In today’s briefing:
- Clarifying the Bilibili (9626 HK) Rule on Southbound Eligibility
- Pushpay Draws Another Sixth Street/BGH Offer
- Lion Heart Studio Pre-IPO – The Positives – Got One Hit
- Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further
- Yaskawa (6506 JP) | Constant Currency Concerns
- Schneider Electric/Aveva: Potential Offer Price Sweetening
- Open Interest Hits All Time High
Clarifying the Bilibili (9626 HK) Rule on Southbound Eligibility
- Bilibili Inc (BILI US) listed in the US in April 2018. It eventually listed in Hong Kong under the ticker Bilibili (9626 HK) in March 2021 as a Secondary Listing.
- Bilibili (9626 HK) announced 16 March 2022 it intended to pursue a HK Primary Listing. Application was announced on 2 May 2022, Circular a month later. Results announced 29 September.
- As of 3 October, it is a Dual Primary Listing, making it eventually eligible for Southbound Trading. But there as confusion as to when. Hint: It’s March 2023.
Pushpay Draws Another Sixth Street/BGH Offer
- Pushpay Holdings (PPH NZ) confirmed that it had received a “revised” indicative non-binding proposal from a shareholder consortium, believed to be Sixth Street/BGH, which has a 20.3% stake.
- The proposal is “to acquire the Company at a premium to Friday’s closing share price.” Due to the sell-off, Sixth Street/BGH will likely offer a lower premium than initially intended.
- Our best guess is that Sixth Street/BGH’s offer is around A$1.30 per share. While not a knockout offer, it is a good starting point in the current grim market conditions.
Lion Heart Studio Pre-IPO – The Positives – Got One Hit
- Lionheart Studio (426630 KS), a game development studio based in South Korea, aims to raise around US$420m via its South Korean IPO.
- The company is majority owned by Kakao Games Corp (293490 KS), which after having recently hiked its stake, owned 54.94% of the company prior to listing.
- In this note, we will talk about the positive aspects of the deal.
Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further
- Several news media outlets reported last week that Tencent has changed its M&A strategy to obtain majority stakes in overseas gaming companies as opposed to buying minority stakes previously.
- Tencent’s online game revenue declined YoY for two-consecutive quarters primarily due to decline in domestic game revenue that was impacted by absence of new game titles and minority protection rules.
- Our analysis on Tencent’s game downloads and ranks reveal that both domestic and international game revenues would decline further in 3Q2022E.
Yaskawa (6506 JP) | Constant Currency Concerns
- Yaskawa’s order momentum has peaked. On a constant currency basis, orders growth was -6% sequentially
- Margins for the key Motion Control segment were 160bps lower in the quarter compared to a year ago
- A minor revision down relies on aggressive FX assumptions for the 2H. We feel there is another downgrade to come. Stay Bearish
Schneider Electric/Aveva: Potential Offer Price Sweetening
- Davidson Kempner and others may seek an improved offer of up to 3,500p/share, 29.7x EV/Fwd EBIT, in line with Ideagen’s acquisition multiples. Gross spread is +2.38%.
- Assuming AVEVA can reach 2018a 34.7% EBITDA margins and increase revenues, the offer price would seem cheap. An increase to 3,300p seems feasible, £4,073 million, similar to the Bridge Facility.
- Current net debt/EBITDA is 1.3x and EBIT/interest is 33.6x, so it could comfortably take on that additional debt. At 3,300p, proforma net debt/EBITDA would be 1.9x, before adding any synergies.
Open Interest Hits All Time High
- Price Movements: BNB, the native token of Binance Smart Chain, is down 8% following a $100mn hack.
- Market Liquidity: Sushiswap’s market share vs. Uniswap hit all time lows of just 1% in September as new Head Chef takes over.
- Derivatives: Open interest on Binance has surged to all time highs, although funding rates remain firmly neutral.
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