In today’s briefing:
- Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
- PCOMP Adhoc Index Rebalance: NIKL to Replace UBP in a BIG Move
- Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?
- BPlant/KLK: This Is Getting (Even More) Political
- Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate
- Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade
- Alpha Generation Through Share Buybacks in Korea: August & September 2023
- Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem
- Hollysys (HOLI US): Board Starts a Formal Sale Process
- Pinduoduo (PDD US): Growth Cadence Matters
Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
- The SBI Holdings (8473 JP) takeout of SBI Shinsei Bank (8303 JP) was opportunistic – done at a price SBI Shinsei’s Board considered not reasonable. Until it changed its mind.
- I had thought appraisal rights a great trade. I also thought it a good trade to own the back end, but that involved one holder putting ¥55bn on the table.
- Activist Murakami-san’s S Grant Corporation has done that. It will own one share of 8 post-consolidation on Monday. They are now equal shareholders with the govt entities. Wow.
PCOMP Adhoc Index Rebalance: NIKL to Replace UBP in a BIG Move
- In a surprise development, UnionBank of the Philippines (UBP PM) will be deleted from the Philippines Stock Exchange PSEi Index (PCOMP INDEX) and replaced with Nickel Asia (NIKL PM).
- There will be a BIG impact on both stocks as a result of the change with passive trackers need to trade in excess of 30 days ADV.
- Expect both stocks to move today and then continue that move for the next few days till the changes are implemented.
Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?
- The Delta Electronics Thai (DELTA TB) / Delta Electronics (2308 TT) spread peaked earlier this year and has been trending lower for the last few months (but it is volatile!).
- Delta Electronics Thai (DELTA TB) dropped 20% on Friday following Delta Electronics (2308 TT)‘s placement of 0.72% of shares outstanding. The stock last closed 12.7% below the placement price.
- Delta Electronics (2308 TT) still owns over 63% of Delta Electronics Thai (DELTA TB) and there could be more downside for the Thailand line over the near term.
BPlant/KLK: This Is Getting (Even More) Political
- On the 24 August, Kuala Lumpur Kepong (KLK MK) entered an agreement with Boustead Holdings (BHB), Boustead Plantations (BPLANT MK)‘s largest shareholder, to acquire a 33% plus 1 share stake.
- Upon the completion of the agreement, KLK – together with BHB and LTAT – would make a Mandatory Offer for BPlant. The Offer Price would be RM1.55/share, a lifetime high
- It all looked pretty straightforward. However the BHB/LTAT agreement has twice been delayed. This may still get done. But there remain a number of political kinks to be ironed out.
Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate
- Boustead Plantations (BPLANT MK) shares are down 16%, resulting in proprietary day trading and intraday short selling being suspended. The transaction is mired in political debate.
- The bull case is that Kuala Lumpur Kepong (KLK MK) continues on-market purchases and the opposition will compromise, paving the way for deal completion. Timing is the key risk.
- The bear case is a deal break. The downside is limited as the government will need another buyer, the shares trade below the undisturbed price, and the undemanding valuation.
Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade
- Using data from the close on 28 September, there could be 6 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 19.8% and a one-way trade of US$1.36bn.
- There are 15 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.
Alpha Generation Through Share Buybacks in Korea: August & September 2023
- In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in August and September 2023.
- We provide a list of 18 stocks in the Korean stock market that have announced share buyback programs in August and September 2023.
- The top three market cap stocks that have announced share repurchases include Celltrion Inc (068270 KS), Celltrion Healthcare (091990 KS), and KT&G Corporation (033780 KS).
Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Keiyo Co Ltd (8168 JP), 111 Inc (YI US), Eoflow (294090 KS), Symbio Holdings (SYM AU), IMAX China Holding (1970 HK), JSR Corp (4185 JP).
- Lowest spreads Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), Pact Group Holdings (PGH AU), T&K Toka Co Ltd (4636 JP), Celltrion Healthcare (091990 KS), Seiko Pmc Corp (4963 JP).
Hollysys (HOLI US): Board Starts a Formal Sale Process
- The Hollysys Automation Technologies (HOLI US) Board succumbs to shareholder pressure by announcing the formation of a special committee to conduct a formal sale process.
- Hollysys has received non-binding proposals from six parties since December 2020. The most recent is a non-binding proposal from the Recco consortium at US$25.00 per share.
- The Board’s change of heart should encourage previous bidders to re-engage. Recco’s offer, while attractive, is not a knockout bid, suggesting a possible bidding war.
Pinduoduo (PDD US): Growth Cadence Matters
- We reviewed our PDD investment thesis trying to incorporate and make sense of various channel checks and sell-side’s research which are often inconsistent and even conflicting.
- While there are many unknowns and ambiguities, we are convinced the street still significantly underestimates PDD’s growth outlook for 2H23, and fails to see a slowdown in FY24.
- Our price target remain unchanged as lower target P/E multiple (to reflect slowdown prospect) is offset by higher FY23 earnings which flow to outer years.
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