In today’s briefing:
- HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- HSCEI Index Rebalance Preview: High & Low Probability Changes
- Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
- Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon
- ASMPT (522 HK): Don’t Bet on a KKR Privatisation
- GA Pack (468 HK): Crunch Time
- Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital
- ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?
- K Bank IPO – Should Price Below Its Range
- China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing
HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
- We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
- If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.
HSCEI Index Rebalance Preview: High & Low Probability Changes
- PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
- There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
- There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.
Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
- Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
- If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
- Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.
Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon
- The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
- Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
- If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.
ASMPT (522 HK): Don’t Bet on a KKR Privatisation
- Bloomberg reported that KKR has made a non-binding, preliminary approach to taking ASM Pacific Technology (522 HK) private. ASMPT has been the subject of takeover rumours in the past.
- The trading patterns of the substantial shareholders suggest a willingness to exit. However, past privatisation rumours suggest issues with the offeror matching key shareholders’ price expectations.
- A binding proposal is unlikely as the timing would be viewed as opportunistic, with the recent market rally eroding a potential takeover premium and ASMPT’s premium multiple compared to peers.
GA Pack (468 HK): Crunch Time
- Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
- The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.
- Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management.
Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital
- Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake.
- Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
- Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.
ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?
- The second PE rumoured interest in ASMPT in 18 months, with KKR circling.
- Semiconductor M&A has surged in 2024 YTD with a 33% increase in deal activity compared to 2023.
- ASM’s leadership in TCB, potential growth within HBM, expansion at TSM and enabling the Nvidia Blackwell platform are all reasons for M&A interest.
K Bank IPO – Should Price Below Its Range
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.
China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing
- China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.
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