In today’s briefing:
- Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
- Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
- Midea Group H Share Listing (300 HK): Valuation Insights
- Guotai Junan (2611 HK) & Haitong (6837 HK) Merger Creates China’s Major Player
- 7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Midea A/H Listing – Bigger Deal, Better Pricing
- Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
- Terumo (4543 JP): The Current Playbook
- K Bank IPO – The Biggest IPO in Korea in 2024
Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
- In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
- The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
- Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here.
Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
- Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
- Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.
Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
- Constituent changes to the S&P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
- The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
- The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&P 500 INDEX (SPX INDEX) trackers.
Midea Group H Share Listing (300 HK): Valuation Insights
- Midea Group Co Ltd A (000333 CH) has launched its H Share listing at HK$52.00-54.80 per share. Pricing will be on 13 September, and the listing on 17 September.
- We previously discussed the listing in Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health and Midea Group H Share Listing: AH Discount Views.
- Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.
Guotai Junan (2611 HK) & Haitong (6837 HK) Merger Creates China’s Major Player
- Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK), two of China’s leading state-backed brokerages, intend to merger via a share swap, subject to regulatory approvals.
- Via a Merger by Absorption. GJS will issue new A and H shares to Haitong shareholders. The ratio hasn’t been firmed. Upon completion, the MergeCo creates China’s largest securities entity.
- A merger is welcome – possibly mandated – amid challenging capital markets and a tightening regulatory backdrop.
7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Late last week, the Nikkei reported Seven & I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT’s Proposal and deemed it “inadequate.” Indeed it was.
- 7&i then published the Board’s letter, saying 7&i remained open to discussions but ACT’s Offer “grossly undervalued” 7&i’s intrinsic value and lacked in other areas. ACT responded with a “letter.”
- But ACT’s “letter” was a press release aimed not at 7&i but the public. 7&i released a terse response today. ACT is the suitor. It needs to act like it.
Midea A/H Listing – Bigger Deal, Better Pricing
- Midea Group Co Ltd A (000333 CH) aims to raise up to US$3.5bn in its H-share listing, the deal is somewhat larger than what was being spoken about earlier.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the deal background in our previous notes. In this note, we talk about valuations.
Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
- A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
- We have covered the background of the deal in our earlier note, Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics.
- In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.
Terumo (4543 JP): The Current Playbook
- Since the US$1.4 billion secondary placement announcement, Terumo Corp (4543 JP)’s shares are down 3.5% from the undisturbed price of JPY2,771 per share (29 August).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Terumo’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 10 September. Despite Kokusai and Honda’s disappointing performance, the average large Japanese placement tends to generate positive returns.
K Bank IPO – The Biggest IPO in Korea in 2024
- K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
- According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
- The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million).
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