In today’s briefing:
- Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later
- Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued
- Reliance, AAHK, Kexim Launch $ Bonds; Macro; Rating Changes; New Issues; Talking Heads; Top Gaine…
Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later
- The Katakura Industries (3001 JP) MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception).
- Another would-be activist bought Oasis’ shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price.
- Yesterday, the bidder dashed those hopes, and today the shares fell, but not to the TOB Price. This has longer-term designs.
Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued
- By deconsolidating Shenzhen Expressway (548 HK) (SZX) from Shenzhen International (152 HK) (SZI), SZI’s net book value reached HK$16.4bn. Its current market cap of HK$18.9bn implies SZX is almost free.
- SZI’s high gearing is primarily due to SZX. Excluding SZX, SZI’s gearing is just 32.3%. As Shenzhen’s flagship SOE, there is consistent monitoring and huge support from the local government.
- SZI’s 0.47x P/B is more than 2SD below historical average; but it has proven capability to realise value of underlying assets. Excluding SZX, SZI is on even cheaper 0.32x P/B.
Reliance, AAHK, Kexim Launch $ Bonds; Macro; Rating Changes; New Issues; Talking Heads; Top Gaine…
US equity markets ended broadly lower, with the S&P and Nasdaq down 0.1% and 1.3% respectively. Energy led the gainers, up 3.5% while Healthcare and IT fell 1.4% and 1.1%. US 10Y Treasury yields continued to rise, by 4bp to 1.65%. Almost $1.2bn was pulled out of the TLT ETF (iShares 20+ Year Treasury Bond ETF) on Monday, the third-biggest outflow since its launch in 2002. European markets were higher with the DAX, CAC and FTSE up 0.8%, 1.4% and 1.6% respectively. Brazil’s Bovespa was down 0.4%. In the Middle East, UAE’s ADX was down 0.7% while Saudi TASI was up 0.3%. Asian markets have opened lower today – Shanghai, HSI and STI were down 0.2-0.4% while Nikkei was flat. US IG CDS spreads were flat and HY CDS spreads widened 1.3bp. EU Main CDS spreads were 0.2bp tighter and Crossover CDS spreads were 1.9bp tighter. Asia ex-Japan CDS spreads tightened 1.8bp.
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