Last Week in Event SPACE: Aveo, Cocokara, TPV Tech, Sanyo Chem, Travellers, Osram, Mylan, Swire Pac

Last Week in Event SPACE ...

• Aveo Group (AOG AU)'s Offer Price is below expectations, and at 0.56x P/B, appears cheap. But the lack of interest from alternative bidders and active shareholder buying, plus Mulpha's support of the Offer, suggest this price is fair and a reality check in the current environment.
• There is a non-negligible chance the Cocokara Fine (3098 JP) / Matsumotokiyoshi Holdings Co (3088 JP) deal breaks down before the two companies finish talks. It may not be 50/50, but it is not 2/98 either. If Cocokara were to drop dramatically, it would be a buy again. Someone else will buy it. In the meantime, it is likely to be a multi-month wait til the next real news unless it goes three-way.
• This time round, CEIEC/CEC table a full Offer for TPV Technology (903 HK).
• The trade war is an obvious problem for the ongoing Sanyo Chemical Industries (4471 JP)/ Nippon Shokubai (4114 JP) merger; but Sanyo Chem had the ability to revise down forecasts with some impunity and it did not do so. That is interesting by itself. What was a ratio bet trade with good odds has gotten better.
• Another gaming play to delist in the Philippines, but the Offer for Travellers International Hot (RWM PM)'s is miserly, plus the initial announcement created confusion as to the Bidders' intention.
• The OSRAM Licht AG (OSR GR) offer by ams is better than that by Bain & Carlyle, but investors may not want to sell the company partway through a cycle trough. Trading from point A to point Z probably has some negative alpha relationship to market beta. If the market goes down 15% in the next month, €38.50 starts to look a lot better and this is much more easily done. However, like many interesting event trades, path risk is more interesting than end-to-end risk.
• On Friday, Fortress announced a management-supported Tender Offer at ¥4000/share to buy out Unizo Holdings (3258 JP) which had heretofore been subject to a Partial Tender by H I S Co Ltd (9603 JP) at ¥3100/share and accumulation of a 9.9% stake by Elliott Mgmt at ¥3470/share. Given this is a 100+% premium to undisturbed and a 98% premium to the 6-month average to undisturbed, this looks pretty great for shareholders. But questions still need to be asked...
• Pfizer Inc (PFE US) administers an injection onto Mylan Nv (MYL US).
• Swire Pacific Ltd Cl A (19 HK) faces interference on all fronts as protest disruptions drag on.
• Plus, other events, CCASS movements and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)

Unizo Holdings (3258 JP) (Mkt Cap: $1.30bn; Liquidity: Mixed: High recently, low historically)

On July 10th, Japan's largest private travel agency H I S Co Ltd (9603 JP) announced that it had purchased just under 5% of real estate (office, multi-use, hotels) developer/leaser Unizo Holdings (long known as Jowa Holdings). It also announced that the next day it would launch a Partial Tender Offer at a 56% premium to last trade of ¥3100/share, taking its stake to 45% which would allow it de facto consolidation and near control. The shares skyrocketed to terms trading through terms on the second full day of trading. Unizo Holdings objected. It convened a Special Committee who eventually decided that it did not support the deal. It also called the deal very underpriced. About 2 weeks ago, Elliott Management showed up on the register with more than 5.5%. 8 days later Elliott had 9.9% at an average price of ¥3471, which was 12% through terms, though it had purchased some shares at almost 20% through terms near or even above ¥3700/share.

In the background, Unizo was looking for a white knight starting in early July. On Friday it officially found one in Fortress Investment Group's Japan business who announced a Tender Offer at ¥4,000/share.

• The Tender Offer starts Monday 19 Aug and goes through 1 Oct. There was a process where there were 16 market checks, four bidders submitting proposals, 11 external consultants to Unizo, 1 Independent Committee, and the result of two offers to pay ¥4,000/share. Fortress' bid was chosen.
• This should shut down H.I.S. whose tender offer ends this coming week. It should result in numerous Mizuho-related cross-holders, most passive and active institutional investors selling their shares, and probably most domestic institutional investors. It is a higher price than every offering priced in the past five years.
• It remains a question as to whether H.I.S. or Elliott will tender, but even if they do not, if there is no other bid, this deal should get done.
• Travis Lundy who just published about the situation this weekend thinks it is possible an overbid comes. The construct for Unizo management is financial. The buyer is financial. If a buyer can achieve what two of the three Independent Valuation experts proposed as the Adjusted Net Asset Value, and do so at the end of three years, a buyer could get a 20% IRR paying up to ¥4300-4400/share (the shares are very levered).

