In today’s briefing:
- Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- Li Ning (2331 HK): Value Trap Play?
- ITC $2bn Placement – Very Well Flagged but Still Won’t Be an Easy One to Digest, Won’t Do an Indigo
- CIMC (1839 HK): Firm Offer. With A Bump!
- Li Ning (2331 HK): Evaluating a Potential Privatisation
- Li Ning (2331 HK): Update On The Name Given Potential Privatization News
- Alumina/Alcoa: Binding Agreement On The Same Terms
- Ola Electric Pre-IPO – Initial Thoughts on Valuation
- KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group
- KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations
Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- In late February, Keisei Electric Railway Co (9009 JP) announced a 5.0mm share (2.96%) ¥33bn buyback, to be executed in the following 3 months. That meant likely ToSTNeT-3.
- I thought that mildly bullish. Shares rose 0.05% the next day. Then we got an OLC offering announcement. I thought that bearish. The stock popped early but fell hard.
- Today the announcement. It IS a ToSTNeT-3. tomorrow. At ¥6,320/share. But it is an Accelerated Share Repurchase. Which changes things. Or it doesn’t. But it bears watching closely, maybe acting.
Li Ning (2331 HK): Value Trap Play?
- As the Hong Kong bourse languishes, recent Hong Kong privatisation include mainland Chinese firms such as Vinda International (3331 HK) and China Traditional Chinese Medicine (570 HK) .
- Reportedly (Reuters) Li Ning (2331 HK) is now in the crosshairs. Shares are up 7.8% as I type.
- Olympic champion Li Ning holds ~10.5% in his self-named company, which was recently in the news after acquiring a HK$2.2bn commercial building from Henderson Land (12 HK) as its headquarters.
ITC $2bn Placement – Very Well Flagged but Still Won’t Be an Easy One to Digest, Won’t Do an Indigo
- In Feb 2024, BAT’s management stated that they were reviewing their stake in ITC Ltd (ITC IN). The news of a possible selldown by BAT was leaked again earlier today.
- BAT has owned its stake in ITC for over a century and remains its largest shareholder.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
CIMC (1839 HK): Firm Offer. With A Bump!
- Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
- This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
- Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.
Li Ning (2331 HK): Evaluating a Potential Privatisation
- Reuters reported that due to the steep share price declines, Mr Li Ning is considering leading a consortium to privatise Li Ning (2331 HK).
- The shares have been weighed down by concerns about channel inventory, steep retail discounts, and unauthorised distributor sales. To counter this, Li Ning aims to achieve RMB50bn sales by 2028.
- The probability of an offer is low as funding the scheme consideration could prove challenging. Nevertheless, the downside is low as Li Ning trades at an undemanding valuation.
Li Ning (2331 HK): Update On The Name Given Potential Privatization News
- According to public news today afternoon during trading hours, the founder and biggest shareholder of Li Ning (2331 HK), Mr. Li Ning, is mulling privatizing the public company.
- Mr. Li Ning has shown the opposite intention over the last few years, with several major sell-down of stake.
- The company is trading at 16x 2024 PE, with visibility being quite low.
Alumina/Alcoa: Binding Agreement On The Same Terms
- On the 26 February, via an NBIO, Alcoa (AA US) offered 0.02854 of its own shares for each Alumina Ltd (AWC AU) share, a 13% premium to last close.
- Alcoa/Alumina control 60%/40% of the AWAC JV, an owner and operator of global bauxite mines and alumina refineries. Both companies have now entered into a Scheme on the same terms.
- Alcoa holds 19.9% in AWC after reaching an agreement with Allan Gray Australia. The key risks to the deal are FIRB approval and how CITIC, holding 18.9%, will respond.
Ola Electric Pre-IPO – Initial Thoughts on Valuation
- Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
- In our previous note we looked at the company’s past performance and undertook a peer comparison. In this note, we will talk about valuations.
KCC Corp: Taking a Closer Step to Separating the Ownership Structures of the KCC Group
- There is an increasing probability that KCC Corp is closer to separating the ownership structures of the three Chung brothers regarding the various KCC Group related companies.
- KCC’s 9.17% stake in Samsung C&T is worth 2.8 trillion won. KCC’s stake in Samsung C&T is worth 117% of KCC’s own market cap.
- According to our valuation analysis, it suggests NAV of 355,925 won per share, representing a 30% upside from current levels.
KRX’s Official SSF/SSO Reshuffle Results: Trading Considerations
- The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.
- Ecopro Materials’ SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.
- We should also be wary of a pattern akin to last July’s in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.
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