In today’s briefing:
- KOSPI200 Index Rebalance Preview (June): Review Period Ends as Reversion Kicks In
- Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback
- MNACT’s Scheme Meeting on 23 May, IFA Opinion
- KOSDAQ150 Index Rebalance Preview: 14 Potential Changes in June
- Guodian’s H Share Class Meeting on 20 May, IFA Opinion
- Merger Arb Mondays (2 May) – Dongzheng AFC, Yashili, VNET, Sezzle, Link, Ramsay
- (Mostly) Asia M&A: April 2022 Roundup
KOSPI200 Index Rebalance Preview (June): Review Period Ends as Reversion Kicks In
- The review period for the June rebalance ended on Friday. The changes will be announced in around 3 weeks and will be effective after the close on 9 June.
- We see 7 changes for the index with most of them being high probability. The potential adds have outperformed the potential deletions, but have given up some gains in April.
- Short interest on some of the potential deletions has risen sharply over the last month and now almost equals the estimated passive selling.
Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback
- Hitachi Ltd (6501 JP) results were salutary but noisy and the year to March 2023 is forecast similar (salutary but noisy). Service integration and growth to external customers is key.
- Forecast growth in main businesses ex- to-be-sold listed subs is decent, but could be better.
- A SEMI-Bigly buyback will help cushion any selling, but it has recently outrun Siemens on a like-for-like basis.
MNACT’s Scheme Meeting on 23 May, IFA Opinion
- Mapletree Commercial Trust (MCT SP)’s EGM, Mapletree North Asia Commercial Trust (MAGIC SP)/MNACT’s EGM and trust scheme meeting will take place on 23 May. The effective date is 8 August.
- The IFA considers the scheme consideration to be fair. We think that IFA’s valuation approach is broadly sound with some areas for improvement.
- For a 17 August payment, the gross and annualised spread of the cash-only consideration (including permitted clean-up DPU) is 1.6% and 5.6%, respectively.
KOSDAQ150 Index Rebalance Preview: 14 Potential Changes in June
- The review period for the June rebalance of the KOSDAQ 150 Index ended on Friday. We see 14 potential changes to the index – most are high probability.
- The impact of passive trading is higher on the deletions than on the additions. Short interest on the potential adds is zero/negligible and a lot larger on the potential deletions.
- Short interest on a couple of potential deletion exceeds the estimated passive selling, while there are others where short interest is three-quarters of the estimated passive selling.
Guodian’s H Share Class Meeting on 20 May, IFA Opinion
- Guodian Technology & Environment Group (1296 HK)‘s composite document is out with the H Shareholders’ class meeting on 20 May. The IFA considers the offer to be fair and reasonable.
- The key condition for the privatisation is approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.
- The H Shareholder with a blocking stake has provided an irrevocable. For a 9 June payment, the gross and annualised spread to the offer is 1.9% and 19.5%, respectively.
Merger Arb Mondays (2 May) – Dongzheng AFC, Yashili, VNET, Sezzle, Link, Ramsay
- 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 Dongzheng Automotive Finance (2718 HK), Yashili International Holdings (1230 HK), 21Vianet Group (VNET US), Sezzle Inc (SZL AU), Link Administration Holdings (LNK AU).
- The lowest gross spreads are Beijing Enterprises Urban Resources (3718 HK), Virtus Health (VRT AU), 51 Job Inc Adr (JOBS US), China Logistics Property Holdings (1589 HK), Uniti Group.
(Mostly) Asia M&A: April 2022 Roundup
- For the month of April, 10 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$22bn.
- The average premium for the new deals announced (or first discussed) in April was ~36%.
- This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.
Before it’s here, it’s on Smartkarma
