In today’s briefing:
- SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball
- Rakuten Possible US$2.2bn Placement – Will Be a Huge Deal to Digest, but It’s Not All Bad
- Yuexiu Property (123 HK): Rights Trade Playbook
- The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names
- Yuexiu Rights – The Trading Pattern Fits
- Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng
- JAPAN BUYBACKS – Alfresa (2784) Cheap Stock, Uncheapening, Goes Big
- Newcrest Backs Newmont’s US$19bn Offer
- Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan
- MVIS Australia Equal Weight Index Rebalance: Potential Deletes & Capping Changes
SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball
- After the large tender offer in late 2021, SBI was always going to try to take Shinsei Bank private. Now they have launched their deal at ¥2,800/share.
- That is below fair according to the Board, Special Committee, and implicitly to SBI. But the Shinsei Board has recommended shareholders tender so The Government will vote to squeeze out.
- I expect some upset, the possibility of some activism, but it all plays out in the back end in my opinion. Not the front end.
Rakuten Possible US$2.2bn Placement – Will Be a Huge Deal to Digest, but It’s Not All Bad
- Rakuten (4755 JP) is considering raising around US$2.2bn (JPY300bn), as per Reuters reports. The company hasn’t confirmed or denied the same in its press release.
- The company has been listing some of its subsidiaries and monetising investments to raise cash and has recently hinted at a possible equity issuance.
- While there is no guarantee that the deal will ever materialize, in this note, we take an early look at the possible deal dynamics.
Yuexiu Property (123 HK): Rights Trade Playbook
- On 20 April, Yuexiu Property (123 HK) announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.
- Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.
- The shares went ex-rights on 2 May and the rights start trading on 15 May. Link REIT (823 HK)’s trading over its rights period provides the playbook for Yuexiu’s trading.
The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names
- The possibility of experiencing a CFD margin call is a genuine and persistent concern. Even a small trigger causes selling pressure to intensify and results in a rapid downward trend.
- The counter that the local market is closely monitoring is JPM. The selling pressure from the JPM counter since May 8th has exhibited an abnormal pattern.
- Eight names are screened. They are KOSPI 200/KOSDAQ 150 constituents with JPM’s net selling volume to SO being 0.2% or higher, and a margin-equity ratio of 3% or higher.
Yuexiu Rights – The Trading Pattern Fits
- The Yuexiu Property (123 HK) Rights start trading today. Last day is next Monday. There is a general pattern to the flows and it behooves investors to be aware.
- There is a pattern to these trades which is worth understanding.
- In this case, I expect it is worth going long Yuexiu Rights vs Short peer basket equity earlier in the cycle.
Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads 111 Inc (YI US), ARTERIA Networks Corp (4423 JP), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Hailan Holdings (2278 HK).
- Lowest spreads – Healius (HLS AU),Liontown Resources (LTR AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service.
JAPAN BUYBACKS – Alfresa (2784) Cheap Stock, Uncheapening, Goes Big
- Born of a merger between two not-very-well-known businesses 20 years ago, Alfresa Holdings (2784 JP) is still not very well known. It is in a boring, low-margin business.
- The highest EBIT margin in the past two decades was…. 1.8%. ROE was in the 8-10% range for 2016-2020 but has since fallen below, as PBR has fallen below 1.0x.
- Today, we got an amended Mid-Term Management Plan, a new dividend policy, and buyback of 10% of shares out based on last price. It’s worth looking in the details.
Newcrest Backs Newmont’s US$19bn Offer
- On the 11 April, Newmont Mining (NEM US) bumped the all-scrip terms for Newcrest Mining (NCM AU) to 0.400 Newmont shares – from 0.380 – for each Newcrest share held.
- Exclusive due diligence was granted and now a firm Offer, by way of a Scheme, has been agreed.
- The Offer permits Newcrest to pay a special franked dividend of up to $US1.10/share on top of the Offer terms.
Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan
- It is highly likely that Dongwon Industries will be removed from the KOSPI 200 index in this June review.
- Additionally, based on the confirmed cancellation timeline, the possibility of reinstatement during the December review seems unlikely.
- As a result, it would be wise to maintain shorting position strategies that factor in this information.
MVIS Australia Equal Weight Index Rebalance: Potential Deletes & Capping Changes
- There are unlikely to be any inclusions to the index in June while there are three stocks that are close to the deletion threshold.
- Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of over 4% and a one-way trade of A$78m.
- Short interest on AMP Ltd (AMP AU) has been increasing as the stock has dropped and a further decline in the stock could lead to deletion.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
