In today’s briefing:
- Toyo Construction (1890) Tender Situation Indeed Getting Funky
- Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.
- PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.
- HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments
- Toyo Construction (1890) Tender Still Funky – A New (Perhaps Serious), but Secretive Large Holder
Toyo Construction (1890) Tender Situation Indeed Getting Funky
- Toyo Construction (1890 JP)‘s Independent Committee thought this deal was being done too cheaply, but they signed off on it. I thought it was cheap too.
- I thought that a leading activist in the name would think so too, and try his hand because of his running start of 7+%. Huge volume Day1 sparked wider interest.
- It has traded every day so far above terms so far but on the first full day of trading, the activist Murakami-san bailed. That changes things, but… it’s still funky.
Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.
- Raymond Zage’s letter was super interesting in terms of its nuance, as discussed in Toshiba Board Ructions as Independent Director Goes Rogue.
- In Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail, I discussed that this opens the door to exploring combinations of ideas.
- Today Effissimo filed an amended LSR to say they’d sell their shares to a Bain Tender Offer if launched. The statement, and the break clause are informative, and more nuanced.
PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.
- Pc Partner posted record results with revenue and profits increasing by 99%% and 1,047% respectively. The final 1.61 HKD dividend was below my 2 HKD estimate but still solid.
- Cash grew to 3.1 b HKD vs a market cap of 4.37 b HKD, or 70% of market cap. By end of FY22 cash could be 100% of market cap.
- The outlook is mixed with short-term ASP pressure into 2Q22 but longer-term optimism into 2H22. As always visibility is low but offset by a cheap valuation and large cash buffer.
HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments
- Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.
- CNOOC Ltd (883 HK) has not declared a dividend yet due to its IPO, while Sunac China Holdings (1918 HK)‘s suspension could lead to index deletion in June or July.
- Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.
Toyo Construction (1890) Tender Still Funky – A New (Perhaps Serious), but Secretive Large Holder
- After Murakami-san reported yesterday selling most of his shares on 23 March, the stock fell heavily today. From 6.7% above terms to 0.65% above terms.
- 6.5 mm shares changed hands today at less than a 1% premium to terms.
- After the close, a Cayman company, “WK 1 Limited”, announced it had two affiliates owned 5.89% as of 24-March. Still funky. Still fun. Bet it pops now.
Before it’s here, it’s on Smartkarma
