In today’s briefing:
- If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- Ola Electric IPO: The Investment Case
- Fortescue Placement – Discount Appears Attractive, but Momentum Has Been Very Weak
- A8 Media (800 HK): 23rd August Shareholder Vote
- Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
- ECM Weekly (29th July 2024) – ASICS, Kokusai, Amer, Hyundai, Timee, Sanil, Akum, Bloks, Ola Electric
- Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Charoen Rearranges ThaiBev and TCC’s Deckchairs
If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- A couple of years ago, Rakuten (4755 JP) – burning through cash to start its mobile business – announced it would its Bank and Securities units. Bank listed. Securities didn’t.
- Mizuho ended up buying 49% of Securities. Today, it was announced there would be discussions to put Bank, Securities, Card, and Insurance in a new listed Holdco.
- How this works will end up being complicated. More complicated than it should be. But the complexity would make this more of a win-win for everyone.
Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
- MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer.
- The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump.
Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- The Kirin Holdings (2503 JP) Tender Offer to buy out minorities in Fancl Corp (4921 JP) closes today. Or at least the current one does.
- The original deal announced was light, and the stock has traded above terms since the announcement, with one fund buying up to 7.94%.
- I expect Kirin to extend and bump next week, or bump/extend now, depending on their visibility on Fancl Q1.
Ola Electric IPO: The Investment Case
- Ola Electric (1700674D IN), the largest Indian player in electric two-wheel vehicles (E2W), will launch a US$660 million IPO at a lower US$4.5 billion valuation (vs. the previous US$7-8bn target).
- We previously discussed the IPO in Ola Electric IPO: The Bull Case and Ola Electric IPO: The Bear Case. In this note, we examine the latest updates in the RHP.
- The investment case rests on rising market share in a growing market, rapid growth aided by product diversification, path to profitability supported by lower losses and declining cash burn.
Fortescue Placement – Discount Appears Attractive, but Momentum Has Been Very Weak
- An undisclosed shareholder is looking to raise US$1.25bn (A$1.91bn) from selling some stake in Fortescue Metals (FMG AU).
- The deal is a large one to digest at 13 days of the stock’s three month ADV. The selling shareholder will be locked up for 45 days.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
A8 Media (800 HK): 23rd August Shareholder Vote
- Back on the 12th June, PRC property rental play A8 New Media (800 HK) announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
- The Cancellation price was $0.36/share, a punchy 162.77% to last close. The price was declared final.
- The Scheme Doc is now out, with an independent shareholder vote on the 23 August and payment on or around the 2nd October. This is a done deal.
Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
- Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
- We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
- Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.
ECM Weekly (29th July 2024) – ASICS, Kokusai, Amer, Hyundai, Timee, Sanil, Akum, Bloks, Ola Electric
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, the coming week will see Sanil Electric (062040 KS) list, while Akums Drugs and Pharmaceuticals books will open and Ola Electric too might be launched.
- On the placement front, the past week was relatively quiet after a few hectic weeks.
Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Today after the close Stanley Electric (6923 JP) announced a salutary Q1 result which was “ahead of in-line” in most metrics towards unchanged H1 and FY guidance.
- The company also announced a BIG on-market buyback at 8.1% of shares out, to be bought back with a delayed start over the 7.5mos starting 13 August.
- At last price, the buyback is ~10mm shares. The details are interesting and are worth a look.
Charoen Rearranges ThaiBev and TCC’s Deckchairs
- Back on the 18th, the Sirivadhanabhakdi family-backed Thai Beverage (THBEV SP) announced it would swap its 28.78% stake in Frasers Property Ltd (FPL SP) with THBEV-affiliate TCC Assets.
- Under the agreement, TCC will transfer a 41.3% stake in food and beverage play Fraser And Neave (FNN SP) to THBEV, lifting THBEV’s holding to 69.61% from 28.31% currently.
- The share swap triggers no Offers for either F&N or FPL. THBEV says it has no plans to privatise F&N … at the moment.
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