In today’s briefing:
- Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
- [JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
- Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
- Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications
- Sensetime Placement – Seems Highly Opportunistic
- Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged
- Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer
- CMCDI (133 HK): Kan Re-Elected. But Only Just
- Allied Blenders and Distillers – RHP Updates & Thoughts on Valuation
Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
- Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
- In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
- The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
- Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
- My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.
Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
- Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
- Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
- Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.
Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
- The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
- Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
- There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.
Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications
- Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
- The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
- Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.
Sensetime Placement – Seems Highly Opportunistic
- SenseTime Group (20 HK) aims to raise up to US$263m via selling around 4.5% stake.
- Sensetime hasn’t had the best of times since listing, however, the shares have rebounded recently on generative AI buzz around the stock.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged
- Despite high growth in 2023, the accelerated growth of Giant Biogene has entered a turning point, and its performance has begun to slow down. Long-term growth momentum is highly uncertain.
- Giant Biogene plans to prioritize the market entry of Class III medical device products.Due to increasing competition/challenges in marketing/promotion, it takes time to verify if the second growth curve works.
- Reasonable valuation for Giant Biogene is P/E of 20-30x.If based on RMB1.8 billion 2024, market value is RMB36-54 billion. Short-term catalyst is the Online 618 Shopping Festival and 24H1 report.
Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer
- After watch accessory play Hengdeli Holdings (3389 HK) was suspended on the 17th June pursuant to the Takeovers Code, I didn’t hold out high hopes of a knock-out Offer.
- And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has made a Partial Offer (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.
- That’s a 18.5% premium to last close … and a 80% discount to NAV, and a 47% discount to Hengdeli’s net cash as at 31 December 2023.
CMCDI (133 HK): Kan Re-Elected. But Only Just
- At the AGM yesterday, China Merchants China Direct Investments (133 HK)‘s director Elizabeth Kan was re-appointed, but by a wafer-thin margin: 29.97% of shares out FOR, and 29.44% AGAINST.
- Stripping out Victor Chu’s stake (~2%?) and China Merchant’s (27.6%), or collectively ~29.6% of shares out, it’s fair to say the remainder of the shareholder register wants her out.
- CMCDI is currently trading at a 55% discount to the latest NAV (as at 31st May 2024) of HK$30.42/share. Argyle continues to add to its position.
Allied Blenders and Distillers – RHP Updates & Thoughts on Valuation
- Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.
- ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
- In our previous notes, we talked about various aspects of the company. In this note, we talk about its RHP updates and our thoughts on valuation.
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