In today’s briefing:
- Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives
- FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling
- Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Henlius Biotech (2696 HK): Fosun Offer?
- Henlius (2696 HK): Privatisation by Fosun Pharma?
- Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
- SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote
- SciClone Pharma (6600 HK): Scheme Vote on 19 June
- KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
- Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT
Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives
- In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
- It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
- This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.
FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling
- Lee urgently appeard on TV today and said, “In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption.”
- He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office’s stance from two days ago.
- Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.
Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
- The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
- If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.
Henlius Biotech (2696 HK): Fosun Offer?
- Biopharmaceutical outfit Shanghai Henlius Biotech (2696 HK) is currently suspended pursuant to the Takeovers Code.
- Shanghai Fosun Pharmaceutical (Group) (2196 HK) holds ~60% in Henlius, mostly via domestic shares. Co-founders and Qatar Authority hold ~28% and 8% the H shares respectively.
- IF an Offer were to unfold, it would be the third in this space in the past two months, after Offers for Sciclone (6600 HK) and Yichang HEC (1558 HK),
Henlius (2696 HK): Privatisation by Fosun Pharma?
- Shanghai Henlius Biotech (2696 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” The likely bidder is Fosun Pharma.
- A merger by absorption would require approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). There could also be a 90% minimum acceptance condition.
- The shares are 62% below the IPO price. However, shareholders with blocking stakes would welcome an offer suggesting a 30-40% takeover premium would be sufficient.
Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
- Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the not-so-positive aspects of the deal.
SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote
- On the 28th March, Li Zhenfu (SciClone (6600 HK)‘s NED), Assicurazioni Generali (G IM), and concert parties (collectively controlling 36.61%), made an Offer at $18.80/share, a 33.9% premium to undisturbed.
- The Offer price is bang in line with SciClone’s March 2021 IPO price. Terms were declared final. This is a clean deal.
- The Scheme Document is now out. The Court Meeting will be held on the 19th June. Expected payment on or before the 12 July. FWIW: IFA says fair & reasonable.
SciClone Pharma (6600 HK): Scheme Vote on 19 June
- Sciclone Pharmaceuticals (6600 HK)‘s scheme document is out, and the court meeting is scheduled for 19 June. The IFA considers the HK$18.80 per share offer fair and reasonable.
- The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- This is a done deal. At the last close and for the 12 July payment, the gross and annualised spread is 2.2% and 17.3%, respectively.
KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
- The KRX have announced the index changes for the KOSPI200 June review.
- The index will be rebalanced in the closing auction on Thursday the 13th of June.
- There will be 6 additions to the index and 6 deletions.
Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT
- Unexpectedly, KRX included Cosmo AM&T (005070 KS) despite not meeting the market cap cutoff and excluded DB Hitek (000990 KS) and Lotte Energy Materials (020150 KS).
- Cosmo AM&T’s unexpected inclusion triggers a significant one-day passive flow event through the KOSPI 200 IT, the sector index with the largest AUM.
- Sector index rebalancing, a single-day event managed by one ETF operator, more significantly correlates flow direction with price impact. We should consider a long-short setup for these on June 13th.
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