In today’s briefing:
- Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
- SPX Hard Close as Defensives Begin to Bend
- Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting
- Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care
- Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied
Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
- 20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
- The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
- Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.
SPX Hard Close as Defensives Begin to Bend
- SPX closing on Friday’s lows after an impulsive drop sets a more bearish tone for an undershoot barring an impressive recovery.
- The undertone of the market shifted on Friday as defensive sectors took a hit. If this continues it would induce a broader market sell off (bigger breakdown).
- Russell 2000 1,900 is the level to watch to lead a harder US cycle decline followed by NDX 13k dual lows. Cycle inflection timeline.
Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting
- The amended Cayman Islands Act is yet to become law which increases the odds that the headcount test remains for Razer Inc (1337 HK)‘s court meeting on 26 April.
- Since the despatch of the scheme document, the gross spread has narrowed to 7.6% (last close). Current deal probability implies an 80% chance of success.
- The rising deal probability negatively skews the risk/reward profile. We are hesitant to be long this trade into a scheme meeting that is too close to call.
Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care
- The review period for the price cutoff of the MSCI May SAIR commenced last week and will run through the coming week. MSCI normally chooses a day from week 1.
- Yangzijiang Financial Holding Ltd (YZJFH) will list on 28 April and one stock will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
- There were inflows to China and Taiwan focused ETFs, while there were outflows from Korea focused ETFs.
Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied
- Guodian Technology & Environment Group (1296 HK)’s privatisation offer from China Energy is HK$1.08 per H share. The pre-condition was fulfilled on 22 April.
- The key conditions for the delisting will be approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.
- At last close and for a mid-June effective date (composite document despatched by 29 April), the gross and annualised spread to the offer is 2.9% and 19.9%, respectively.
Before it’s here, it’s on Smartkarma
