In this briefing:
- StubWorld: Aramco’s Stake Reaffirms Hyundai Heavy’s NAV; Rusal Gains After Sanctions Lifted
- TPG Telecom/VHA Merger: A High Stakes Gamble to Abandon Mobile Network Rollout
1. StubWorld: Aramco’s Stake Reaffirms Hyundai Heavy’s NAV; Rusal Gains After Sanctions Lifted
This week in StubWorld …
- Saudi Arabian Oil Co’s 19.9% stake in Hyundai Oilfield spotlights Hyundai Heavy Industries Holdings (267250 KS)‘s deep discount to NAV.
- United Co Rusal (486 HK)‘s discount to NAV narrows after sanctions are lifted, but remains well off its pre-sanctions level.
Preceding my comments on HHI and Rusal are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % – of at least 20%.
2. TPG Telecom/VHA Merger: A High Stakes Gamble to Abandon Mobile Network Rollout
On Tuesday, TPG Telecom Ltd (TPM AU) surprisingly cancelled plans to roll out its mobile network in Australia, blaming the government’s ban on using Huawei Technology (40978Z CH) for 5G equipment for its decision. The market seems to be undecided if TPG’s decision will lead to Australian Competition and Consumer Commission (ACCC) approving the TPG/VHA merger as TPG shares rose 3%, but Hutchison Telecomm (Aust) (HTA AU) (50% owner of VHA) shares declined 4%.
The bull view is that TPG’s decision removes ACCC’s primary concern and paves the way for approval. The bear view is that TPG’s eggs are all in the merger basket and the ACCC could call TPG’s bluff and block the merger. Overall, TPG’s decision to cancel its network rollout plans does not change our view that the risk-reward remain skewed towards the downside.
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