In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades
- Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink
- Link Admin Mulls Dye & Durham’s Upped Bid
- KOSPI 200 December Rebelancing: Names Currently Close To & Out of Buffer Zone
- Link Narrows the Price Gap as DND Bumps Its Lowered Offer
- République Française/EDF: Possible Offer for Minorities
- JAPAN ACTIVISM: Silchester’s Chugoku Bank AGM Ploy Fails – Won’t Be an Activism Target
- Giordano (709 HK): Cheng Family’s Offer (Even) Less Viable After Positive Profit Alert
FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades
- The FTSE TWSE Taiwan Dividend+ Index is an index of stocks with the highest dividend yields in the universe of the FTSE TWSE Taiwan 50 and Mid-Cap 100 Indices.
- According to our estimates, the historical average return for index rebalance trades seems to be extremely attractive and the potential volume impact can be significant too.
- We feel this is one of the most interesting esoteric indices in the Asia-Pacific region for index rebalance trades.
Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink
- Giordano International (709 HK)’s 1H22 net profit is expected to be in the range of HK$91-101 million, which represents YoY growth of 52-68%. Interims will be out in early August.
- The clear sign of a retail recovery diminishes the prospect of the Cheng family’s low-ball offer of HK$1.88 per share hitting the 50%+ minimum acceptance threshold.
- The offer price has not been declared final suggesting that the Cheng family retains some room to test shareholder appetite with an improved offer.
Link Admin Mulls Dye & Durham’s Upped Bid
- Dye & Durham (D&D) has bumped its offer for Link Administration (LNK AU) to $4.57/share after its prior revised $4.30/share bid was rejected.
- Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
- Link said it will consider the proposal and continue to engage with D&D.
KOSPI 200 December Rebelancing: Names Currently Close To & Out of Buffer Zone
- At this point, Lotte Confectionery and Miwon Specialty Chemical are currently within less than a 5% increase in market cap to beat the buffer rule.
- Three constituents are out of the buffer zone: Cheil Worldwide, HDC Hyundai Development, and Boryung Pharmaceutical. Hanall Biopharma, Samyang Holdings, and Hyundai Home Shopping sit on the buffer zone borderline.
- We should target Samyang Holdings and Hyundai Home Shopping for a short position against Lotte Confectionery and Miwon Specialty Chemical.
Link Narrows the Price Gap as DND Bumps Its Lowered Offer
- Dye & Durham/DND has bumped its lowered offer by 6.3% to A$4.57 per share. The Link Administration (LNK AU) Board has postponed the 13 July scheme meeting to facilitate discussions.
- DND’s “sweetened” A$4.57 base consideration plus the potential BCM consideration of A$0.13 totals exactly A$4.70 per share. This suggests that Board is aiming for a A$4.70 base consideration.
- DND is clearly interested in Link. Bridging the 2.8% price gap between the buyer’s and seller’s price aspirations is not onerous and suggests a deal can get done.
République Française/EDF: Possible Offer for Minorities
- The French Government works on the complete nationalisation of Electricite De France Sa (EDF FP). The Government currently owns 81%. The listing has not been a happy story for shareholders.
- As private equity usually puts it, a “private” setting would be more convenient for EDF, considering the massive debt issuance required to build 14 nuclear plants.
- A 40% premium (pre-PM speech) would still mean acquiring minorities at a lower multiple than that of Endesa (a close comparable) and would translate in an offer at €10.98/share.
JAPAN ACTIVISM: Silchester’s Chugoku Bank AGM Ploy Fails – Won’t Be an Activism Target
- Silchester International Investors targeted the AGMs of four Japanese regional banks in which it had held shares for 12-17yrs writing open letters, and asking each for a small special dividend.
- One was heavily over-capitalised and significant cross-holding owning Chugoku Bank (8382 JP)
- Their Shareholder Proposal flopped badly. The shareholder structure isn’t there to support it, now or in future, and among regional banks, this is on the “less attractive” side valuation-wise.
Giordano (709 HK): Cheng Family’s Offer (Even) Less Viable After Positive Profit Alert
- After the close of trading yesterday, Giordano International (709 HK) announced a positive profit alert
- Giordano expects an interim net profit of HK$91mn-HK$101mn, a 52%-68% increase over the corresponding period.
- The Cheng family’s HK$1.88/share Offer was low-balled from the onset. Substantial shareholder David Webb agrees. This deal is dead without a bump.
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