In today’s briefing:
- Newcrest-Newmont Merger: Fancy Index Shenanigans
- Asian Dividend Gems: Giordano International
- Vinda (3331 HK): Tanoto Sees The Wood
- WH Group (288 HK): Potential US Listing Of Smithfield Foods Could Be A Catalyst
- Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,
- Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank
- Japan – Increase in Shorts on Some Interesting** Stocks
- NWD 17 HK: FY23 Results Update, to Reset and Transform, and a Beta Play if Rate Expectation Peaks
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Lithium Power, Vinda, Origin Energy, Liontown, Kenedix REITs
- Ohayo Japan | Middle East Dominates; Japanese Companies Disposing Non-Core Real Estate
Newcrest-Newmont Merger: Fancy Index Shenanigans
- Back in February, Newmont Proposes Taking Newcrest Back Into The Fold. Newmont bumped, there was due dili, then Newcrest Backs Newmont’s US$19bn Offer in May.
- More recently, we have Newcrest: Shareholder Vote On 13th Oct, with a prescribed schedule. That makes things fun.
- There will be considerable movement of shares, and that will mean opportunity. Both up and down. I see US$3bn to buy, then A$1.5bn or more to sell a bit later.
Asian Dividend Gems: Giordano International
- Giordano, one of the most recognizable apparel business in Asia, has been improving its operations materially with solid growth in sales and profits.
- Giordano provides very high dividend yield and payout. The consensus expects DPS of HKD 0.28 for Giordano in 2023, which would suggest a dividend yield of 12.8%.
- We like the company’s high dividend yield, loyal customer base, and attractive valuations. It is trading at EV/EBITDA of 3.6x and P/B of 1.5x.
Vinda (3331 HK): Tanoto Sees The Wood
- On the 27 April, Vinda (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See Essity Mulls Holding In Vinda (3331 HK).
- That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil’s Suzano, the world’s largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.
- The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September.
WH Group (288 HK): Potential US Listing Of Smithfield Foods Could Be A Catalyst
- According to public news yesterday, WH Group (288 HK) plans to list its US pork business Smithfield Foods, the largest US pork producer, back in the US again.
- WH Group currently trades at 5x 2024E PE, assuming earnings return to the 2022 level in 2024E. Since 2016, the company has had an average PE of 11x.
- The stock is a buy with a fairly strong catalyst in the potential US listing of the Smithfield Foods business, while downside is limited.
Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,
- If Descente Ltd (8114 JP) earnings disappoints, buy the dip. Itochu Corp (8001 JP) is buying for the long-term.
- MGM China Holdings (2282 HK) has gained market share in mass table market, VIP, and total revenue. Yet MGM’s FY24E EV/EBITDA is ~40% below its two-year forward average EV/EBITDA pre-Covid.
- If you had a J-REIT portfolio, Sankei Real Estate (2972 JP) would go in and push something else out or smaller. I think one gets beta-plus, which is usually called alpha.
Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank
- Light & Wonder (LNW US)/ Light & Wonder (LNW AU) replaced United Malt Group Ltd (UMG AU) in the S&P/ASX 200 (AS51 INDEX) last week.
- Newcrest Mining (NCM AU) stops trading this week and should be replaced by Newmont Mining (NEM US) CDIs in the ASX indices.
- Another week of ETF outflows for China with the largest outflows from trackers benchmarked to the CSI 1000 Index.
Japan – Increase in Shorts on Some Interesting** Stocks
- CyberAgent, Lixil Group, Hakuhodo Dy Holdings, Kobayashi Pharmaceutical, Welcia Holdings, Persol Holdings, Kurita Water Industries, GMO Payment Gateway, Keio Corp and NGK Insulators have underperformed the Nikkei225 over the recent past.
- The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
- Short interest has increased on some stocks and there could be more pre-positioning to come over the next few weeks.
NWD 17 HK: FY23 Results Update, to Reset and Transform, and a Beta Play if Rate Expectation Peaks
- In this insight, we summarized NWD’s FY2023 results. We think the gearing and balance sheet, the biggest concern that market has, has been clearly addressed
- NWD has announced disposal of its stake in NWS, and will have more corporate actions to come. The dividend expectation is reset
- We view most of the negatives are priced in at current valuation. NWD is much better than a Chinese developer, and should not be trading at 0.19x PB
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Lithium Power, Vinda, Origin Energy, Liontown, Kenedix REITs
- I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- One new deal was discussed on Smartkarma this week:Lithium Power International (LPI AU)‘s Scheme. Vinda International (3331 HK) and Shinko Electric Industries (6967 JP) are in the cross hairs.
- Key updates took place for: Origin Energy (ORG AU), Liontown Resources (LTR AU), Golden Eagle Energy (SMMT IJ) and Kenedix REITs.
Ohayo Japan | Middle East Dominates; Japanese Companies Disposing Non-Core Real Estate
- Overseas: SPX -1.3% , Nasdaq -1.5%; Broad-based equity decline with all sectors in the red as concerns over Israel-Hamas conflict grew; airline stocks under pressure
- Today: NKY Futs -0.8% v cash. JPY 149.9; Core inflation at 13-month low; Signs that the property market overheating. Daiichi Sankyo big payday for cancer drugs
- JapanX: Japanese companies boost P/B ratios by selling non-core real estate assets, transforming corporate governance and efficiency in response to the TSE’s call for improved performance
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