In today’s briefing:
- Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
- Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
- Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse
- L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met
- Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well
- L’Occitane (973 HK): On Activism And The Scrip Alternative
- Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer
- Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)
- Alibaba (9988 HK): Core Segments Moving Into The Right Direction
Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
- Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP).
- There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
- The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.
Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
- Along with its fiscal 2024 results, Alibaba (9988 HK) announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.
- If the conversion is completed by the end of August, Alibaba (9988 HK) could be added to Southbound Stock Connect in September and that could bring in significant flows.
- We do not forecast any passive inflows due to the change with Alibaba Group Holding (9988 HK) capped at 8% of the HSI, HSCEI and HSTECH indices.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
- Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
- There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
- Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.
Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse
- The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.
- Recently, Yanai-san sold more Fast Retailing (9983 JP). There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).
- There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.
L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met
- L’Occitane (973 HK) announced that the share alternative pre-condition was satisfied. However, The share alternative offer is at the offeror’s discretion and with the consent of the financing parties.
- The share alternative offer poses a dilemma due to the requirement to satisfy the minimum acceptance condition while not breaching the upper limit of the share alternative offer.
- The share alternative offer is a play on higher multiples by relisting the business. At HK$50.00, L’Occitane would trade in line with its median global beauty peers’ multiples.
Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well
- HD Korea Shipbuilding & Offshore Engineering (009540 KS) is looking to raise approximately US$258m, via selling 2.6m shares (2.9% of TSO) of HD Hyundai Heavy Industries (329180 KS) stock.
- The deal is a large one to digest at 14.6 days of three month ADV.
- In this note, we will talk about the placement and run the deal through our ECM framework.
L’Occitane (973 HK): On Activism And The Scrip Alternative
- In the 29th April HK$34/share VGO announcement, a share scrip alternative may be afforded if 10% of L’Occitane (973 HK)‘s disinterested shareholders expressed interest by the 15th May
- That pre-condition has been satisfied. However, we are none the wiser whether you receive shares of the levered-up Bidco, at some undetermined scrip ratio; or keep shares of L’Occitane as-is.
- Some shareholders, like Butler Hall, considered terms low-balled. They now have the option to rollover. But there are still other large activists on the register, whose intentions are not known.
Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer
- Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners, are offering to buy all shares not already owned in Malaysia Airports Holdings (MAHB MK) at RM11.00/share.
- The pre-conditional voluntary Offer price is a 5.77% premium to last close; but a life-time high. The Offeror consortium collectively holds 41.22% of shares out.
- The pre-cons include regulatory approvals (in Malaysia, Turkey, Saudi Arabia, and Egypt). The Offer is subject to a 90% acceptance condition; which may be reduced.
Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)
- Two and a half years ago, H2O Retailing (8242 JP) the 10.9% owner, arranged to merge its own units into Kansai Super Market (9919 JP) to get control. OK Corp complained.
- OK Corp offered to double the price in a Tender Offer but wouldn’t go hostile. KSM/KFM said no go. Shares popped to ¥2,000+ then when the deal failed, they fell.
- H₂O ended up with 58% (64.9% of votes now). The ultimate goal was to swallow it paying zero premium. On 15 May, it announced the merger to do just that.
Alibaba (9988 HK): Core Segments Moving Into The Right Direction
- On first look, Alibaba Group Holding (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy.
- We can give the company the benefit of the doubt given that the important segments of the company are heading into the right direction.
- Alibaba returned USD13.4bn and USD16.5bn to shareholders in FY23 and FY24, compared to the current market cap of USD197bn
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