In today’s briefing:
- SAIC’s Unconditional Offer For Dongzheng
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (27 May 2022)
- Post KOSPI 200 Rebalancing Shorting Event: Watch Iljin Hysolus, F&F, & K Car
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (27 May 2022)
- Beijing Enterprises Urban Resources’ MGO Open, First Closing Date 17 June
- Infomedia (IFM AU): Battery Ventures Sneaks In Above TA’s Proposal
- Infomedia Receives a Competing A$1.75 Offer from Battery Ventures
- BGH Capital in Pole Position at Virtus
- Korean Air & Asiana Airlines: Current Status of CB Conversion Event
- BEURG (3718 HK) Now Open For Acceptances. IFA Says Fair
SAIC’s Unconditional Offer For Dongzheng
- It’s now official – SAIC Motor (600104 CH) has made a possible unconditional mandatory cash Offer for Dongzheng Automotive Finance (2718 HK).
- To recap: on the 19 May, SAIC acquired China Zhengtong Auto Services Hldg (1728 HK)‘s 71.04% stake in Dongzheng at a judicial auction. This triggers the mandatory Offer.
- The new news from today’s announcement is that the Offer price was reduced to HK$1.243/share – presumably on account of moves in HKD vs. RMB. The Offer price is final.
Shanghai/Shenzhen Southbound Connect: Weekly Moves (27 May 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, net inflow was ~US$1.1bn, split evenly (roughly) between Shanghai and Shenzhen.
- The largest inflows were into China Mobile (941 HK) and CNOOC Ltd (883 HK). The largest outflows were in Kuaishou Technology (1024 HK) and BYD (1211 HK).
Post KOSPI 200 Rebalancing Shorting Event: Watch Iljin Hysolus, F&F, & K Car
- We should pay attention to the following three stocks: F&F, Iljin Hysolus, and K Car. They all have recently seen a drastic increase in the loan balance.
- Their passive flow sizes relative to ADTVs are the lowest among the additions. It seems that those with relatively little passive impact are targeted.
- Also, their projected earnings are highly volatile, and they all face overvaluation issues, whereas the other four names have more clear projections for earnings.
Shanghai/Shenzhen Northbound Connect: Weekly Moves (27 May 2022)
- Inside is a recap of movements in the last week relating to the Hong Kong Stock-Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
- Overall, net inflow was ~US$0.7bn, split between Shanghai (+US$1bn) and Shenzhen (-US$0.3bn)
- The largest inflows were into China Yangtze Power (600900 CH) and Cosco Shipping Holdings (601919 CH). The largest outflows were in Kweichow Moutai (600519 CH)and CATL (A) (300750 CH).
Beijing Enterprises Urban Resources’ MGO Open, First Closing Date 17 June
- Beijing Enterprises Urban Resources (3718 HK) composite document is out with the MGO’s first closing date of 17 June. The IFA considers Beijing Enterprises Water Group (371 HK)‘s offer fair.
- The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights. With the offeror currently at 44.16%, the MGO should become unconditional.
- At last close and for a 28 June payment, the gross and annualised spread to the MGO price (including final dividend) of HK$0.81 per share is 2.5% and 31.5%, respectively.
Infomedia (IFM AU): Battery Ventures Sneaks In Above TA’s Proposal
- Online auto parts and service provider Infomedia Ltd (IFM AU) has received a second non-binding proposal – by way of a Scheme – this one from PE outfit Battery Ventures.
- The Offer price is A$1.75/share, a 36.7% premium to last close, and a A$0.05/share premium to TA/Viburnum’s proposal earlier this month.
- As with TA, Battery has been granted limited due diligence. With a 19.4% stake, TA remains very much in the driver’s seat.
Infomedia Receives a Competing A$1.75 Offer from Battery Ventures
- Infomedia Ltd (IFM AU) disclosed an indicative non-binding proposal from Battery Ventures at A$1.75 a share, a 2.9% premium to TA/Viburnum’s offer of A$1.70 per share.
- Infomedia is in preliminary discussions with several other interested parties. The other interested party is rumoured to be the auto software business OEConnection.
- The situation is reminiscent of the ongoing bidding war for Virtus Health (VRT AU) between CapVest and BGH Capital. Expect at least another round of bids.
BGH Capital in Pole Position at Virtus
- The Virtus Health (VRT AU) Board changed their recommendation that the BGH takeover offer rather than the CapVest offer is in the best interest of shareholders.
- BGH and CapVest represent 22.38% and 1.13% of outstanding shares, respectively. Press reports suggest that it is unlikely that CapVest will increase its offer (scheme: A$8.15, takeover: A$8.10).
- The BGH takeover offer of A$8.15 per share remains open until 31 May. At the last close price, the gross spread to the BGH takeover offer is 0.9%.
Korean Air & Asiana Airlines: Current Status of CB Conversion Event
- Korean Air might have already notified the creditors of its early repayment decision. Asiana will likely follow suit, immediately triggering the creditors to exercise the conversion rights.
- So, both Korean Air and Asiana’s conversion should be a foregone conclusion. There is only uncertainty about how many conversions we will actually see for Asiana from the KDB.
- Instead of preemptive position setup at this point, I would consider starting the position build-up within the 2-3 day window from the repayment filing to CB conversion.
BEURG (3718 HK) Now Open For Acceptances. IFA Says Fair
- The Composite Doc for Beijing Enterprises Water Group (371 HK)‘s (BEURG) mandatory general cash for Beijing Enterprises Urban Resources (3718 HK) (BEW) has been despatched.
- The first close is the 17 June but can be open until the 26 July. BEW has 44.16% in the bag and this requires a 50% hurdle to turn unconditional.
- It’s an underwhelming Offer yet the IFA considers the terms to be fair and reasonable. But there’s probably enough here for the Offer to get up.
Before it’s here, it’s on Smartkarma
