In today’s briefing:
- Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
- Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco
- Datamatics Global Services Ltd: Forensic Analysis
- Whispir (WSP AU) Backs Soprano’s Bump
- XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
- On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
- On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
- “The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.
Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco
- It was reported today that SK Pharmteco completed a 660 billion won in pre-IPO funding valuing the company at 4 trillion won.
- Prior to this investment, SK Inc owned a 100% stake in SK Pharmteco. After this investment, it is estimated that SK Inc will own about 83.5% stake in SK Pharmteco.
- Our base case valuation of SK Inc is NAV of 19.0 trillion won (NAV per share of 258,967 won), representing a 47% upside from current levels.
Datamatics Global Services Ltd: Forensic Analysis
- Datamatics Global Services (DATA IN) or DGSL has seen a good operational performance especially since F23, on the back of a difficult IT macro environment.
- Yet there are some discomforts on the forensic side, especially related to cash component. Low cash yield due to significant current account balances in subsidiaries raises alarm bells.
- We find opaqueness regarding some important disclosures including Ind AS 115- Revenues and Ind AS 116- Leases. Decision to increase remuneration cap size also leaves us perplexed.
Whispir (WSP AU) Backs Soprano’s Bump
- Soprano has upped its Offer for Whispir Ltd (WSP AU) to A$0.55/share, and has secured board support.
- Pendula has a higher (indicative) Offer of A$0.60/share; however Whispir sees Soprano’s terms as superior due to the “conditionality, uncertainty and timing of progressing to a binding transaction with Pendula”.
- Soprano’s Offer for Whispir closes on the 10 January – unless extended.
XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence
- XL Axiata (EXCL IJ) continues to stand as the most direct way to play the data demand in Indonesia as well as being the most convergent of the listed telcos.
- Although it saw some seasonal slowdown in 3Q, the solid growth trajectory remains intact for this year with the completion of the Link Net restructuring driving convergence growth.
- XL Axiata (EXCL IJ) raised data prices again in November and will continue to ride the wave of price reparation over the coming quarters in a more rational pricing environment.
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