In today’s briefing:
- Golden Eagle (3308 HK): 15th September Scheme Meeting
- KOSPI Size Indices – Plenty of Migrations to Attract Active Flows
- Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: A Week to Go
- EOFlow/Medtronic: What Lawsuit?
- TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates
- Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
- Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish
- APA Group Placement – Well Flagged Deal, but Lacks in Accretion
- Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart
Golden Eagle (3308 HK): 15th September Scheme Meeting
- On the 28th May, PRC department store play Golden Eagle Retail (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
- The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable.
- The Scheme Doc was despatched this morning (23 August). The Scheme Meeting is September 15th with expected payment on (or before) the 17th of October. The Offer price is final.
KOSPI Size Indices – Plenty of Migrations to Attract Active Flows
- The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
- We see 7 migrations from MidCap to LargeCap, 6 migrations from LargeCap to MidCap, 7 new adds to MidCap, and 17 migrations from SmallCap to MidCap.
- Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.
Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote
- Dali Foods Group (3799 HK)‘s gross spread on the Founder’s (Mr Xu Shihui) HK$3.75 per share offer has sharply increased and stood at 5.3% at the last close.
- The rising gross spread is due to the recent market selloff (the gross spread of all HKEx merger arbs we track increased this week) and vote risk.
- The vote risk is due to no interim results, the high AGM minority participation rate and a modest offer. There is little evidence that these risks will derail the vote.
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: A Week to Go
- The changes for the next rebalance will use closing prices from 31 August, will be announced after the close on 8 September with implementation at the close on 15 September.
- One stock is very close to the 85% cumulative market cap inclusion threshold, while there are two stocks that are near the 98% cumulative market cap deletion threshold.
- With one inclusion and capping changes, estimated one-way turnover at the rebalance will be 3.5% resulting in a one-way trade of US$20m. That could change over the next week.
EOFlow/Medtronic: What Lawsuit?
- On the 8th of August, Insulet Corp (PODD US) filed a lawsuit accusing Eoflow (294090 KS) of the misappropriation of trade secrets, patent infringement, and trademark dilution.
- The filing was pretty heavy on accusations. EOFlow declined ~11% on the news.
- Undeterred, Medtronic (MDT US) continues to preach all is peachy, suggesting the EOFlow merger is a go, and Medtronic will deal with the lawsuit, as and when.
TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates
- TVS Supply Chain Solutions (TVSSCS IN) raised around US$108m in its India IPO, after downsizing from an earlier reported float of up to US$500m.
- TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand and trading dynamics.
Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
- Nvidia will report its earnings today U.S.-time, we outline the key Taiwan AI supply chain names to watch around the earnings.
- TSMC has maintained its full-year revenue guidance despite media reports questioning whether a further downgrade was coming.
- Hon Hai produces over 50% of Nvidia’s AI hardware according to media reports.
Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish
- Baring aims to raise around US$900m by selling its remaining 26.6% stake in Coforge (COFORGE IN) .
- Baring has been paring down its stake since 2020 and hence, the selldown is somewhat well flagged.
- In this note, we run the deal through our ECM framework and talk about the deal dynamics.
APA Group Placement – Well Flagged Deal, but Lacks in Accretion
- APA Group (APA AU) is looking to raise A$675m (US$430m) in its primary follow-on to partially fund its acquisition of the Alinta Energy assets in the Pilbara region.
- The deal is a well flagged one with APA having been one of the last remaining bidders on the asset. Short interest has been on the rise as well.
- However, the deal doesn’t seem accretive at our end, and the results reported today seemed to have missed analyst expectations.
Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart
- Ecopro (086520 KS), Jyp Entertainment (035900 KS), Hanwha Ocean (042660 KS), Hanmi Semiconductor (042700 KS), CJ Corp (001040 KS) and E Mart (139480 KS) have been on investors/traders radars recently.
- There will be liquidity demand on the stocks in a week and there is pre-positioning on a lot of the stocks.
- Since 10 August, retail investors have net bought Jyp Entertainment and E Mart, foreigners have net bought Ecopro, Hanwha Ocean and Hanmi Semiconductor, while local institutions have net bought CJ Corp.
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