In today’s briefing:
- Toshiba – ISS Advises Against Breakup Plan
- Jardine Matheson (JM SP): Reloading The Buyback?
- KOSPI Lockup Releases & Likelihood of Hitting the Market
- Close the Gap: Korean Pref Vs. Common Shares Post New South Korean President Yoon Suk-Yeol
- Supplies from Russia critical for RoH revenues
Toshiba – ISS Advises Against Breakup Plan
- This morning Institutional Shareholder Services recommended against both Toshiba’s break up plan and 3D’s alternative proposal.
- Both proposals looked uncertain and with ISS coming out against them it now appears more likely that both will be rejected.
- That leaves Toshiba in limbo once again and we aren’t convinced the exit will be a privatisation.
Jardine Matheson (JM SP): Reloading The Buyback?
- Jardine Matheson Holdings (JM SP)‘s underlying net profit in FY21 was up 39% against 2020, and just 5% shy of 2019’s level.
- The latest US$250mn buyback program appears to have been completed.
- Shares are down ~5% since the FY21 results. At a ~28% discount to NAV, JMH is inexpensive here.
KOSPI Lockup Releases & Likelihood of Hitting the Market
- KOSPI has seven lockup release events that are likely to hit the market. And all of them are IPO institutional and ESOP lockups.
- Whether these IPO institutional/ESOP lockups will hit the market directly correlates with the return size from the offering price. And most of them are still far above the offering price.
- Therefore, it is highly likely that a meaningful share price correction will occur on each release date. This correlation pattern has been more pronounced in recent lockup release events.
Close the Gap: Korean Pref Vs. Common Shares Post New South Korean President Yoon Suk-Yeol
- We highlight the closing of the pricing gaps between the Korean common and pref shares, which is likely to be accelerated by the free market promoting new Korean President Yoon.
- These measures include strengthening investor protection in the event of a spin-off of a new business listing, incorporating compulsory tender offers, and improving short selling systems and foreign exchange operations.
- We believe these measures to emphasize on the free markets are likely to improve minority shareholder rights and the gaps between the common and preferred shares could narrow further.
Supplies from Russia critical for RoH revenues
- Hindustan Aeronautics (HAL) procures Rs40-42bn worth of spares and parts (used in ROH) from Russia, for which it has maintained inventory to cater to the requirement for at least next 8-9 months.
- The company is also focusing on indigenous production of Russian supplies to reduce the import dependence.
- Management mentioned that Russia has confirmed to supply critical raw material to the company, but the payment mechanism is yet to be established.
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