In today’s briefing:
- JD.com (9618 HK): CCASS Share Increase Driver & Potential Prosus Selldown
- JD.com’s Musical Shares – Less Than You Think
- HK Connect: March ’22 Inclusion Post-Event Analysis
- Tri-Stage (2178 JP) MBO by Bain – Another Lowball Takeover Likely To Get Done
- KT Corp & SK Telecom: Potential Changes Driven by Foreign Buying
- Toyo Construction (1890) – Mystery Holders Now 17% (Or More)
- Hina/IBC’s Non-Binding Proposal For VNET
- Otis/Zardoya Otis: Squeeze-Out
JD.com (9618 HK): CCASS Share Increase Driver & Potential Prosus Selldown
- There has been an increase of 700m shares held in HK CCASS for JD.com Inc. (9618 HK) on 11 April.
- The largest part of 421.5m shares is likely the conversion of Class B to Class A shares following Richard Liu stepping down as CEO of the company.
- The rest is unknown at this point but could be Prosus (PRX NA) moving their shares to HK to sell-down and use the cash to buy back their own stock.
JD.com’s Musical Shares – Less Than You Think
- Today, CCASS data showed that 700,000,047 Class A Shares of JD.com Inc. (9618 HK) popped into existence in CCASS (from outside of CCASS the day before). Poof!
- They showed up in Deutsche Bank’s CCASS Participant account. Just like the 600,000,000 Class A Shares which popped in on 15 December 2021.
- There’s a thing here, and there are things going on in the background, but the things in the foreground are not as menacing as they appear. I explore and explain.
HK Connect: March ’22 Inclusion Post-Event Analysis
- After one month from the March batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 19 stocks.
- We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
- We observed outperformance post the HSCI announcement but not the actual inclusion despite the fact that southbound inflows has a significant impact on the trading volume.
Tri-Stage (2178 JP) MBO by Bain – Another Lowball Takeover Likely To Get Done
- Bain is getting the major execs to tender, and rolling Sojitz Corp (2768 JP)‘s 23% into the post-Tender EGM vote. That gets them to 57+%. No majority of minority here.
- But the equity check appears to be about 0.06x revenue, 4-5x PER, and takeover price EV at 4+ish years of forecast EBITDA. It’s a good rollup for its ads business.
- Too cheap, but not much you can do about it. Foreigners and financial holders own less than 0.5% of shares out.
KT Corp & SK Telecom: Potential Changes Driven by Foreign Buying
- Foreign investors have continued to buy Korea telecom companies. The buying has pushed the foreign room lower. This will have implications for the stocks in MSCI and FTSE indices.
- KT Corp (030200 KS)‘s foreign room has dropped below 15% and this could lead to the stock not being added to the MSCI Korea Index at the May SAIR.
- SK Telecom (017670 KS)‘s foreign room has dropped significantly and further buying over the next week could see the stock deleted from the MSCI Korea Index at the May SAIR.
Toyo Construction (1890) – Mystery Holders Now 17% (Or More)
- WK 1-3 Limited are now (as of a week ago) 17.34% of Toyo Construction’s share register. They bought 40+% of volume in the relevant period, as I suggested they might.
- On a realtime basis, they could be 20+%, but because no single entity is there they would not become top shareholder as a triumvirate.
- I offer consolidated thoughts and like the idea of buying the dip.
Hina/IBC’s Non-Binding Proposal For VNET
- Chinese Internet data center services provider 21Vianet Group (VNET US) has recently received a non-binding proposal letter from the Hina Group and Shanghai’s Industrial Bank Co.
- The indicative Offer price is US$8.00/ADS, or ~US$1.3333 per ordinary share.
- The Offer Price is utterly underwhelming. A successful outcome will more than likely find its way to the Cayman Court.
Otis/Zardoya Otis: Squeeze-Out
- Otis Worldwide Corp (OTIS US) increases its stake in Zardoya Otis SA (ZOT SM) to 95.51% after the takeover bid. The settlement date is 12 April.
- Otis has decided to proceed with the squeeze-out. Next 3 May will be the date.
- The outcome is in line with expectations and my recommendation to tender. Gross spread is 0.43%, and 6.31% is the estimated annualised return (assuming settlement on 6 May).
Before it’s here, it’s on Smartkarma
