In today’s briefing:
- Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
- SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer
- Genting Fancies A Flutter In Macau
- Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- CALB IPO: Updates Support the Bull Case
- Poor Initial IPO Book Building Results for WCP
- Hitachi Metals (5486) Gets SAMR Clearance, Finally. So Now We Can Sell.
- CALB Pre-IPO – Thoughts on Valuation
- TIGER Battery ETF (WISE) Rebalancing in October
- EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
- Atlas Arteria (ALX AU) is acquiring 66.67% in Skyway Concession Company LLC, the concessionaire of the Chicago Skyway for an equity value of US$2.013bn (A$3.098bn).
- The acquisition will be funded by a fully underwritten 1:1.95 ANREO to raise A$3.098bn. The offer price of A$6.3/share is a 13.7% discount to TERP and 19.3% discount to last.
- The increase in market cap could result in Atlas Arteria (ALX AU) being added to the S&P/ASX 50 Index at the December rebalance.
SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer
- Yesterday, SBI Holdings (8473 JP) announced it would launch a tender offer to buy 33.4-51% of Aruhi Corp (7198 JP) at ¥1,500/share – a 48.5% premium to the close.
- ARUHI – Japan’s largest “mortgage bank” – was listed in late 2017. Long ago, its predecessor was named SBI Mortgage. This is SBI buying back in.
- Inside we look at valuations, shareholder structure, pro-ration. There are opportunities here.
Genting Fancies A Flutter In Macau
- In a surprise move, Genting Bhd (GENT MK) – or Genting Malaysia (GENM MK) – has joined the six incumbents in bidding for new casino licences in Macau.
- The bidding process follows Macau’s record low monthly gaming revenue in July after casinos were closed for 12 days in response to a Covid outbreak.
- Casinos have re-opened, yet there is little to cheer about as business remains muted. The six winners are expected to be announced by the end of November or early December.
Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- In August, Janaghan Jeyakumar, CFA published his leaderboard and flow estimates for the FTSE Taiwan Dividend+ Rebalance which starts today and runs through next Thursday.
- Late in August, I recommended a basket trade. Since then, the BUY basket has outperformed the SELL basket by 7.6%. Set & Forget it is up 7.2%.
- I provided timing in the basket trade. Now it is time to swing the other way.
CALB IPO: Updates Support the Bull Case
- CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
- We previously discussed the IPO in CALB IPO: The Bull Case and CALB IPO: The Bear Case. This note updates our view for the PHIP and recent developments.
- The 1Q and truncated 1H numbers outline the highest growth among peers, customer diversification and sequential improvement in gross margin. The IPO is worth a look.
Poor Initial IPO Book Building Results for WCP
- Several local Korean media reported that the initial book building results for the WCP IPO has been disappointing.
- The IPO could be priced close to 60,000 won to 65,000 won won, which would be about 19%-25% lower than the low end of the IPO price range.
- The final decision as to whether or not WCP will go ahead with the IPO at lower price or delay it altogether is expected to be made on/near 19 September.
Hitachi Metals (5486) Gets SAMR Clearance, Finally. So Now We Can Sell.
- Today before the open, China’s State Administration for Market Regulation (SAMR) finally announced the approval of the takeover of Hitachi Metals (5486 JP). This was what delayed things.
- The approval had actually been issued on 7 September, and the collected approvals in the week to the 12th were announced today. Some media outlets had the info yesterday.
- I expect it is likely that the Bain Tender Offer to buy Hitachi Metals will be announced today after the close, or at latest, early next week.
CALB Pre-IPO – Thoughts on Valuation
- CALB aims to raise around US$1.5bn in its Hong Kong IPO.
- CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
- In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.
TIGER Battery ETF (WISE) Rebalancing in October
- The rebalancing trading will be at the close on October 13. The AUM currently amounts to ₩1.32T with 28 constituents, implying that the passive impacts wouldn’t be insignificant.
- It will likely show a similar pattern to the last rebalancing. With no constituent change, weight adjustment by 10% cap of top stocks leads to weight adjustment of the rest.
- An important variable here is the entry of newly listed stocks. SungEel Hitech and Sebitchem, the two larger cap stocks, appear to have a reasonably high inclusion probability.
EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
- HSI INDEX is trading back down to recent lows and support levels. It looks oversold and there are potential catalysts for a bounce
- Implied vols are low and options offer a great way to play a tactical long
- We highlight a relative value vol trade vs the SPX
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