In today’s briefing:
- The Honda (7267) Offering – Much Easier Than It Looks
- Hong Kong: Stocks Facing the Passive Boot in August
- Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”
- S&P/ASX Index Rebalance Preview: Potential Changes from Now to September
- Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out
- Timee IPO: Forecasts and Valuation
- Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
- GULF-INTUCH Amalgamation
- SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
- Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.
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.
Hong Kong: Stocks Facing the Passive Boot in August
- There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI 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.
- There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.
Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”
- Last night, the Board of Intouch Holdings (INTUCH TB) announced an amalgamation with Gulf Energy Development (GULF TB) and Tender Offers for Advanced Info Service (ADVANC TB) (at THB 216.30)
- And Thaicom Pcl (THCOM TB) (THB 11.00) shares. This is really big news. It appears to try to cap years of re-arrangement of the capital structure. It’s complicated.
- But it is not fair. INTUCH shareholders lose 22% of earnings value per investment value in 2024. 20% in 2025. But, there may be a way to block it…
S&P/ASX Index Rebalance Preview: Potential Changes from Now to September
- With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
- There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX).
- The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.
Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out
- Hyundai Motor (005380 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
- HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
- In our previous note, we looked at the company’s past performance. In this note, we undertake a peer comparison.
Timee IPO: Forecasts and Valuation
- Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
- We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
- Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.
Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
- Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
- Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
- We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.
GULF-INTUCH Amalgamation
- The amalgamation will entail the ratios for allocations of shares in the NewCo to the shareholders of GULF and INTUCH as detailed below.
- The amalgamation process and the establishment of the NewCo are expected to be completed in 2Q25.
- The restructuring is aimed at reducing duplication in the shareholding structure and facilitating growth opportunities in the energy, infrastructure, and digital businesses.
SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
- The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
- SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
- Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.
Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.
- An interview in the Nikkei of Koito Manufacturing (7276 JP) CFO Takahito OTAKE offered the comment that Koito Mfg expected a shareholder return of 130% a year through March 2029.
- The stock popped 19% after lunch on that comment, then fell back to end up 5.0%.
- This is the same pop as we saw end-March. Then it was +24.6% and it stayed up the next day. Same reason for the pop. This was an echo.
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