In today’s briefing:
- Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event
- TCM (570 HK): Inching Towards Regulatory Sign-Off
- Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?
- K Bank IPO – The Positives – Fast Growth
- MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
- Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible
Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
- Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
- The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
- Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
- There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
- Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
- But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
- Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.
Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event
- As of today, it’s clear Choi is struggling to secure white knights, pushing him to double down on political lobbying to stay in the game.
- Choi’s aiming for the National Pension Service’s 7.57% voting rights, but with its legal neutrality, the chances of it caving to political pressure are slim.
- MBK’s statement today shows confidence that Choi won’t get Fair Trade Commission approval, and that, like Hanwha and LG, Hyundai Motor won’t back him either.
TCM (570 HK): Inching Towards Regulatory Sign-Off
- In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
- Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
- The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
- KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
- KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
- In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.
Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?
- In late August, Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) agreed to merge in what appeared to be a hastily papered deal discussed here.
- CTBC Financial Holding (2891 TT) put forth its own proposal at a big premium. Shin Kong traded up. Both deals need FSC approval. Taishin’s deal has a vote 9 October.
- Taishin recently upped terms. And now the FSC has said “no” to CTBC’s proposal. But it’s weird. It’s not “NO”; more like, “not this.” Bit of a sticky wicket here.
K Bank IPO – The Positives – Fast Growth
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In this note, we talk about the positive aspects of the deal.
MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
- Back on the 19th August, MyState Ltd (MYS AU), Tasmania’s biggest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
- Under the terms, MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the combined group.
- This is done and is expected to be wrapped up in December. Today is the last day of trading for Auswide cum-FY24 final dividend.
Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
- We expect up to four ADDs and five DELs for the KOSPI 200 index during this index rebal event based on the latest available data. And we have a trade.
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