In today’s briefing:
- China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
- China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
- Japan – Yet Another Big Round of Passive Selling Expected in August
- Doosan Group: Index Implications of the Corporate Restructuring
- The Honda (7267) Offering – Much Easier Than It Looks
- Honda (7267 JP): The Current Playbook
- Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48
- Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
- Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave
- Further “SGX Listing & HKEx Withdrawal” Musings
China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
- The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
- Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
- China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.
China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
- China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%.
- The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition.
- The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.
Japan – Yet Another Big Round of Passive Selling Expected in August
- There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
- The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
- Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.
Doosan Group: Index Implications of the Corporate Restructuring
- The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
- Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
- There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.
The Honda (7267) Offering – Much Easier Than It Looks
- At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
- We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
- It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.
Honda (7267 JP): The Current Playbook
- Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48
- Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively.
- The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
- The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.
Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
- A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
- The possibility of such a selldown was flagged by Reuters prior to the deal launch.
- In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.
Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave
- Gigabyte Technology (2376 TT) is looking to raise up to US$350m in its upcoming GDR offering. The firm is also looking to raise another US$300m via convertible bonds.
- In late Jun 2024, Gigabyte announced that it had received its shareholder’s approval to issue between 32-38m common shares via a GDR offering.
- Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
Further “SGX Listing & HKEx Withdrawal” Musings
- Back on the 18th June, personal computer parts and accessories play PC Partner (1263 HK) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
- This development was discussed in PC Partner (1263 HK) Muses SGX Listing & HKEx Withdrawal. PC Partner subsequently announced a privatisation would not accompany any proposed withdrawal (should it happens).
- My recent discussions with SFC confirms this is possible. And there was a recent precedent. But there may be caveats.
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