In today’s briefing:
- Cosmo Oil (5021 JP) Accelerated Block Offering – Big Discount But… 👀
- NIO (9866 HK) Secondary Listing: HSTECH Inclusion in June Likely
- HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)
- MSCI Korea May Rebalancing Preview
- Startek Inc. – SRT US 55% Owner Proposes $5.40 Cash Per Share Squeeze Out
- Kumho Petrochem: Share Buyback, Cancellations, & Higher Dividends
- KKR/Albioma: Takeover Interest
- DWS Gatecrashes NEX Offer for Stagecoach
Cosmo Oil (5021 JP) Accelerated Block Offering – Big Discount But… 👀
- Mubadala bought 20.8% of Cosmo Energy Holdings (5021 JP) in 2007 at ¥5,068/share (split-adjusted). A few months later it dipped below that and hasn’t seen that price since.
- The sovereign wealth fund sold 5% last year at ¥2,610, and just 7 months later is bailing on the other 15.7% at a 12-17% discount.
- Result? Float will rise. Index funds will buy a bit, and active foreign institutional investors will nearly double their holdings.
NIO (9866 HK) Secondary Listing: HSTECH Inclusion in June Likely
- NIO Inc (9866 HK) is expected to list on the HKEX (388 HK) tomorrow. Nearly 820m Class A shares are now held on the Hong Kong Share Register.
- We do not expect NIO Inc (9866 HK) to get Fast Entry to the HSCEI INDEX and HSTECH INDEX, though inclusion in the HSTECH could take place in June.
- NIO Inc (9866 HK) is not likely to get Fast Entry to the HSCI. The stock is not eligible for Southbound Stock Connect as a Secondary Listing.
HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)
- Great Wall Motor (2333 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance. The review period ends 31 March.
- Bilibili (9626 HK) is a close add while Sunac China Holdings (1918 HK) is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.
- Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).
MSCI Korea May Rebalancing Preview
- As for additions, only Kakao Pay and Hyundai Heavy pass the screening. Both now satisfy the minimum listing period requirement and comfortably beat both full and float-adjusted market cap hurdles.
- Lotte Shopping and Meritz Financial Group are filtered among the deletion candidates. Both fail (or closely) to meet the lower buffer of the float-adjusted market cap, estimated at ₩0.91T.
- Hyundai Heavy’ passive impact is expected to be relatively greater than that of Kakao Pay. Lotte Shopping’s impact is estimated to be significantly greater than that of Meritz Financial Group.
Startek Inc. – SRT US 55% Owner Proposes $5.40 Cash Per Share Squeeze Out
- Singapore-Based private equity firm Capital Square Partners (“CSP”) engineered combination of Aegis Global and “old” Startek in 2018 to create “new” Startek.
- Microcap business process outsourcing (“BPO”) company runs outsourced customer contact centers, has improving sales and profitability, and a declining stock price.
- On 20December2021, CSP disclosed that it had submitted a “preliminary, non-binding proposal” to acquire all outstanding shares of SRT US not already owned by it for $5.40 per share.
Kumho Petrochem: Share Buyback, Cancellations, & Higher Dividends
- After the market close on 8 March, Kumho Petro Chemical (011780 KS) announced major share buyback, dividends, and investment plans.
- Kumho Petrochem’s share price has nearly halved since its 52 week highs in May 2021.
- The company’s efforts to buyback shares and cancel them (about 3% of outstanding shares) as well as higher dividends are likely to reverse this share price decline.
KKR/Albioma: Takeover Interest
- KKR is considering the takeover of recently underperforming renewable energy producer Albioma. The sector is trendy due to low real interest rates, increasing electricity prices and interest from infrastructure funds.
- The deal should increase KKR’s exposure in renewable energies across geographies (Albioma has exposure to France, Mauritius, Brazil and others, and accelerate Albioma’s growth.
- Awaiting for further news, comparables are trading at a median 14.7x EV/Fwd EBITDA, thus the implied equity value of Albioma would be €62.2/share. Falck was taken at 16.3x EV/Fwd EBITDA.
DWS Gatecrashes NEX Offer for Stagecoach
- Stagecoach has agreed to a 105p cash offer from DWS (37% premium, 14.7x EV/Fwd EBIT). The board has withdrawn the prior recommendation for an all-share merger with National Express.
- National Express could respond by increasing its offer in line with DWS’s, but that would imply giving away c. 50% of the combined company, which I think unlikely.
- The offer is not incredibly generous, but there are risks (soaring fuel prices, inflation, etc.). Gross spread is nil and the offer is likely to close.
Before it’s here, it’s on Smartkarma
