In today’s briefing:
- Kito (6409) – Now Sitting Pretty
- ResApp (RAP AU): Pfizer Coughs Up
- Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday
- Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …
- Baidu to Sell Its Stake in IQiyi
- Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?
- HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022
Kito (6409) – Now Sitting Pretty
- Kito Corporation (6409 JP) is under offer by KKR unit Crosby, which announced a takeover in mid-May.
- Anti-Trust and foreign review will take a few months, and so we wait. In the meantime, the shareholder register has changed significantly. This remains an interesting option.
- And now, global market ructions offer arbitrageurs a meaningful opportunity.
ResApp (RAP AU): Pfizer Coughs Up
- Pfizer Inc (PFE US) is Offering ResApp Health (RAP AU) shareholders up to A$0.207/share by way of a Scheme. ResApp’s Board unanimously recommends the Offer.
- ResApp is currently trialing a cough-based Covid detection tool. If the study proves satisfactory, Pfizer will outlay A$0.207/share. If not, shareholders get A$0.146/share. Pfizer initially pitched A$0.115/share.
- The results of the study are due out on the 20 June.
Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday
- Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close tomorrow.
- The stocks with passive inflows have outperformed the stocks with passive outflows over the last couple of months and post-announcement. There will be pre-positions on a lot of names.
- Short interest has increased on nearly all the deletes from the S&P/ASX indices, while short interest movement on the stocks with passive inflows has been mixed.
Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …
- The Circular, containing the IFA opinion and the directors’ recommendation, was despatched after close yesterday. The IFA says fair and the directors recommend shareholders accept the Offer.
- However … directors holding 29.26% of shares out do not intend to accept the Offer. The intention of an additional 10.9% held by Ong family members is not known.
- No word on Hong Leong Investment as to their 5.1% stake. The IFA notes the revised Offer terms are a 20.8% discount to the revalued NAV of S$0.5052/share
Baidu to Sell Its Stake in IQiyi
- Reuters and several other news media outlets reported that Baidu (BIDU US) is planning to sell its stake in iQIYI Inc (IQ US) .
- Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.
- IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.
Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?
- When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
- Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
- The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.
HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022
- As a result of a drastic decline in the share price of HYBE, it is increasingly likely that HYBE’s weight in MSCI Korea Index will be reduced significantly in 2022.
- According to our valuation sensitivity analysis, our base case valuation is 4.8 trillion won.
- As of 1 March 2022, HYBE’s weight in the MSCI Korea Index was 0.430064%, which was the 38th largest stock in this index (out of 111 stocks in total).
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