(link to Travis' insight: Fortress Group Fund Bids for UNIZO (3258): An Interesting TOB)

Aveo Group (AOG AU) (Mkt Cap: $832mn; Liquidity: $6mn)

Aveo and Brookfield have finally entered into a Scheme Implementation Deed such that Brookfield will undertake to buy all Aveo shares at $2.195/share (inclusive of the FY19 annual distribution of A$0.045/share), a 28% premium to the undisturbed price of $1.71/share on the 12 February. The Offer Price is final. Seng Huang Lee and Eric Lee, both directors of Aveo and Mulpha International (MIT MK), Aveo's largest shareholder with 24.4%, have confirmed they intend to recommend to Mulpha to support the Offer. Seng Huang Lee is Mulpha's shareholder with 44.96%.

• The headline number is a disappointment - below where shares traded at the time of the strategic review announced last August. But Aveo reported a 67% decline in 1H19 earnings from the previous year and a 2% decline in NTA; peer comps are down 11% on average from a year ago and similarly reported negative growth in the 1H19.
• Apart from Perpetual increasing its stake last November, there have been no other interested buyers of shares, despite half a dozen (initial) interested parties. Mulpha appears a willing seller at the Offer Price. That may be the best indication on how to trade this.
• Currently trading at a gross/annualised spread of 1.4%/5.8% - it has gone ex-div already -assuming mid-November completion. I'd take those odds. Separately, Mulpha is worth a punt here. Its stake in Aveo is worth 130% of its market cap. The discount to NAV has recently pulled back to its one-year average. The only drawback is that the stock is illiquid. Also, rumours are that Mulpha will opt for scrip not cash.

(link to my insight: Brookfield's Offer For Aveo May Just Get Up)

Cocokara Fine (3098 JP) (Mkt Cap: $1.3bn; Liquidity: $9mn)

Earlier this week, Cocokara management decided to enter merger talks with Matsumotokiyoshi Holdings Co (3088 JP) (commonly known as "MatsuKiyo") and not with Sugi Holdings (7649 JP). Cocokara shares immediately popped 9.5% before settling +6.9% at lunchtime. MatsuKiyo popped as well. Over the lunch break, Cocokara released an official statement, that they would enter exclusive negotiations with MatsuKiyo to conclude a basic agreement, followed by a final agreement. When the market opened in the afternoon, both fell, then both slowly rose back into the end of the day. Cocokara ended up 1.3%; Matsukiyo fell 2.2% on the day. The share price ratio closed at 1.689.

• On a trading basis, Travis Lundy expected the knee-jerk response on Cocokara which got stomped on after the pop was the right one. He expects the fall in MatsuKiyo shares was a fear that MatsuKiyo would be overpaying for a less profitable business.
• We do not yet know deal structure, but this deal is not likely to be a Tender Offer for Cocokara because it would require too much of a premium and would not be "in a spirit of equality." That means a share exchange. So now we have negotiations about negotiations, then we have negotiations, and then we get a share exchange ratio. Possibly.
• Travis thought the Cocokara/MatsuKiyo ratio was a short at the time of the insight. If it spikes to 1.80 again, he definitely thinks it is a short. However, the hedge on this is to be net long (i.e. short $7-8 and long $10). There will be cost to restructure, but scale will likely cover them in a year, and be totally additive in Year2. Getting an extra 1% on MatsuKiyo's business and lifting Cocokara OPMs by 1.9% to get to 5.0% would mean that if paying the current 1.689 ratio, MatsuKiyo OP/share would rise something like 12-15% in one year and 8% the year after.
• However, paying 1.689 requires getting gains in margins at both before OP/share at MatsuKiyo rises at all. Anything north of about 1.45-1.55 means MatsuKiyo shareholders are pre-paying for synergies.
• Mio Kato, CFA writes in his insight that the key driver for profit growth in the sector is the spread between GPM and SG&A as % of revenue, rather than store growth. Matsukiyo appears to have significantly greater potential to raise margins. An analysis of MatsuKiyo and Cocokara's OP fluctuations suggests that the two companies may have a similar stance on discounting, which can often be a key M&A sticking point, culture-wise. Mio Kato, CFA believe this makes an eventual merger more likely.

