In today’s briefing:
- JAPAN ACTIVISM: Mitsui Fudosan (8801) Responds to Elliott with Buyback, Amended Long-Term Plan
- S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- CGN New Energy (1811 HK): Evaluating a Potential Privatisation
- Fast Retailing(9983) | Not So Fast
- CGN New Energy (1811 HK): Takeover Rumours
- NIFTY Bank Index Rebalance Preview: Canara Bank Still Cheap; Double Deletion for Bandhan?
- StubWorld: Melco Gains As Lawrence Ho Buys
- Boral Backs Seven’s “Enhanced” Offer
- Keepers Holdings (KEEPR PM) FY23: 30% YoY, Net Cash, Growth 6.8x PE, And A 7.6% Dividend Yield
- Updated TOPIX Big April Basket Flows; More Big Flows and ¥270bn a Side
JAPAN ACTIVISM: Mitsui Fudosan (8801) Responds to Elliott with Buyback, Amended Long-Term Plan
- 9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback.
- The stock popped 7% the next day to ¥1302, on the highest volume since the covid crash, hesitated a day, then powered almost 20% higher through the end of March.
- Today, Mitsui Fudosan responded with an Amendment to their Plan out to 2030. It has a higher dividend, a share buyback, higher EPS target growth, and higher ROE target. But…
S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
- The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
- There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.
CGN New Energy (1811 HK): Evaluating a Potential Privatisation
- Bloomberg reports that CGN, the parent and largest shareholder, is reconsidering taking CGN New Energy Holdings (1811 HK) private.
- CGN New Energy shares have underperformed the median peer’s shares since the announcement of CGN’s previous aborted privatisation attempt (2 March 2020) and on the last twelve-month basis.
- The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.
Fast Retailing(9983) | Not So Fast
- Fast Retail missed analyst estimates for Q2 sales and operating profit. Revenue growth slowed to 5% YoY
- Full year operating profit guidance maintained at Y450 billion, just slightly below the street
- The stock is trading at 27x EV/EBIT, in-line with historical averages, but still expensive in absolute terms and versus global peers
CGN New Energy (1811 HK): Takeover Rumours
- Another week, another rumoured (from Bloomberg) takeover. This time it’s for clean energy play CGN New Energy Holdings (1811 HK).
- Back in 2020, CGN was subject to a potential privatisation from its SOE-parent – see CGN New Energy: The Latest SOE Clean Energy Play – but it failed to materialise.
- A couple of years back, a “valuation system with Chinese characteristics” had the media discussing whether this implied a premium for SOEs and companies aligned with national goals.
NIFTY Bank Index Rebalance Preview: Canara Bank Still Cheap; Double Deletion for Bandhan?
- Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the September rebalance.
- Passive trackers will need to buy nearly 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
- Canara Bank (CBK IN) is one of the best performing banking stocks while Bandhan Bank Ltd (BANDHAN IN) has been the worst performer over the last two years.
StubWorld: Melco Gains As Lawrence Ho Buys
- Melco International (200 HK) gains as Lawrence Ho increases his position. Melco and 51.1%-held Melco Resorts (MLCO US) are the two worst performing gaming stocks over the past year.
- Preceding my comments on Melco 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%.
Boral Backs Seven’s “Enhanced” Offer
- After Boral (BLD AU) rejected Seven Group (SVW AU)‘s cash/scrip Offer, Seven slammed the Independent Expert’s report, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
- Seven has now waived certain tendering thresholds, increasing the cash terms to A$1.70/share from A$1.50/share. Boral will also pay a fully-franked dividend of A$0.26/share, providing A$0.11/share of franking credits.
- The IE now considers the Offer to be reasonable. Boral’s board recommends shareholders to accept. This is done.
Keepers Holdings (KEEPR PM) FY23: 30% YoY, Net Cash, Growth 6.8x PE, And A 7.6% Dividend Yield
- The Keepers Holdings (KEEPR PM) demonstrated a 5-year CAGR of 16%/25% revenue/profit growth with an ROE averaging 20%.
- FY23 surpassed our expectations with 17%/30% revenue and net profit growth. 4Q 2023 high season revenue and profit growth was an astounding 21%/75% YoY.
- The stocks trades at 6.9x/6.2x PE FY23/FY24e with a 7.5% dividend yield (assuming ten centavos/dividend based on FY23 earnings for FY24 and a 50% payout ratio).
Updated TOPIX Big April Basket Flows; More Big Flows and ¥270bn a Side
- Several days ago I published a piece showing the data for TOPIX flows for April month-end.
- This is an update reflecting new data companies have reported to regulators, one large correction to a data provider’s data, and one Very Large Flow.
- I believe that the revised data is more accurate. And there is more flow. With a spreadsheet attached.
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