In today’s briefing:
- Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?
- Wharf Holdings (4 HK): Improved Liquidity & Passive Buying
- Quiddity A/H Premium Weekly (15-Sep): Utilities, Insurance, China Mobile, BYD
- SK Telecom (017670 KS): Foreign Room & Passive Inflows
- Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
- Poly Culture (3636 HK): H Share Class Meeting on 3 November
- Lansen Pharma (503 HK): The Chairman Makes An Offer
- Costa Mulls Paine Schwartz’s Lower Bid
- Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
- HSCI Index Rebalance Preview: Low Probability Add in December
Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?
- Four years after Itochu got to 40.0% of votes in Descente (8114) in a hostile Tender Offer, Descente partner ANTA, which supported Itochu at the time started selling its stake.
- A few months later, Itochu started buying shares of Descente in the market. As of 7 Sep, Itochu had bought Descente shares 81 days straight (9.7% of ADV).
- This begs the question: Is Itochu ensuring they maintain voting control as ANTA sells? Or are they buying to lift their stake prior to another bid?
Wharf Holdings (4 HK): Improved Liquidity & Passive Buying
- Improved liquidity and a higher stock price could see passive trackers buying Wharf Holdings (4 HK) within the next couple of months.
- Wharf Holdings (4 HK) trades cheaper than the average and median of its peers on EV/Sales, EV/EBITDA and price to book value.
- Wharf Holdings (4 HK) has already started to move higher and there could be a bigger move in the stock over the next month.
Quiddity A/H Premium Weekly (15-Sep): Utilities, Insurance, China Mobile, BYD
- The Brand-Spanking New (6 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
- We used to do it and decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 41 Trade Recommendations.
- The last five weeks (since the instantiation of the new Monitor and Portfolio 6 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%.
SK Telecom (017670 KS): Foreign Room & Passive Inflows
- Foreign room in SK Telecom (017670 KS) increased above 15% in July and is currently just above 16%. Foreign investors have resumed buying again and foreign room is moving lower.
- Foreign room staying above 15% for another month could result in passive buying at the end of November. SK Telecom (017670 KS) has outperformed peers over the last few weeks.
- Foreign buying over the next month could lead to foreign room dropping below 15% in which case there will be no passive inflows. But the stock could be higher.
Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
- Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
- This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
- The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved.
Poly Culture (3636 HK): H Share Class Meeting on 3 November
- The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
- The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
- The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.
Lansen Pharma (503 HK): The Chairman Makes An Offer
- Specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK) has been a perennial takeover target. And now we have an Offer.
- Wu Zhen Tao, NED and Chairman of Lansen, has made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.
- This looks done. Get involved if small-cap illiquid arbs are your thing.
Costa Mulls Paine Schwartz’s Lower Bid
- Back on the 4 July, Paine Schwartz Partners (PSP) made an A$3.50/share NBIO for Costa Group (CGC AU) by way of a Scheme. PSP held 14.84% at the time.
- The due diligence period came and went, or so it appeared, but Costa said it remained ongoing. Rumours circulated that PSP had gone cold. 1H23 results were also delayed.
- Costa has now announced this morning that PSP has returned with a $3.20/share Offer – best and final – reduced for any permitted dividend of up to A$0.04, if declared.
Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
- As of last Friday, SKT has utilized 86.2 billion won out of the allotted 300 billion won for share buybacks, resulting in the acquisition of 1,810,242 shares.
- If there are indications of the foreign room potentially falling to a risky level, SKT will likely proceed with an aggressive buyback, targeting 20-30% of the daily trading volume.
- Another particularly intriguing observation is the absence of local retail flow directed towards SKT. This indicates there is still potential momentum for an upward price movement at this juncture.
HSCI Index Rebalance Preview: Low Probability Add in December
- There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
- Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
- Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.
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