links to:
Travis's insight: Cocokara (3098) Going With MatsuKiyo (3088) But Ratio Overextended
Mio's insight: Matsukiyo-Cocokara Merger: Quantamental Analysis Shows Matsukiyo in Fact IS the Best Fit.

TPV Technology (903 HK) (Mkt Cap: $832mn; Liquidity: $6mn)

The previous Friday, TPV's shares were suspended pending the release of an announcement pursuant to The Hong Kong Code on Takeovers and Mergers. In my insight TPV Halted - A New Offer From CEC/Mitsui?, I concluded CEC/CEIEC will make another Offer - this time to potentially delist the company. CEIEC has now launched a $3.86/share Offer for TPV, a 41.39% premium to last close, by way of a Scheme. The Offer Price is Final. The headcount test applies.

• CEIEC and concert parties hold 1.15bn shares or 49.04% of shares out. Therefore, the blocking stake at the Court Meeting will be 119.5mn shares or ~US$54mn at the current price. The Offer Price falls short of the $5.20/share MGO in 2010. However, that was the high watermark for the stock after which TPV's earnings collapsed with four of the last seven years in the red. The Offer Price is a seven-year high.
• One pushback on pricing is that TPVs earnings have been impacted by extraordinary currency gain/losses. Yet those losses have been consistent - earnings in six of the past seven years have been affected by exchange losses. Ironically, in FY17 when TPV recorded an exchange gain of US$58.8mn, the net loss was US$50.6mn, it's single worst performing year since listing. TPV did return to the black (US$26.4mn) in its 2019 interims, reversing a loss the previous year. Extrapolated for the full year - perhaps optimistically, given the display industry is a tough, low margin business, plus the China-USA trade dispute - pitches the Offer above peer metrics.
• Timing to completion may vary from my expected November payment. Both NDRC and SAMR approval are required. However, the Offeror is an SOE and already has effective control over TPV. Currently trading at a gross/annualised spread of 6%/25%. That appears an attractive risk/reward here.

(link to my insight: TPV Tech's Full Offer From CEIEC/CEC)

Sanyo Chemical Industries (4471 JP) (Mkt Cap: $934mn; Liquidity: $4mn)

On 29 May this year, chemical companies Sanyo Chem and Nippon Shokubai (4114 JP) announced they had reached a Basic Agreement to move ahead with the consideration toward the integration of their businesses based on an equal footing. When it was announced, the Sanyo Chem / Nippon Shokubai ratio was trading at a 9-year high. On 31 July, Sanyo Chem announced Q1 earnings with OP at ¥2.9bn or -19.1%yoy. A fall was expected, however, the company kept its full-year revenue, OP, and Net Profit projections unchanged. After the close the same day, Nippon Shokubai announced substantial downward revisions to both its H1 and Full-Year Guidance.

• The Sanyo Chemical / Nippon Shokubai Share Price Ratio, which had been 0.8313 at initial deal announcement and 0.86 just eight weeks earlier, was 0.71 during that day before the announcement but traded as high as 0.80+ the next morning before settling at 0.7900 at the close. The ratio then fell six of the next seven trading days to the 0.745 level near where we closed Thursday too (0.7463).

• At deal announcement, the ratio still had Sanyo Chem trading slightly cheap to Nippon Shokubai. The ratio is down 10.2% from where the deal was announced and down 13.4% from the post-deal announcement high. The denominator of the ratio has lowered its FY Operating Profit Guidance by 33% so the profit relationship has changed. It is a good trade to be long Sanyo Chem and short Nippon Shokubai.

• There should not be significant downside from a 10% discount to the undisturbed ratio. There could be upside. Both to undisturbed and to fundamental ratios. If there is deal break, break risk probably favors Sanyo Chem. It is not hugely liquid, but the event will provide the exit. There is definitely room for upside to Sanyo Chem vs Nippon Shokubai.

