In today’s briefing:
- HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
- ASICS (7936 JP): A US$1.4 Billion Secondary Offering
- Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex
- MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
- Hyundai Motor India IPO: The Bull Case
- POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won
- MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up
- Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex
- CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
- CK Infra (1038 HK): London Calling
HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
- Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
- As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
- The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.
ASICS (7936 JP): A US$1.4 Billion Secondary Offering
- ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
- Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).
Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), A8 New Media (800 HK), Asia Cement China (743 HK).
- Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP).
MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
- Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
- The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
- The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.
Hyundai Motor India IPO: The Bull Case
- Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion.
- HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
- The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile.
POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won
- POSCO Holdings (005490 KS) announced a major shareholder return policy to buyback and cancel nearly 2 trillion won worth of treasury shares from 2024 to 2026.
- The company will cancel 5.25 million treasury shares representing 6.2% of outstanding shares (about 1.9 trillion won). It will also repurchase and cancel additional 100 billion won of shares.
- POSCO Holdings has taken a major initiative to provide greater returns to its shareholders and this should have a positive impact on its share price.
MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up
- While there may be still be some overhang once the rights shares start trading, this is a good entry point
- Applications for 6.4 Billion excess rights shares received from 11 applications
- Rights shares will start trading on Tuesday 16th of July
Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: ASICS Corp (7936 JP), Honda Motor (7267 JP), Kokusai Electric (6525 JP) placements; Sanil Electric (062040 KS) and Timee Inc (215A JP) IPOs.
- Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Shanghai Henlius Biotech (2696 HK), Hong Kong Television Network (1137 HK), Rex Minerals (RXM AU), Second Chance Properties (SCE SP).
CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
- There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
- We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.
CK Infra (1038 HK): London Calling
- CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
- A UK-listing makes perfect sense. In excess of 90% of CKI’s FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
- The wording in the announcement is unclear – a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.
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