In today’s briefing:
- Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
- Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)
- Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family
- ESR Group (1821 HK): Inching Closer to a Binding Proposal
- 7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
- WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
- Weekly Deals Digest (06 Oct) – Tokyo Metro, Rigaku, CR Beverage, K Bank, ASMPT, Samson, T-Gaia
- WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade
- Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
- CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
- Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
- Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid.
- Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.
Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)
- In August, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
- Everyone had expected a delay, but the stock fell. Then tech/AI fell out of bed, Ibiden crashed, China export restrictions noise/pushback caused further upset. But Ibiden and tech are rebounding.
- At 9% it was a raging buy;post-dip at 7% it was good. Now it’s 6+%. Still wide, still interesting, still stable but year-end path dependency… So I still like Ibiden.
Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family
- We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares.
- Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc.
- We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc.
ESR Group (1821 HK): Inching Closer to a Binding Proposal
- ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
- The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.
- The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.
7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
- Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
- The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
- Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish.
WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
- The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
- The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
- There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.
Weekly Deals Digest (06 Oct) – Tokyo Metro, Rigaku, CR Beverage, K Bank, ASMPT, Samson, T-Gaia
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), K Bank (279570 KS) and China Resources Beverage (CRB HK) IPOs.
- Event-Driven developments: ASM Pacific Technology (522 HK), Greatview Aseptic Packaging (468 HK), Samson Holding (531 HK), Descente Ltd (8114 JP), T Gaia Corp (3738 JP).
WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade
- The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
- The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
- There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.
Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
- MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
- Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
- We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.
CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
- Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer
- ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
- If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.
💡 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 Analytics and News
- ✓ Events & Webinars
