In today’s briefing:
- LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups
- Jardine Matheson (JM SP): Fast Food Junked
- Dragon Crown (935 HK): Offeror’s IFA Report
- TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei
- Unilever/GSK Heathcare: Ballsy, but Doable
LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups
- ESOP marginally undersubscribed, retail investors were allocated 25.8% of the IPO while institutions got 55%. Post IPO, LG Chem Ltd (051910 KS) owns 81.84% of LG Energy Solution (373220 KS).
- Around 58% of the institutional allocation is subject to voluntary lockups. For Fast Entry, MSCI will use a FIF of 9%, while FTSE will use an investability weight of 4.16%.
- LG Energy Solution (373220 KS) needs to rally 84% by the close on 27 January to get FTSE Fast Entry. MSCI Standard and KOSPI200 index inclusions are a near certainty.
Jardine Matheson (JM SP): Fast Food Junked
- Reportedly Jardine Matheson Holdings (JM SP) is negotiating the sale of Jardine Restaurant Group, a wholly-owned subsidiary that operates KFC and Pizza Hut franchises.
- Additionally, JMH is exploring the sale of its 28% stake in Greatview Aseptic Packaging (468 HK).
- JMH is in the market every day buying its own shares, but on a less aggressive basis compared to the pace seen shortly after reloading its buyback program last month.
Dragon Crown (935 HK): Offeror’s IFA Report
- Liquid chemical storage and handling outfit Dragon Crown Group (935 HK) (DCG) announced on the 8 October a pre-conditional Offer from Guangdong Great River Smarter Logistics (002930 CH) at HK$1.28/share.
- GGRS has now released its own independent financial advisor’s report, which concluded the Offer was fair and reasonable.
- Trading at a gross spread of 6.7% with possible payment early April.
TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei
- A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade.
- Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade.
- Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.
Unilever/GSK Heathcare: Ballsy, but Doable
- GSK has rejected Unilever’s approaches (last at £50 billion) but leaked it would be ready to accept an offer around £60 billion (a whopping c. 65% of Unilever’s market capitalisation).
- The deal would be transformational and Unilever’s management see it as the way forward to revive the company’s performance and the share price.
- Ballsy, but doable, with a positive impact on results from FY2024, but negative impact on leverage at 4.9x. I believe that Unilever may make a further approach.
Before it’s here, it’s on Smartkarma
