In today’s briefing:
- The Biggish Sep 2024 “Thursday-Friday Trade”
- REA’s Improved Terms For Rightmove
- Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
- Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive
- BUY/SELL/HOLD: Hong Kong Stock Updates (September 21)
- REA/Rightmove: Third Proposal Seems Close to Fair Value
- Qualcomm’s Game-Changing Play: What Intel’s Acquisition Could Mean for the Future of Tech!
- Tech Supply Chain Tracker (24-Sep-2024): Taiwan’s energy policy faces EU pressure on localization.
- Maximus Inc.: Initiation Of Coverage – Transition to Medicaid Enterprise Systems As A Critical Pivot & Other Major Drivers
- ExlService Holdings: Initiation Of Coverage – Expansion of Analytics and Healthcare Services & Other Major Drivers
The Biggish Sep 2024 “Thursday-Friday Trade”
- Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
- There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
- This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.
REA’s Improved Terms For Rightmove
- Rightmove PLC (RMV LN), UK’s largest real estate portal, has twice rejected REA Group Ltd (REA AU) cash/scrip non-binding Offers this month.
- REA has upped terms to 341 pence + 0.0422 new REA shares per Rightmove share, or 770p/share, a 39% premium. If completed, Rightmove’s shareholders would own ~20.1% of the MergeCo.
- Thrice rejected? I think Rightmove should engage. REA also has until the 30th September to make a formal Offer. Or walk away.
Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
- The new 100% mandatory tender offer rule could push buyers to lower premiums for major shareholders, potentially increasing hostile takeover attempts as costs get shared with minority shareholders.
- It looks like MBK is eyeing this situation as a chance to redefine their strategy. This really shows how serious MBK is about the Korea Zinc deal.
- Watch for top-tier assets available via hostile takeovers, particularly companies like SK Inc and Lotte Corp, where low shareholder stakes may lead to management conflicts.
Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive
- Sino American Silicon Products (5483 TT) is looking to raise US$287m in its GDRs offering. Proceeds will be used to purchase overseas raw materials, repay bank loans and purchase machinery.
- Similar to previous GDR listings, the deal has had a long drawn out approval process. Thus, the deal is a very well flagged one.
- The deal is a relatively large one to digest at 15.7 days of the stock’s three month ADV.
BUY/SELL/HOLD: Hong Kong Stock Updates (September 21)
- The conglomerate sector continues to show momentum in Hong Kong while the materials and energy sectors lag
- Weibo (9898 HK)Weibo Corp (WB US) was rated a BUY as valuations and potential catalysts from parent Alibaba Group Holding (9988 HK) could support a higher stock price.
- China East Education (667 HK) was upgraded to BUY with higher higher price target due to profit increase. Dongfang Electric (1072 HK) was initiated with a BUY with strong upside.
REA/Rightmove: Third Proposal Seems Close to Fair Value
- The Board of Rightmove PLC (RMV LN) will consider REA Group Ltd (REA AU)‘s third proposal (implied value of 770p/share, 39% premium, 20.4x EV/NTM EBITDA, 28x Fwd P/E).
- Using 21.3x NTM EBITDA (comps) would indicate fair value of 805p, 4.5% increase to current offer, implying 29.3x P/E, although proforma leverage would increase to 3.6x.
- REA has not stated that the offer is final. Rightmove investors and Board may require further persuasion, as the implied probability of deal success is just 58%.
Qualcomm’s Game-Changing Play: What Intel’s Acquisition Could Mean for the Future of Tech!
- The semiconductor industry is buzzing with news that Qualcomm, the world leader in smartphone chipsets and wireless technology patents, has approached Intel about a potential acquisition.
- The Wall Street Journal recently reported on this development, signaling Qualcomm’s ambition to expand beyond its mobile chipset dominance and deepen its reach into the PC and server markets.
- While the deal remains uncertain and could face significant regulatory hurdles, this move could be transformative for Qualcomm.
Tech Supply Chain Tracker (24-Sep-2024): Taiwan’s energy policy faces EU pressure on localization.
- Taiwan’s energy policy is challenged by EU pressure on localizing offshore wind, hindering progress in renewable energy development.
- Recycling technology is repurposing electronic waste components like substrates and circuit boards, reducing environmental impact and promoting sustainability.
- Google implements DataGemma to improve accuracy in their hallucination-proofing LLM system, using Data Commons for enhanced performance.
Maximus Inc.: Initiation Of Coverage – Transition to Medicaid Enterprise Systems As A Critical Pivot & Other Major Drivers
- Maximus, a global leader known for managing government programs, recently delivered robust financial results for its fiscal 2024 third quarter.
- The company showed notable organic growth and revenue expansion across its diversified segments, with total revenue reaching $1.31 billion, marking a 10.6% year-over-year increase.
- This growth was driven mainly by the U.S. Federal Services segment, which achieved a significant 17.0% revenue increase primarily through expanded clinical programs.
ExlService Holdings: Initiation Of Coverage – Expansion of Analytics and Healthcare Services & Other Major Drivers
- ExlService Holdings, Inc. has delivered a robust performance in the second quarter of 2024, continuing its upward trajectory in the data and artificial intelligence (AI) sectors, an area where the company has been increasingly focusing its resources.
- The company reported a revenue of $448 million, marking an 11% increase year-over-year, and an adjusted earnings per share (EPS) rise of 11% to $0.40.
- This growth was predominantly propelled by high demand in its Analytics and Digital Operations & Solutions segments.
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