In today’s briefing:
- JX Advance Metals Pre-IPO – The Positives – Transforming
- Warren Buffett and the Japanese Trading Houses I
- Rio Tinto (RIO LN/RIO AU): Thinking About Unification
- HKBN (1310 HK): MBK Ups Stake Via VLN Conversion
- Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- MV Global Junior Gold Miners Index Rebalance: 7 Adds & Other Changes Lead to US$610m Trade
- Ramelius/Spartan Merger: MergeCo Close to ASX100 Index Inclusion
- HKBN (1310 HK): Another Sing Tao Article as Speculation Swirls on MBK’s Loan Notes Conversion
- The Backdrop Behind Today’s Pivot in Samsung’s Playbook
- Fengxiang (9977 HK): Privatisation by PAG?
JX Advance Metals Pre-IPO – The Positives – Transforming
- JX Advance Metal’s (JXAM) parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.6bn via selling more than half of its stake in JXAM in its Japan IPO.
- JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
- In this note, we talk about the positive aspects of the deal.
Warren Buffett and the Japanese Trading Houses I
- The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
- He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
- He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.
Rio Tinto (RIO LN/RIO AU): Thinking About Unification
- Rio Tinto Ltd (RIO AU) shareholders will vote on Palliser’s AGM resolution to conduct an independent review on whether the potential unification is in the best interests of shareholders.
- Palliser and the Board’s arguments for and against unification focus on five factors: tax costs, post-unification share price, lack of scrip M&A, wastage of franking credits, and shareholder support.
- A Grant Thornton report supports unification. The board’s case is strong primarily on tax costs, while Palliser’s case is strong on post-unification share price, M&A, and franking credits.
HKBN (1310 HK): MBK Ups Stake Via VLN Conversion
- China Mobile (941 HK) has made a pre-conditional HK$5.23/share voluntary Offer for HKBN Ltd (1310 HK). However, a possible separate Offer from I Squared continues to make the news.
- In an unusual move, MBK, via Twin Holding, has converted HK$970.5mn of VLNs, at a whopping HK$11.60/share conversion price, lifting MBK’s stake to 16.39% on a fully diluted basis.
- Speculation is rife that MBK provides an irrevocable to I Squared for its enlarged shareholding. Maybe. I still don’t see China supporting a U.S.-based infrastructure firm over an SOE .
Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- Nikkei Business reported Friday 14 March that Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) (“DHFG”) were in talks to integrate to create a Super-Regional Bank
- Gunma and Daishi-Hokuetsu are part of the same multiple-regional bank alliances, including the Gunma-Daishi Hokuetsu Alliance since 2021, in order to collaborate regionally, build scale, and lower service provision cost.
- As Gunma and Daishi Hokuetsu serve adjacent jurisdictions, and they are already exploring sharing branches, this makes sense. The World with Interest (rates above zero) may cause more integration talk.
MV Global Junior Gold Miners Index Rebalance: 7 Adds & Other Changes Lead to US$610m Trade
- There are 7 adds for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March. There are plenty of float and capping changes too.
- Estimated one-way turnover is 5.3% resulting in a round-trip trade of US$610m. There are 11 stocks with over 1x ADV to trade from passive trackers.
- Spartan Resources /Australi (SPR AU) and Ora Banda Mining (OBM AU) will be added to some of the S&P/ASX indices at the same time, increasing flow and impact.
Ramelius/Spartan Merger: MergeCo Close to ASX100 Index Inclusion
- Ramelius Resources (RMS AU) and Spartan Resources /Australi (SPR AU) have signed a binding Transaction Implementation Deed to enter into a ‘Transformational Combination’.
- For each share of Spartan Resources (SPR AU) held, shareholders will receive A$0.25 in cash and 0.6957 Ramelius Resources (RMS AU) shares, implying a value of A$1.78/share for Spartan Resources.
- The merger is expected to complete late July/ early August, and the merged entity could be added to the S&P/ASX 100 Index in September.
HKBN (1310 HK): Another Sing Tao Article as Speculation Swirls on MBK’s Loan Notes Conversion
- A new Sing Tao Daily article on HKBN Ltd (1310 HK) claims that China Mobile (941 HK)’s offer is a stalemate, and a potential I Squared offer faces regulatory challenges.
- The article is being unduly alarmist. The concerns raised on the China Mobile offer remain premature, and there remains a medium-to-high probability of a competing offer from I Squared.
- Last Friday, MBK converted its vendor loan notes (VLN) into shares, which could signal that an I Squared competing offer is imminent.
The Backdrop Behind Today’s Pivot in Samsung’s Playbook
- Jay Lee flipping the switch signals Samsung’s pivot—no more playing defense, no more legal jitters. Market’s reading this as full send on the next phase.
- Near-Term, Samsung’s pushing hard—NVIDIA’s HBM qual tests are in focus. With NVIDIA’s event this week, traders are watching for bullish signals after earlier cautious moves.
- The real juice? Samsung might drop a bold value-up play and a no-nonsense shareholder message. The prime launchpad: AGM day, this Wednesday, 19th, 9 AM.
Fengxiang (9977 HK): Privatisation by PAG?
- Shandong Fengxiang (9977 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” PAG, the controlling shareholder, likely aims to privatise Fengxiang.
- The offer will likely be structured as a privatisation by merger by absorption requiring approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection).
- The presence of several substantial shareholders necessitates a reasonable offer. An offer of HK$1.80-2.00 (a 21%—33% premium to the last close) could win over these shareholders’ backing.
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