In today’s briefing:
- Last Minute MNACT Arb and Index Selling
- Giordano (709 HK): Cheng Family Offer Or Cashing Out?
- Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures
- Atlas Arteria (ALX AU): IFM Investors Comes Knocking
- HS Holdings (8699 JP): Khan Bank IPO Delayed but Path Clear
- Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte
- Uniti Group: 15th July To Vote On Morrison/Brookfield’s Scheme
- STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- Uniti’s Scheme Meeting on 15 July, IE’s Opinion
- Kakao Pay: Comp Valuation Analysis Suggests Additional 40% Downside Risk
Last Minute MNACT Arb and Index Selling
- Today is the last day of trading for Mapletree North Asia Commercial Trust (MAGIC SP) also known as MNACT.
- That means today is index deletion day for any number of global indices, even though MNACT is not in many of the major ones.
- Payment will be S$1.949/unit plus a Clean-Up Distribution. There may be opportunities at the close. Strategy below.
Giordano (709 HK): Cheng Family Offer Or Cashing Out?
- Giordano International (709 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
- The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook?
- And just for some (possible) added excitement, David Webb holds 5.1%.
Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures
- Ant Financial Services Group (6688 HK) is declaring a dividend at a time when regulators have forced the company to increase its capital base.
- Moreover, Ant’s financial performance doesn’t support a dividend payment of RMB 11.8bn in the short term.
- We think the sale of 5.0m Kakao Pay (377300 KS) shares today was forced upon Ant through the lack of usual funding sources at Alibaba Group (9988 HK)’s disposal.
Atlas Arteria (ALX AU): IFM Investors Comes Knocking
- Fresh from successfully taking out Sydney Airport (SYD AU) earlier this year, IFM is reportedly on the cusp of submitting a non-binding indicative proposal for Atlas Arteria (ALX AU)
- A proposal is contingent on being granted limited due diligence. Meanwhile, IFM has accumulated an economic interest in ALX of 15%.
- ALX said they have not received any information on a proposal. Expect that to occur shortly.
HS Holdings (8699 JP): Khan Bank IPO Delayed but Path Clear
- The saga that has been the Sawada now HS Holdings (8699 JP) effective control change and change in Mongolian Banking Law has been interesting but the end game is clear.
- Last week, the Mongolian parliament extended the listing deadline for the top 5 Mongolian banks from June 2022 to June 2023. The IPO has been pushed back. Which is good.
- The stock is not what people think it is, and the implied PBR and PER of Khan Bank exposure on a cash-adjusted basis is VERY low.
Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte
- After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.
- The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won).
- We have a Positive view on Lotte Chilsung Beverage and we would take this deal.
Uniti Group: 15th July To Vote On Morrison/Brookfield’s Scheme
- The Scheme Booklet for Morrison/Brookfield/CSC’s Offer for Uniti Group Ltd (UWL AU) has now been despatched. The Scheme Meeting will be held on the 15th July.
- The Independent Expert considers the terms to be fair and reasonable with a fair value range between A$4.65-A$5.20 compared to the Offer price of $5.00/share.
- Trading tight to terms, as it has done since parties entered into the Scheme Implementation Deed.
STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
- That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
- Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.
Uniti’s Scheme Meeting on 15 July, IE’s Opinion
- Unsurprisingly, the independent expert (IE) considers the consortium’s offer of A$5.00 per share to be fair and reasonable. We think that IE’s valuation approach is sound.
- The key condition is approval from Uniti Group Ltd (UWL AU) shareholders and regulatory authorities (FIRB). The scheme meeting is scheduled for 9:30 am on 15 July.
- We continue to think that offer is attractive. At the last close price and for the 4 August implementation date, the gross and annualised spread is 0.8% and 5.1%, respectively.
Kakao Pay: Comp Valuation Analysis Suggests Additional 40% Downside Risk
- Our base case valuation of Kakao Pay is market cap of 7.1 trillion won or 53,767 won per share, which represents an additional 40% downside risk from current levels.
- Our base case valuation is based on 5x EV/Sales multiple and applying this to the consensus estimated sales of 898 billion won in 2023.
- The fact that the share price ended 15.6% lower (much bigger than block deal discount range of 8.5% to 11.8%) suggests a lower probability of an MSCI Korea index inclusion.
Before it’s here, it’s on Smartkarma
