In today’s briefing:
- Air New Zealand’s Rights Offering – Take Advantage Of the Arb
- Toshiba (6502) – 3D Writes Another Letter
- HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?
- Yangzijiang Shipbuilding: Get Involved
- Toshiba – 3D At It Again
- First Pac (142 HK): Perennially Inexpensive
- BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus
- Advent & CenterBridge/Aareal: Getting the Holdouts on Board
- DAX Index: Quiddity Leaderboard for June 2022
Air New Zealand’s Rights Offering – Take Advantage Of the Arb
- Air New Zealand (AIR NZ) is the latest airline do a Covid Recapitalisation with a “heavy rights issue” where
- The dynamics will likely play out somewhat similarly to the way Singapore Air’s did. The initial squeeze and first leg down have.
- But that means LOTS of opportunity here for long only, passive, and arbitrageurs alike.
Toshiba (6502) – 3D Writes Another Letter
- On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check.
- That same day, Bain signed a “Confirmation Agreement” with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check.
- Now we have a 3D public letter to the Board demanding 3 measures before the AGM.
HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?
- Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
- We list 10 stocks that could be added to the index in June – with one-way turnover close to 6%, the actual number of inclusions will be lower.
- We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.
Yangzijiang Shipbuilding: Get Involved
- Yangzijiang Shipbuilding (YZJSGD SP)‘s EGM will be held on 18 April to vote on the proposed spin-off and listing of the company’s investment segment, YZJ Financial Holdings Ltd (YZJFH).
- This spin-off involves an in-specie distribution of YSJFH, with a possible listing by month-end.
- YZJ’s shares have had a solid run since the initial restructuring announcement last November. There looks to be still more juice left in the trade.
Toshiba – 3D At It Again
- 3D Investment Partners has sent another open letter to Toshiba’s Board of Directors once again pushing for privatisation options.
- Once again, the fund’s claims and demands come across as rather shrill and potentially desperate.
- 3D’s behaviour is a stark contrast with other activists who have been quieter and more skilful and could be the biggest risk to Toshiba in our view.
First Pac (142 HK): Perennially Inexpensive
- Last week First Pacific Co (142 HK) announced a 33% increase in recurring profit to a record high.
- The full-year distribution up to 19.0 HK cents/share backs out a yield of 6.3%.
- The current discount to NAV of 56% compares with a 12-month average of 59%, and a long-term average of 50%.
BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus
- BGH announced an unconditional off-market takeover offer at A$8.00 cash per share along with intention for on-market purchases equal to, below, or higher than the offer price.
- CapVest’s scheme transaction while superior has virtually no chance of getting up. CapVest’s off-market transaction is less appealing due to the uncertain outcome of the ATO ruling.
- The last close price of A$8.15 is higher than both BGH and CapVest’s off-market offers which suggest both would need to raise their bid.
Advent & CenterBridge/Aareal: Getting the Holdouts on Board
- The consortium sees value in Aareal, as it intends to come back with a renewed €33/share offer, while getting the main holdouts on board after securing 37% of voting rights.
- Aareal’s Board will nod again, and BaFin should green light the new offer (6.5% increase). Acceptances needed would be 36.5% of the float. The offer would more palatable.
- My SOTP valuation ranges from €36.8 – €39.67share. Gross spread (5 April) is 1.58%, 5.14% annualised assuming settlement by 30 July (it could be earlier). Long ARL GR.
DAX Index: Quiddity Leaderboard for June 2022
- DAX is a German blue-chip index that tracks the 40 largest companies listed on the Regulated Market of the Frankfurt Stock Exchange.
- The DAX Index is reviewed on a quarterly basis in March, June, September, and December.
- In this insight, we take a look at the potential constituency changes that can happen in the June 2022 review.
Before it’s here, it’s on Smartkarma
