In today’s briefing:
- Origin: Brookfield Bumps. AustralianSuper Say Meh.
- Ecopro Materials: Reduces IPO Price Range
- Celltrion Merger: Appraisal Rights & Passive Flows
- Celltrion Merger Update: Limits Lifted
- Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer
- Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?
- Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place
- Midea Group H Share Listing: The Investment Case
- Past A/H Listings Performance – Have Been a Mixed Bag
- Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed
Origin: Brookfield Bumps. AustralianSuper Say Meh.
- On the 31st October, AustralianSuper (with 13.67% of shares out and Origin Energy (ORG AU)‘s largest shareholder) argued the Brookfield/EIG-backed Consortium Offer remained substantially below its estimate of fair value.
- Brookfield/EIG have now increased their Offer by 8% to $9.53/share from $8.81/share, which now comprises cash components of A$6.59/share and US$1.86/share. A consideration-reducing fully-franked dividend of A$0.39/share is expected.
- The Offer is declared “best and final.” It is above the top-end of the IE’s valuation range. AustralianSuper should accept the revised terms. But they say no.
Ecopro Materials: Reduces IPO Price Range
- Ecopro Materials reduced the upper end of the IPO price range from 46,000 won to 44,000 won.
- The bankers reduced the IPO discount, EV/EBITDA valuation multiple, and outstanding shares.
- We maintain our Bearish view of the Ecopro Materials IPO. Our base case valuation of 37,436 won per share is towards to lower end of the IPO price range.
Celltrion Merger: Appraisal Rights & Passive Flows
- The Appraisal rights exercise period ends on 13 November. If the NPS and other large shareholders exercise their rights in Celltrion Inc (068270 KS), the merger could be in trouble.
- Both stocks are trading close to their exercise price and could be supported due to the companies buying back their shares.
- There will be passive flows from local and global trackers and there does not appear to be pre-positioning. That is likely due to the risk of potential merger cancellation.
Celltrion Merger Update: Limits Lifted
- Back on the 17 August, biopharmaceuticals developer and producer Celltrion Inc (068270 KS) announced a merger with Celltrion Healthcare (091990 KS).
- On October 23rd, shareholders approved the merger. The appraisal rights exercise period commenced on the 23 October and ends on November 13. 28th December is the merger’s effective date.
- Initially, the stock purchase rights limit was set at 1₩tn; however Celltrion Group’s founder/Chairman Seo Jung-jin has removed this limit. That takes care of NPS, which opposes the merger.
Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer
- Origin Energy (ORG AU) has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.
- AusSuper will vote against the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.
- The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues.
Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?
- Yesterday, Kyocera Corp (6971 JP) announced Q2 results and lowered its full-year forecast. Then the CEO said it was “reconsidering” what to do with KDDI shares (after an AGM disaster).
- The company had already planned to borrow ¥500bn against the KDDI stake to return capital to shareholders. That was in the price 5+ months ago.
- The new hope is that Kyocera just got Corporate Governance Religion. I have my doubts, and even if it did, you have to look carefully at their ambitious plans.
Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- The index changes and the indicative component weights for the December 2023 index review will be published in a couple of weeks.
- In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
Midea Group H Share Listing: The Investment Case
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, has filed for a H Share listing to raise US$1 billion, according to press reports.
- Midea is the world’s largest home appliance company in sales volume and revenue in 2022. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
- The investment case rests on return to growth, margin on an upward trajectory, cash generation, strong balance sheet and undemanding valuation.
Past A/H Listings Performance – Have Been a Mixed Bag
- Two of the biggest deals in the Hong Kong pipeline are A/H listings for S.F. Holding (002352 CH) and Midea Group (000333 CH), both looking to raise around US$3bn.
- Prior to the deals going live, we had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
- Overall, most of the recent A/H listings haven’t done much in the near term.
Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” Securities listed in Hong Kong.
- In a couple of weeks, the official index changes and the indicative weights for the final index members for the December 2023 rebalance will be announced.
- In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.
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