In today’s briefing:
- Toshiba (6502 JP) – Weak Sauce from JIP
- Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks
- Delhivery: Potential Index Inclusions Overshadowed by US$2.89bn Lock-Up Expiry
- Toshiba – Realistic Valuation Disappoints Markets
- Golden Energy & Resources (GER SP)’s Lacking Offer from the Widjaja Family
- Five-Star Business IPO – Thoughts on Valuation
- Super High Premium Buyout for Totoku Electric (5807) By Carlyle
- Origin Energy (ORG AU): Indicative Proposal from Brookfield & MidOcean; Index Implications
- Jinke Smart (9666 HK): Offer Now Unconditional In All Respects
- Hangzhou GreatStar Industrial GDR Listing – Wider Discount Here and Momentum Has Been Strong
Toshiba (6502 JP) – Weak Sauce from JIP
- Media reported last night that JIP would bid ¥2.2trln for Toshiba. That’s about ¥5,000-5,100/share.
- This morning, there is a bit more clarification. Funnily, that means there is less info here than people think.
- But it is not a great look for either JIP or Toshiba at this point.
Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks
- Jardine Cycle & Carriage (JCNC SP) was deleted from the SIMSCI Index in November 2020 and could be added back to the index at the upcoming SAIR.
- If added to the index, we estimate passive MSCI trackers will need to buy 7.9m shares (US$176m; 11 days of ADV) at the close on 30 November.
- Jardine Cycle & Carriage (JCNC SP) is trading at a tight discount to its listed holdings and the spread could widen post the MSCI implementation.
Delhivery: Potential Index Inclusions Overshadowed by US$2.89bn Lock-Up Expiry
- Delhivery (DELHIVER IN) raised US$675m in its IPO and started trading on 24 May. The stock dropped below its IPO price a couple of weeks ago.
- Lock-Ups on pre-IPO investors expire on 20 November with 598m shares (US$2.89bn) becoming available for sale. Sell before then or hold off on buying.
- Delhivery (DELHIVER IN) is a potential inclusion to the MSCI Small Cap and FTSE All-World indices in the next month. Passive buying will be overshadowed by lock-up expiry.
Toshiba – Realistic Valuation Disappoints Markets
- The Nikkei reported on Monday that JIP’s bid values Toshiba at roughly ¥2.2trn.
- The stock has dropped to a level just below this valuation suggesting some anticipation of a Bain/JIC bid above that valuation.
- While that is plausible, the cautiousness of JIP’s bid highlights the fundamental downside risk here in our view.
Golden Energy & Resources (GER SP)’s Lacking Offer from the Widjaja Family
- Golden Energy & Resources (GER SP)‘s proposal from the Widjaja family – The distribution proposal (1.3936 GEMS share per share or IDR5,500 per GEMS share) and the delisting proposal (S$0.160).
- For minorities, the good news is that the distribution share ratio is in line with the control ratio and offers are at a premium to historical share prices/multiples.
- The bad news is that the distribution cash alternative is unattractive and the delisting offer values GEAR at a discount to the Stanmore Coal (SMR AU) stake adjusted for debt.
Five-Star Business IPO – Thoughts on Valuation
- Five Star Business Finance (0958461D IN) is looking to raise around US$250m in its upcoming India IPO.
- Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
- We have looked at various aspects of the deal in our previous note, in this note, we talk about valuations.
Super High Premium Buyout for Totoku Electric (5807) By Carlyle
- Yesterday, Carlyle announced a buyout of Totoku Electric (5807 JP) at ¥5,660/share, which was a cool 155% premium to Tuesday’s close of ¥2,215. The stock was limit up today.
- It will be limit up tomorrow, and the next day. And probably the next day.
- This is a very interesting outcome. But it is actually not as expensive as it “looks.”
Origin Energy (ORG AU): Indicative Proposal from Brookfield & MidOcean; Index Implications
- A Brookfield/MidOcean consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in Origin Energy (ORG AU) at A$9/share in cash.
- The offer values Origin Energy (ORG AU)‘s equity at A$15.5bn and is a 54.9% premium to the last close. The premium is over 50% even using longer term VWAPs.
- There will be changes to the S&P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.
Jinke Smart (9666 HK): Offer Now Unconditional In All Respects
- Back on the 27th of September, PRC-incorporated property management play Jinke Smart Services (9666 HK) announced a voluntary cash offer from Boyu at HK$12/share, a 33.04% premium to last close.
- The Offer was contingent on SAMR and 7.71% of shares out tendering. Matters were somewhat complicated by Boyu buying 7.15% of shares out before dispatching the Composite Document.
- Jinke has now announced SAMR approval and waiving the acceptance condition. The Offer is unconditional. The final closing date is the 22nd of November. This may trade through terms.
Hangzhou GreatStar Industrial GDR Listing – Wider Discount Here and Momentum Has Been Strong
- Hangzhou Great Star Industrial Co., (002444 CH) is looking to raise around US$150m in its Swiss GDR listing. Huatai is the sole bookrunner in the deal.
- The firm is offering 11.5m GDRs (1 GDR to 5 A-shares) for sale at a 16.1-18.7% discount to last close.
- The deal would represent just 2.3 days of three month ADV and 4.3% of the firm’s current mcap.
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