In today’s briefing:
- HD Hyundai Marine Solution: IPO Book Building Results Analysis
- L’Occitane (973.HK) Privatization – The Offer Price Is Good Enough
- Trading Implications Of Intra-Day Naked Short Selling Rule Tightening in Korea
- Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- KLINE (9107) – More Profit, More Shareholder Return 3mo Buyback Inbound
- HD Hyundai Marine Solution IPO Trading – Strong Demand and Peers Continue to Rise
- Chilled & Frozen’s Target Opinion Statement; Chotto Matte (Four Counterbidders)
- Namoi Cotton (NAM AU): Bloom Times As Louis Dreyfus & Olam Agri Tangle
- Big Fines on Foreign Investment Banks for Naked Short Selling in Korea – Implications
- Wuxi XDC Lock-Up – US$300m Lockup Expiry Could See Some Selling Owing to the Regulatory Overhang
HD Hyundai Marine Solution: IPO Book Building Results Analysis
- HD Hyundai Marine Solution’s IPO price has been determined at 83,400 won per share, which is at the high end of the IPO price range.
- A total of 2,021 institutional investors participated in this IPO book building. The demand ratio was 201 to 1. HD Hyundai Marine Solution will start trading on 8 May 2024.
- Our base case valuation of HD Hyundai Marine Solution is target price of 98,254 won per share, which represents an upside of 18% from the IPO price.
L’Occitane (973.HK) Privatization – The Offer Price Is Good Enough
- The HK$34/share offer price is final, which exceeds all-time high closing price of HK$33.60/share since IPO in 2010. EUR6 billion is equivalent to a PE of 52.17x, higher than peers.
- Deploying China’s sinking market is “a good story full of imagination”. However, it may fail to bring expected profits considering increasing competition/potential price war, leading to uncertain future performance growth.
- For minority shareholders, this privatization provides an attractive opportunity to monetise their investments at a premium over market price. We don’t think the current “technical bull market” to be lasting.
Trading Implications Of Intra-Day Naked Short Selling Rule Tightening in Korea
- Aggressively curbing naked short selling may enhance flow conditions for Value-Up stocks by reducing market turnover.
- Liquidity decline may worsen KOSDAQ’s underperformance relative to KOSPI stocks due to its higher vulnerability to liquidity fluctuations.
- We should also monitor price impact from phased short selling in the absence of intra-day naked short selling post-regulation tightening.
Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
- Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.
- Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.
KLINE (9107) – More Profit, More Shareholder Return 3mo Buyback Inbound
- Kawasaki Kisen Kaisha (9107 JP) today announced earnings. Ocean Network Express earnings were out earlier and beyond that, Consolidated Revs beat, OP faltered, but NP was spot on guidance.
- Guidance for the year to March 2025 is well ahead of consensus on revenue, slightly ahead on OP, and just a wee bit ahead on NP.
- But the company raised its 5yr MTMP Shareholder Return from ¥500bn to ¥700bn and set a new ¥100bn (5.5%) buyback to be executed in the next 3 months.
HD Hyundai Marine Solution IPO Trading – Strong Demand and Peers Continue to Rise
- HD Hyundai Marine Solution (443060 KS) had raised around US$539m in its Korean IPO, after pricing the deal at the top end of KRW83,400/share.
- HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
- In this note, we will talk about the demand for the deal and other trading dynamics.
Chilled & Frozen’s Target Opinion Statement; Chotto Matte (Four Counterbidders)
- Today, after the close, Chilled & Frozen Logistics Holdings (9099 JP) released a required (by the FIEA) Target Opinion Statement saying “Opinion Withheld.”
- C&F notes that it had received 9 possible counter-proposals, offered due dili to a certain extent, and by May 1, had 4 binding offers.
- There are interesting competitive dynamics at play here, but cross-holding concentration matters. The question is… How much is enough?
Namoi Cotton (NAM AU): Bloom Times As Louis Dreyfus & Olam Agri Tangle
- Singapore’s Olam Agri and global commodity merchant Louis Dreyfus Company (LDC) are duking it out for Namoi Cotton Co Operative (NAM AU), Australia’s largest cotton producer.
- After both initially lobbed competing Schemes, both have now tabled off-market Offers – A$0.67/share from LDC, A$0.66/share from Olam – each contingent on a 50.1% acceptance hurdle, FIRB, and ACCC.
- LDC, currently holding 17%, announced it will reject Olam Agri’s Offer. Top shareholder Samuel Terry Asset Management, with 24.5%, is expected to support the winning (or superior) bid.
Big Fines on Foreign Investment Banks for Naked Short Selling in Korea – Implications
- The FSS mentioned it has uncovered 211 billion won of naked short sales by Credit Suisse and 8 other global banks of Korea-listed stocks between 2021 and 2023.
- The current ban on short selling stocks could be extended to at least 1H 2025.
- The Korean government’s imposing these large fines on the foreign brokers is sending a message to the foreign brokers to not engage in naked short selling.
Wuxi XDC Lock-Up – US$300m Lockup Expiry Could See Some Selling Owing to the Regulatory Overhang
- WuXi XDC Cayman (2268 HK) was listed in Hong Kong on 17th Nov 2023 after raising US$470m. Its six-month lockup will expire on 16th May 2024.
- WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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