In today’s briefing:
- Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
- Shift Up IPO: Valuation Insights
- How to Own Lenovo at a Discount: BUY Legend Holdings Corp (3396 HK)
- SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win
- GAPack (468 HK): Shandong Xinjufeng Offer Progesses
- Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake
- End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024
- Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer
- Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing
- Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates
Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
- The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
- There is reportedly a new piece of writing out late Thursday which suggests an approach.
- I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.
Shift Up IPO: Valuation Insights
- Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
- We previously discussed the IPO in Shift Up IPO: The Investment Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that Shift Up is attractively valued in the IPO price range. We would participate in the IPO.
How to Own Lenovo at a Discount: BUY Legend Holdings Corp (3396 HK)
- Legend Holdings Corp H (3396 HK) owns 31% of Lenovo (992 HK) , the number one global PC maker
- Lenovo is a leader selling AI enabled PC’s globally. Its server business is growing rapidly through strong demand for generative AI. Legend is the leading AI seed investor in China.
- Technical pattern strong for Lenovo reaching a 9 year high. Legend showing increasing momentum from an historic trough valuation level
SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win
- Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
- That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid.
- SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities.
GAPack (468 HK): Shandong Xinjufeng Offer Progesses
- On the 9th May, Shandong Xinjufeng (301296 CH) (XJF) made a pre-conditional voluntary general Offer at $2.65/share (best & final), contingent on a 50% acceptance. Final/special dividends to be added.
- GAPack(468 HK) has made it clear that XJF is a competitor of GAPack. And Mengniu (2319 HK) may review its relationship if pre-cons are satisfied/waived; or the Offer gets up.
- XJF has announced the necessary applications have been sent to NDRC, MoC, and SAMR; and it prepping for a shareholder meeting to approve the Offer.
Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake
- Bloomberg reports that Blackstone (BX US) has agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a rumoured valuation of JPY260 billion.
- The potential minority offer price depends on whether the rumoured valuation refers to market cap or enterprise value and whether Teijin will share TOB tax benefits.
- The most likely scenario is that the valuation refers to the market cap, with Teijin sharing TOB tax benefits, resulting in a minority offer of around JPY5,720 per share.
End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024
- We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
- These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
- The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico.
Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer
- Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer.
- SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x.
- The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium.
Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing
- Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.
- Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange’s value-up index, possibly using COE as a primary factor for inclusion.
- Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.
Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
- In this insight, we take a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-May 2024.
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