In this briefing:
- Hoya Reports Solid 3QFY03/19 Performance; Our Outlook on the Company Remains Unchanged
- M&A: A Round-Up of Deals in January 2019
- BGH Lurks As Brookfield Firms Offer For Healthscope
1. Hoya Reports Solid 3QFY03/19 Performance; Our Outlook on the Company Remains Unchanged
Hoya Corporation (7741 JP) reported its 3QFY03/19 earnings yesterday (01st Feb). The revenues grew at 4.9% YoY while operating profit increased by a hefty 20.2% YoY during the quarter. On a constant currency basis, revenues grew 6.6% YoY while pre-tax profit increased 15.0% YoY during the period. In addition, Hoya’s margin too witnessed an expansion with operating profit margin reaching 27.8% from 24.3%, while it reported a pre-tax margin of 27.7% compared to 25.4% a year ago. Moreover, the company beat consensus estimates on revenue, operating profit and pre-tax profit.
JPY (bn) | 3QFY03/18 | 3QFY03/19 | YoY Change | Consensus Median | Actual Vs. Consensus |
Revenue | 136.8 | 143.4 | 4.9% | 141.6 | 1.3% |
Operating Profit | 33.2 | 39.9 | 20.2% | 37.3 | 7.0% |
OPM | 24.3% | 27.8% |
| 26.4% |
|
Pre-tax Profit | 34.7 | 39.7 | 14.4% | 37.7 | 5.3% |
Pre-tax Margin | 25.4% | 27.7% |
| 26.6% |
|
Revenues grew thanks to strong performances by the Life Care and Electronics businesses although the Imaging business saw a decline.
2. M&A: A Round-Up of Deals in January 2019
For the month of January, seventeen new deals were discussed on Smartkarma with an overall deal size of US$91bn, with ~81% of that figure from the Celgene Corp (CELG US) deal. This overall number does not include rumours on Nexon Gt Co Ltd (041140 KS) and Capitaland Ltd (CAPL SP)‘s acquisition of Ascendas-Singbridge. The average transaction premium was 43%, or 26% if ignoring Earthport plc (EPO LN).
New Deals | Industry | Premium | Deal Size (US$m) | Deal Type |
| Australia | ||||
| Healius (HLS AU) | Health Care | 33.2% | 1,402 | Scheme |
| Hong Kong | ||||
| New Sports Group (299 HK) | Communication Services | 3.6% | 82 | Off-Mkt |
| India | ||||
| Gruh Finance (GRHF IN) | Thrifts and Mortgage Finance | -7.6% | 2,974 | Scheme |
| Indonesia | ||||
| Bank Danamon Indonesia (BDMN IJ) | Finance | 14.9% | 4,000 | Offer |
| Japan | ||||
| Clarion Co Ltd (6796 JP) | Audio/infotainment | 10.5% | 1,300 | Tender offer |
| Descente Ltd (8114 JP) | Retailer | 49.7% | 185 | Partial offer |
| Jiec Co Ltd (4291 JP) | Info Tech | 39.3% | 52 | Tender Offer |
| Kosaido Co Ltd (7868 JP) | Commercial Printing | 43.8% | 139 | Tender offer |
| Shinmaywa Industries (7224 JP) | Industrials | 10.5% | 365 | Tender offer |
| Veriserve Corp (3724 JP) | Info tech | 44.6% | 142 | Tender offer |
| Singapore | ||||
| Courts Asia Ltd (COURTS SP) | Consumer Discretionary | 34.9% | 27 | Scheme |
| M1 Ltd (M1 SP) | Communication Services | 26.0% | 932 | Off-Mkt |
| Pci Ltd (PCI SP) | Information Technology | 28.0% | 45 | Scheme |
| Taiwan | ||||
| Yungtay Engineering (1507 TT) | Industrials | 22.0% | 704 | Off-Mkt |
| Europe | ||||
| Earthport plc (EPO LN) | Information Technology | 340.0% | 277 | Off-Mkt |
| Panalpina Welttransport Holdin (PWTN SW) | Industrials | 24.0% | 4,083 | Off-Mkt |
| US | ||||
| Celgene Corp (CELG US) | Health Care | 53.7% | 74,000 | Scheme |
M1 Ltd (M1 SP) is essentially an ongoing transaction; while Mastercard Inc Class A (MA US) trumped Visa Inc Class A Shares (V US)‘s December offer for Earthport. Healius (HLS AU) rejected its proposal.
Bank Danamon Indonesia (BDMN IJ) is similarly an ongoing transaction and arguably the premium is higher than 14.9%, which is based on the last close.
Directly below is a summary of ongoing M&A situations, followed by a recap of news associated with each event situation.
3. BGH Lurks As Brookfield Firms Offer For Healthscope
Healthscope Ltd (HSO AU) has announced it has entered into an Implementation Deed with Brookfield, under which Brookfield seeks to acquire 100% of Healthscope by way of a scheme at A$2.50/share, and a simultaneous Off-market takeover Offer at $2.40/share.
The considerations under these proposals compares to the earlier indicative considerations of $2.585/share and $2.455/share respectively under the unsolicited conditional proposals announced back in November.
The $2.50/share under the scheme – which is priced at a 40% premium to the undisturbed price – includes an interim dividend of $.035/share. The scheme consideration represents an EV/EBITDA (Dec-18 end) of ~14.7x.
Both proposals are subject to limited conditions and neither are subject to due diligence and financing. The Off-market is subject to a 50.1% acceptance condition and the Scheme not being successful.
Brookfield’s proposals have unanimous HSO Board backing.
The Off-market takeover will remain open for at least four weeks after the date of the Scheme meeting, providing shareholders with opportunity to consider the Offer, depending on the outcome of the Scheme vote.
HSO also announced that the BGH-led consortium, which holds a ~20% stake, said it could improve the terms of its previous offer of $2.36/share, provided it was given access to Healthscope’s data room.
An explanatory booklet for Brookfield’s proposals is expected to be dispatched in April/May and the Scheme meeting to take place in May/June.
Currently trading tight to the Scheme consideration at $2.45/share.
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