In today’s briefing:
- MNACT/MCT Circulars Out – Still Probably Heads I Win Tails I Win – But It’s Complicated
- JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto
- KOSPI 200 Constituents with a Float Rate Change: 11 Increases & 2 Reductions
- FnGuide Secondary Battery Index (KODEX ETF) Rebalancing Preview
- True/DTAC: Merger Delays As NBTC Board Revamped
- Keisei-Shin Keisei: Merger Seems like a Done Deal
- Itausa (ITSA4 BZ) – Too Narrow a NAV Discount, and the Dividend Yield Is No Longer Compelling
- Beijing Enterprises Urban Resources’ MGO at HK$0.78. Is A Bump Possible?
- KKR / Albioma: Agreed Offer, Est. Timetable
- End of Mandatory Lock-Up Periods for 40 Companies in Korea in May 2022
MNACT/MCT Circulars Out – Still Probably Heads I Win Tails I Win – But It’s Complicated
- The Mapletree North Asia Commercial Trust (MAGIC SP) Scheme Doc and Mapletree Commercial Trust (MCT SP) Circular are both out this morning.
- The IFA deems the deal FAIR and REASONABLE. This is not surprising. It was already going to be so with just the scrip, but with the cash bump it’s easier.
- But the situation is complicated. And the complications have complications. The trade is still to be long MCT, and long MCT vs MNACT is an interesting idea.
JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto
- Silchester International Investors has owned Bank of Kyoto (8369 JP) for 16 years and is now the largest shareholder in the bank.
- They have been dissatisfied, become vocal behind the scenes with their dissatisfaction, and BoK management disagrees so they will go to the mattresses. Gently.
- This could get some investors excited, but it is unlikely to be a successful activist effort.
KOSPI 200 Constituents with a Float Rate Change: 11 Increases & 2 Reductions
- The KOSPI 200 June Review will have a total of 13 float rate changes: 11 increases and 2 reductions.
- Kakao Bank (323410) will experience the biggest change, followed by HMM (011200) and Krafton Inc (259960). The float rate of HDC Hyundai Development (294870) and Doosan Infracore (042670) will decrease.
- Kakao Bank and Kakao Pay (377300) have the most significant passive impact. And LG Corp (003550), Woori Financial Group (316140), and Krafton Inc (259960) are also worth noting.
FnGuide Secondary Battery Index (KODEX ETF) Rebalancing Preview
- The FnGuide Secondary Battery Index currently holds an AUM of ₩1.35T, and the next rebalancing implementation period is from June 13th to 15th.
- Since these are same-sector stocks with a high cointegration level, they are suitable for narrow-window basket trading based on passive flow differences.
- So, I would consider basket trading by targeting the large-cap constituents with a relatively significant passive flow: SK Innovation (096770), SK IE Technology (361610), Ecopro BM (247540), & Ecopro (086520)
True/DTAC: Merger Delays As NBTC Board Revamped
- The newly appointed board of Thailand’s NBTC has set up four subcommittees to study the planned merger of True Corp Pcl (TRUE TB)and Total Access Communication (DTAC TB).
- Previously NBTC was expected to conclude its vetting by the 15 May. That is now unlikely to occur.
- In letters to the NBTC, True insisted the DTAC merger must not be delayed from the expected mid-June completion timetable. NBTC is, appropriately, investigating the merger on its own terms.
Keisei-Shin Keisei: Merger Seems like a Done Deal
- Japan-Based Railway Company Keisei Electric Railway Co (9009 JP) (“Keisei”) and its 44.64%-owned equity method affiliate Shin Keisei Electric Railway (9014 JP) (“Shin Keisei”) have signed a Share Exchange Agreement.
- Shin Keisei Shareholders will receive 0.82 Keisei Shares per Shin Keisei Share. Following the completion of this Deal, Shin Keisei will become a wholly-owned subsidiary of Keisei.
- Below is a closer look at the details of this Transaction and the likelihood of Deal Completion.
Itausa (ITSA4 BZ) – Too Narrow a NAV Discount, and the Dividend Yield Is No Longer Compelling
- Itausa is trading at an 19.6% discount to the HoldCo’s NAV, with the discount narrowing sharply over the last two months
- In addition, after a big increase in the dividend per share announced due to 2021 results, we believe that it is unlikely to see another big increase going forward
- Banco Itaú Unibanco, Itausa’s largest investment, is positively geared to the hiking interest rate cycle by the Brazil central bank; we prefer direct exposure to the bank versus the holdco
Beijing Enterprises Urban Resources’ MGO at HK$0.78. Is A Bump Possible?
- Beijing Enterprises Water Group (371 HK)/(BEWG) will launch a conditional mandatory general offer (MGO) for Beijing Enterprises Urban Resources (3718 HK) at HK$0.78 as it crossed the 30%+ voting threshold.
- The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 38.64%). The MGO price is unattractive, in our view.
- BEWG’s justification for the offer and lack of a “no increase in offer price” wording suggests the possibility of a bump. The shares closed 2.6% above the MGO price.
KKR / Albioma: Agreed Offer, Est. Timetable
- KKR has agreed with Albioma on a €50/share+€0.84 dividend offer, €1,583 million implied equity value, c. €2,543 million implied EV. The consideration represents 11.4x EV/Fwd EBITDA and 25.1x Fwd P/E.
- The multiples are not as rich as in the Falck transaction, but most shareholders will be happy to tender at a 52% premium.
- Albioma closed at €50.7 (a 15.9% increase vs. the prior closing price). Gross spread is 0.28%, and the annual estimated return, assuming settlement by 5 August, is 1.03%, probably low.
End of Mandatory Lock-Up Periods for 40 Companies in Korea in May 2022
- In this insight, we discuss end of the mandatory lock-up periods for 40 stocks in Korea in May 2022, among which 4 are in KOSPI and 36 are in KOSDAQ.
- These 40 stocks on average could be subject to further selling pressures in May and could underperform relative to the market.
- Among these 40 stocks, the following stocks such as Kakao Pay, Enchem, DearU, and 4by4 could face further selling pressures in the coming weeks.
Before it’s here, it’s on Smartkarma
