December, Downer further cut profit forecasts – and interim dividend – this week. After shares cratered 24%, Downer’s CFO promptly tendered his resignation.
- Allan Grey, which holds 6% in Downer, reckons the company has been inept and that a “culture reset” was in order.
Meilan Airport (357 HK): Profit Warning Removed Share Price Overhang
- Meilan Airport issued a profit warning last night expecting a net loss of not more than RMB280 million for 2022.
- While the magnitude of loss surprised us, positive share price reaction suggests investors are ready to look beyond.
- We incorporate both higher passenger throughput and financial expenses estimate in our model and trim our net profit forecast for 2023 from RMB600 million to RMB500 million. Maintain Buy.
Quiddity Final Predictions for UK F100/250 March 2023 Regular Review & Other Intra-Review Changes
- In this insight, we take a look at Quiddity’s final predictions for index changes for UK’s F100 and F250 indices for the March 2023 Rebalance.
- The index changes are likely to be confirmed after market close today and there could be more intra-review changes later this month.
- In this insight, we take a look at the recent price performance of names that can potentially be involved in index changes and our flow expectations for each name.
Downer EDI (DOW AU): Down or Out
- Downer EDI Ltd (DOW AU) shares are battered on the back of two quick successive profit warnings, accounting restatements and dividend cuts.
- A worrying deterioration in cash generation and an increase in leverage add to the nervousness. Management flux adds to the uncertainty and the chance of a third profit warning.
- While Downer’s multiples are in line with peers, momentum is against it and there are question marks if the earnings have been flattered by the misuse of exceptional items.
💡 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
