In today’s briefing:
- 7&I Holdings (3382 JP) – Artisan Writes Another Letter – Based on Content, They Should Sell Any Pop
- TCM (570 HK): “Uncertain” To Spook Shares
- Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference
- Korea: Stocks with Potential Passive Flows in November
- Horizon Robotics IPO – Peers Are Down a Lot, Its Valuation Isn’t
- Rubber Board Says Q1 FY25 Production Near Stable But ATMA Disputes
- Samty (187A) Deal Looks Somewhat Vulnerable to Potential Interlopers
- K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation
- Horizon Robotics (9660 HK) IPO: The Bull Case
- S&P/NZX 50 Index Rebalance: Tower (TWR) Replaces Arvida (ARV)
7&I Holdings (3382 JP) – Artisan Writes Another Letter – Based on Content, They Should Sell Any Pop
- Some two weeks after it became apparent Alimentation Couche-Tard (ATD CN) had lobbied a bid in for Seven & I Holdings (3382 JP), Artisan Partners wrote a letter.
- It was full of misguided analysis, ungrounded insinuation of a general nature without specifying where they would have a problem. It seemed to be complaint for the sake of complaint.
- Today another public letter. This time there are a couple of worthwhile suggestions, some accusations of fiduciary impropriety based on no evidence, and an implicit admission they should have sold?
TCM (570 HK): “Uncertain” To Spook Shares
- China Traditional Chinese Medicine (570 HK) (TCM) will fall today. Perhaps a lot.
- With two days left on the clock to secure the pre-conditions (18th October), the Offeror said “it remains uncertain” whether it can secure an extension from the investor group.
- Such wording could be viewed as boilerplate SFC legalise. I would argue the use of “uncertain” is superfluous, unhelpful, and for investors, downright worrying.
Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference
- Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP).
- There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government.
- None of that will win the hearts and minds of the Special Committee.
Korea: Stocks with Potential Passive Flows in November
- There are a few stocks in Korea that have outperformed/ underperformed their peers and could be added to or deleted from global passive portfolios next month.
- There could be buying in Hyundai Rotem, while there could be selling in KT Corp, Celltrion Pharm, Kum Yang, Hyundai Engineering & Construction, Hyundai Steel, CosmoAM&T and L&F.
- Based on our estimate of passive assets, trackers will need to trade between US$57m to US$230m of the stocks. Impact will vary between 3x-14.5x of ADV to trade.
Horizon Robotics IPO – Peers Are Down a Lot, Its Valuation Isn’t
- Horizon Robotics is looking to raise up to US$696m in its Hong Kong IPO.
- Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
Rubber Board Says Q1 FY25 Production Near Stable But ATMA Disputes
- Consumption declines by .3% to 356,000 tons in Q1 FY 25
- ATMA says April-Sept 2024 production 37% lower year on year
- ATMA asks Rubber Board to expedite data publishing
Samty (187A) Deal Looks Somewhat Vulnerable to Potential Interlopers
- The Hillhouse (Asia-based global PE firm) deal for SAMTY HOLDINGS Co Ltd (187A JP) has seen Samty shares trade tight to terms in the first three days of trading.
- Some 7.5mm shares have traded. This is only 16% of shares out, but it is a much larger portion of Maximum Real World Float.
- This begs the question of whether the deal could be put in jeopardy by the actions of one or two shareholders.
K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation
- Chosun Business Daily mentioned that K Bank IPO book building results among institutional investors have been very poor so far.
- As a result, the bankers and K Bank are currently considering on potentially reducing the IPO price to about 8,500 won or even cancelling the IPO altogether.
- Our base case valuation of K Bank is target price of 9,151 won per share. Even if the IPO is priced at 8,500 won, we would pass on this IPO.
Horizon Robotics (9660 HK) IPO: The Bull Case
- Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
- Horizon ranked fourth among all global ADAS and AD solution providers in China by solution installation volume in 2023 and 1H24, with a market share of 9.3% and 15.4%, respectively.
- The bull case rests on a large TAM, a blue-chip customer base, a robust backlog, a core business in good health, a high gross margin, and a strong balance sheet.
S&P/NZX 50 Index Rebalance: Tower (TWR) Replaces Arvida (ARV)
- Arvida (ARV NZ) will be deleted from the S&P/NZX 50 Index following its acquisition by Stonepeak Alps BidCo. Tower Ltd (TWR NZ) will be added to the index.
- Passive NZX50 Index trackers will need to buy nearly 18m shares of Tower Ltd (TWR NZ) – that is over 26 days of ADV.
- There has been a lot of positioning in Tower Ltd (TWR NZ) since Stonepeak’s offer for Arvida (ARV NZ). There should be enough supply for the passive trackers.
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