In today’s briefing:
- HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
- Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
- (Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?
- Bossini (592 HK): 10th Feb Scheme Vote
- Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist
- Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer
- Samsung Group ETF Rebalancing Event to Watch for in June
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
- There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
- There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
- The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
- Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?
NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
- Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
- Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
- There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.
Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
- Shanghai-Based Bloks Group, a leader of assembly character toys in China, has announced the initial price range for its IPO in Hong Kong.
- The offering is expected to be between HK$55.65 and HK$60.35, implying a market cap of ~HK$14B or ~$1.8B at the midpoint of the price range.
- Assuming IPO offer price of HK$58.00, UBS AM Singapore, Greenwoods AM and Fullgoal Investors have agreed to invest ~HK$388M or ~$50M in the offering.
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
- The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?
- 2025 will start with more attractive turnaround opportunities than we have seen in a long time.
- An uptick in TOBs, MBOs and merger discussions makes it suddenly no longer safe to short low-PBR companies indiscriminately.
- Investors are noticing. More than two-dozen large- and medium-cap stocks with deep discounts to the benchmark began to bounce off well-defined support levels in late December.
Bossini (592 HK): 10th Feb Scheme Vote
- On the 16th October, Li Ning-backed Viva Goods (933 HK) announced a scrip Offer, by way of a Scheme, for 62.91%-held Bossini International Holdings (592 HK), a casual apparel play.
- One new Viva share for five Bossini shares backed an implied scrip price of HK$0.108/share, a 12.2% discount to undisturbed.
- Bossini’s Scheme Doc is now out, with a Court Meeting on the 10th February, and expected settlement on the 24th March. The IFA says “fair and reasonable”.
Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist
- Bloks Group (1850960D CH) is looking to raise US$188m in its Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In our previous note, we looked at the firm’s past performance. In this note, we discuss the latest PHIP updates.
Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer
- On the 5th November, Get Nice Holdings (64 HK) (GNH) announced a scrip Offer, by way of a Scheme, for 72.99%-held Get Nice Financial Group Ltd (1469 HK) (GNF).
- With an implied scrip price & divvy of HK$1.116/share, against a book value of HK1.736/share – and net cash of ~HK$1.00/share – this is probably being down too cheaply.
- GNH’s Circular is now out, with an EGM to be held on the 22nd Jan. GNF’s Scheme Doc is expected to be dispatched one or before the 10th Feb.
Samsung Group ETF Rebalancing Event to Watch for in June
- With Samsung finalizing the call option on Rainbow Robotics in February, the FTC will add it to Samsung Group in March, ensuring its inclusion in the ETF by June.
- With the market cap boost from the call option, Rainbow Robotics is set to easily exceed 2% weight in the ETF by June.
- The rebalancing from June 2-9 will direct 30% of daily volume into Rainbow Robotics, likely enough to move the needle on price action, especially on the first day.
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