In today’s briefing:
- Toshiba – Some Thoughts on the Bain Article
- KKR’s Waste Measurement For Cleanaway?
- MSCI Korea May SAIR: One Adds & One or Two Deletes
- Kakao Pay Passive Play Opportunity on June 9
- Ramsay’s Indicative Bid from the KKR Consortium
- Dongzheng (2718 HK): Potential Offer As ZhengTong’s Stake Gets Liquidated
- Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
- STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance
- LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
- Tesla Q1 Results: Strong Beat But Cautious Outlook
Toshiba – Some Thoughts on the Bain Article
- Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia.
- Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba.
- While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.
KKR’s Waste Measurement For Cleanaway?
- The AFR is reporting that KKR is preparing an Offer for waste management outfit Cleanaway Waste Management (CWY AU). No price has been revealed.
- This is a business KKR understands. It bought, and shortly thereafter sold, Cleanaway 15 years ago.
- KKR also recently sought to acquire Waste Management New Zealand.
MSCI Korea May SAIR: One Adds & One or Two Deletes
- At this point, we have only one candidate for addition: Hyundai Heavy Industries (329180 KS).
- Seegene Inc (096530 KS) currently ranks at the bottom by market cap and is closely followed by Green Cross (006280 KS). So, we have two strong candidates for exclusion.
- The passive outflow size of Green Cross is relatively large. In the case of HHI, HHI’s share price may become more volatile as we move into the SAIR announcement.
Kakao Pay Passive Play Opportunity on June 9
- A passive play opportunity for Kakao Pay (377300 KS) is approaching.
- Its float rate will likely be raised in the KOSPI 200 June rebalancing. Then, in the KOSPI 200 IT Sector Index, it will again experience the most significant passive inflow.
- The recent share price volatility has increased considerably. So, instead of a preemptive position buildup, a shorter-window passive play seems more appropriate just before the rebalancing trading day.
Ramsay’s Indicative Bid from the KKR Consortium
- The KKR consortium will offer A$88.00 per share less any dividends paid after the date of the indicative proposal. The offer less interim dividend of A$0.485 is A$87.52 per share.
- The Ramsay Health Care (RHC AU) Board has provided due diligence access. We think the offer is attractive and represents an all-time share price high.
- The largest shareholder is said to be supportive. The gross spread of the offer less the interim dividend of A$87.52 to the last close price of A$80.00 is 9.4%.
Dongzheng (2718 HK): Potential Offer As ZhengTong’s Stake Gets Liquidated
- Both Dongzheng Automotive Finance (2718 HK) and China Zhengtong Auto Services Hldg (1728 HK) issued HKEx suspension notices at the same time yesterday morning.
- In no uncertain terms, the Shanghai office of the China Banking and Insurance Regulatory Commission has forced the liquidation of ZhengTong’s 71.04% stake in Dongzheng.
- That stake “sale” may trigger an Offer for Dongzheng. Dongzheng’s suspension is “pursuant to the Hong Kong Code on Takeovers and Mergers“.
Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
- Tesla’s Q1 results on April 20th (after market) will likely beat Street estimates, but the overshoot may not be as important as profit margins, which should decline versus Q4 2021.
- Q2 outlook is grim, given the lockdown of Tesla’s Shanghai factory. Even if output ramps up in May, exports–which are 40% of output–may not recover due to epic port congestion.
- Tesla has 2 new factories ramping up as of this month. A slowdown at its most profitable plant amid start-up costs could raise the need for equity financing.
STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance
- The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
- The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
- Below is a look at the Potential Adds and Deletes for the STOXX Europe 600 Index and the EURO STOXX Index in the upcoming index review in June 2022.
LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
- LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
- LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Tesla Q1 Results: Strong Beat But Cautious Outlook
- Tesla’s Q1 operating income beat consensus estimates by 38% (ours by 26%), while GAAP net income came in 42% above consensus (36% above ours).
- The highly focused automotive gross margin (Ex-ZEV credits) came to 30% versus consensus estimates of 27.8% and ours of 27.5%. Costs were booked in R&D rather than COGS.
- The results were solid, but the CFO cautioned on Q2 headwinds. Tesla was up by 5.6% in the after hours on these results, ignoring Tesla’s cautious Q2 outlook.
Before it’s here, it’s on Smartkarma
