In today’s briefing:
- Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
- SATS SP: S$800m Rights Issue to Fund WFS Acquisition
- KOSPI200 Index Rebalance Preview: Changes in April & June
- SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
- Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
- Techtronic Industries (669 HK): JR Puts Down That Tool
- Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time
- Alibaba (9988 HK): 3Q23, Growth Flat, But Margin Up, Buy
- Oasis Management Invests in KT&G
- Boustead Projects: Boustead Singapore Bumps. Still Underwhelming
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
- Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
- A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
- This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.
SATS SP: S$800m Rights Issue to Fund WFS Acquisition
- SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
- The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
- There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.
KOSPI200 Index Rebalance Preview: Changes in April & June
- Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
- We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
- Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
- Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
- They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
- Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
- Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
- The deal would be worth around US$9bn and could come as soon as next month.
- In this note, we talk about the news and take an early look at the possible selldown.
Techtronic Industries (669 HK): JR Puts Down That Tool
- Jehoshaphat Research (JR) argues the case that Techtronic Industries (669 HK) has been engaged in “snowballing” to maintain margin growth.
- JR flags TTI is the only public company in the world (with over $1bn in revenues) exhibiting positive sequential gross margin change in every semi-annual period over ten years.
- Short interest had been picking up ahead of the short sell report. Shares fell 19% before being suspended in the afternoon session.
Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time
- Star Entertainment Group (SGR AU) is looking to raise A$685m via an ANREO of 3 shares in The Star for every 5 shares at a fixed price of A$1.2/share.
- The A$1.2/share price is a 21.1% discount to the last close and a 14.3% discount to the Theoretical Ex-Rights Price (TERP) of A$1.4/share.
- Short interest is near the highs and there is an index deletion pending. We’d look to buy the stock on a move lower, especially closer to index deletion.
Alibaba (9988 HK): 3Q23, Growth Flat, But Margin Up, Buy
- Revenue grew by 2% YoY in 3Q22, as the decrease of online sales offset the increase of physical stores.
- The operating margin began to improve, as the company cut sales and marketing expenses in minor businesses.
- We believe the stock has an upside of 78% for March 2024 and the price target will be HK$170.
Oasis Management Invests in KT&G
- It was reported on 22 February in numerous local Korean media that Oasis Management has invested about 1.5% stake in KT&G Corporation (033780 KS).
- This investment in KT&G is reportedly Oasis Mgmt’s first investment in Korea. For now, Oasis Mgmt has not made any public announcement about its investment in KT&G.
- With Oasis Mgmt investing 1.5% stake in KT&G, we believe it is increasingly likely that it could start its activist campaign on KT&G sometime in 2023.
Boustead Projects: Boustead Singapore Bumps. Still Underwhelming
- On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
- The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation.
- BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.
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