In today’s briefing:
- Mitsui & Co (8031) – ¥100bn Overnight Equity Offering
- Swire Properties (1972 HK): Potential Passive Selling & Trade Ideas
- MMG (1208 HK) Rights Trading Dynamics
- Sanil Electric IPO Preview
- StubWorld: Sun Corp (6736 JP) Running Out Of Puff?
- Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest
- T-Gaia (3738 JP) – Possible Premium Takeout Story
- Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
- Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive
Mitsui & Co (8031) – ¥100bn Overnight Equity Offering
- Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
- This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive.
- Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.
Swire Properties (1972 HK): Potential Passive Selling & Trade Ideas
- The steady selloff in Swire Properties (1972 HK) could result in the stock being deleted from global passive portfolios in the next couple of months.
- Swire Properties (1972 HK) trades marginally cheaper than its similar sized peers on forward PE and price to book value.
- Swire Pacific (A) (19 HK) owns 82% of Swire Properties (1972 HK) and a big drop in the stock price could see them step in.
MMG (1208 HK) Rights Trading Dynamics
- The MMG (1208 HK) rights, designed to raise US$1.15bn to pay off loans to the parent for the purchase of a large copper asset, start trading 24 June 2024.
- There is some risk up for grabs, and it is likely to trade according to standard Hong Kong Rights Trading Dynamics. Shorts are down somewhat, but covering should be expected.
- There is path-dependency to the Rights Trading, and while they trade for 7 trading days through Tuesday next, one should expect the volume to trade this week.
Sanil Electric IPO Preview
- Sanil Electric is getting ready to complete its IPO in late July in KOSPI. The IPO price range is from 24,000 won to 30,000 won per share.
- The company is planning is raise between 182.4 billion won and 228 billion won in this IPO. The book building for the institutional investors lasts from 9 to 15 July.
- Sanil Electric is best known for making special transformers used for special purposes in environments with severe weather changes, such as offshore wind power, solar power, and offshore plants.
StubWorld: Sun Corp (6736 JP) Running Out Of Puff?
- Trading comfortably through the Partial Offer terms, Sun Corp (6736 JP) may still do nothing with its Cellebrite DI (CLBT US) holding towards narrowing the NAV discount.
- Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest
- MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
- While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
- In this note, we will talk about the placement and run the deal through our ECM framework.
T-Gaia (3738 JP) – Possible Premium Takeout Story
- I kind of hate this, but I also can’t ignore it. Apparently, an expensive media service Reporting on Deals or about the Market for Mergers, had an article today.
- Bloomberg carried a small blurb saying there was “speculation on a tender offer…. according to traders”. The stock is untraded, limit up.
- The most informative comment comes from Japanese stock market portal ‘kabutan‘ which suggests “overseas media” thinks Sumitomo Corp will sell its shares. I look at the possibilities below.
Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
- There is a high likelihood of information leaking through the lead securities firm when the tender offer prospectus is provided to branches about three days before the disclosure.
- With the FSS’s stricter stance, tender offer candidates may act swiftly before new regulations, prompting attention to potential surges in tender offers.
- Our approach is clear: identify short-term tender offer candidates, monitor trading volumes for spikes, and use the three-day pre-disclosure surge to time our positions effectively.
Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is no minimum acceptance condition.
- Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.
Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive
- Japan Hotel Reit Investment (8985 JP) aims to raise around US$214m to partly fund the acquisition of four hotel assets.
- The company has undertaken a number of deals in the past, most of which have managed to perform well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
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