In today’s briefing:
- Olam Group: Restructuring to Unlock Value
- China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- NHK Spring (5991) – A Cheap Stock With “Hidden Assets” Making It Cheaper
- Short Interest Flow Checkup on KOSPI 200 Constituents
- KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- Merger Arb Mondays – Razer, 51Job, Irongate, Link, Crown Resorts, Guodian
Olam Group: Restructuring to Unlock Value
- Olam Group set to replace Olam International (OLAM SP) as the listed company entity on 16 March. It consists of Olam Food Ingredients (ofi), Olam Agri and Olam International (OIL).
- The complicated restructuring exercise which was announced in January 2020 is driven by the Board’s intent to unlock long-term shareholder value.
- Our SoTP valuation is S$2.36 per share, which is a 34% upside to the last trading price of S$1.76 per share (9 March prior to the suspension of the shares).
China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- China ADRs were sharply lower last week as the SEC started to name companies that were identified under the Holding Foreign Companies Accountable Act (HFCAA).
- Then DiDi Global dropped 44% on Friday following reports that the their proposals to prevent data/security leaks did not meet CAC’s requirements and work on the HK listing was halted.
- With 2024 not too far away, a lot of the U.S. listed companies will look at listing in Hong Kong in the near future. That will have its own implications.
NHK Spring (5991) – A Cheap Stock With “Hidden Assets” Making It Cheaper
- NHK Spring released an announcement mid-week to the effect that they were selling a golf practice facility they owned. The profit on the sale will exceed 10% of Enterprise Value.
- In addition, the company has another 25-30+% of Enterprise Value in shareholdings which return far less than the Mid-Term Management Plan target ROE of 8%.
- On an Adjusted EV basis (EV less non-operating financial assets), this stock trades at less than 1.5x EBITDA two years out.
Short Interest Flow Checkup on KOSPI 200 Constituents
- I sorted out those on KOSPI 200 with a weekly short-selling volume exceeding 10% of last week’s total trade volume and a 30-day ADTV of +₩5B.
- I further screened those having an increase in the weekly loan balance. As a result, I filtered 23 KOSPI 200 constituents meeting these conditions.
- Among the filtered ones, those whose stock price did not drop last week are screened, meaning that the market’s expectations for further share price declines are high for these names.
KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- KODEX battery ETF does rebalancing four times a year from this March. The rebalancing trading is done for 3-trading days from March 14 to 16, presumably equal daily weight.
- Due to the low float rate, LG Energy will fall to third place. Samsung SDI should become the top constituent with a 20% cap, followed by SK Innovation at 15%.
- The passive impact sizes of the top four stocks are significant, considering they are in the same sector. So, they should make themselves a suitable target for long/short basket trading.
Merger Arb Mondays – Razer, 51Job, Irongate, Link, Crown Resorts, Guodian
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
- This week, the highest gross spreads are Razer Inc (1337 HK), 51 Job Inc Adr (JOBS US), Irongate Group (IAP AU), Link Administration Holdings (LNK AU), Crown Resorts (CWN AU)
- The lowest gross spreads are CIMIC Group Ltd (CIM AU), Singapore Press Holdings (SPH SP), Australian Pharmaceutical Industries (API AU), Virtus Health (VRT AU), Ausnutria Dairy Corp (1717 HK)
Before it’s here, it’s on Smartkarma