(link to Travis' insight: SanyoChem Vs NipponShokubai: An Even Better Trade Now)

Travellers International Hot (RWM PM) (Mkt Cap: $1.6bn; Liquidity: $1mn)

Travellers, the owner/operator of Resorts World Manila, has announced a Voluntary Delisting Offer from a consortium comprising JV partners Alliance Global Group (AGI PM) and Genting Hong Kong (678 HK), plus other shareholders, collectively holding 1.58bn shares or ~89.9%. The Tender Offer Price of PHP5.50 is a 1.3% premium to last close, and will be conditional on a minimum of 838.2mn shares tendering to give the consortium at least 95%. The proposed delisting date is the 15 October. This is the second casino/gaming play in Manila subject to a delisting/tender Offer in the past 12 months after Melco Resorts and Entertainment (Philippines) (MRP PM).

• Travellers' initial Tender Offer announcement stipulated the Offer was contingent on 17.3mn shares (~0.1%) tendering to give the consortium >90%, not 95%, which is somewhat akin to MRP's indirect route, which was ultimately delisted in June after breaching the 10% public float for six months.
• Travellers' average daily volume is ~1.8mn shares. 838mn shares to tender looks like a big ask at this price. 1H19 net profit declined 50% to PHP843mn, but the numbers are not apples to apples. 1H18 had a one-time recognition of PHP1.5bn in other income; Travellers recognised a share in net profit in 1H19 of an associate of PHP403mn (PHP39mn in 1H18); and finance cost increased to PHP982.5mn in 1H19 (PHP43.9mn in 1H18) due to the additional drawdown of loans. Revenue and gross profit in 1H19 increased by 44% and 55% yoy.
• The minimum tender condition in Energy Development (EDC PM)'s Delisting Offer last year could be waived. Perhaps that will be the case for Travellers, and seeing as though it only needs 0.1% to get to 90%+ and breach the free float guidelines, it can simply sit back and wait to get delisted six months later.

(link to my insight: First Melco, Now Travellers With A Delisting Offer)

Macquarie Media (MRN AU) (Mkt Cap: $170mn; Liquidity: $0.1mn)

The Nine Entertainment Co Holdings (NEC AU) / Fairfax Media (FXJ AU) scheme was implemented on the 7 December. This included the acquisition of Fairfax's 54.5% stake in MRN. The acquisition of the remaining 45.5% was viewed as a formality. Nine has now announced a Takeover Offer for MRN at $1.46/share, cash. The Offer Price is 16% below MRN's last close of $1.75. In addition to the usual MACs, the Offer is conditional on Nine holding 90% of shares at the close of the Offer, and John Singleton - holding 32.3% of shares out - entering into a valid Deed of Restraint.

• The takeunder price, on the surface, appears a negative. However, >90% of MRN's register is locked up, with minimal float and tiny liquidity. Rumours of an Offer have been bubbling for a year, and combined with low liquidity, it has resulted in an artificially inflated share price. The Offer metric is also fair with reference to the fair value range of A$280-300mn for MRN by the Independent Expert in Fairfax's Scheme Booklet (page 110), compared to A$250mn under the Offer.
• The pushback? Wilson Asset Management, with an apparent 4% stake, is "disappointed at the independent directors for recommending the bid at a 15% discount to the share price" and are "reviewing all ... options." According to CapIQ, Wilson bought its stake in the 2Q18. MRN closed at A$1.40/share on average during that quarter.
• Nine's intention to buy out the remaining shares has been well flagged. Singleton is a seller, at the right price. Presumably, a deal has been negotiated with him which all but assures the transaction is done. Shares closed Friday at A$1.46. I expect the deal to get up. But it is not a very liquid or large-cap situation.

(link to my insight: Nine To Take Control of Macquarie Media)

OSRAM Licht AG (OSR GR) (Mkt Cap: $2.7bn; Liquidity: $3.3mn)

In early July, Osram confirmed a binding offer had been received from Bain and Carlyle at €35/share. Osram's largest shareholder Allianz Global quickly made their objections known. On 15 July, AMS (which had signed a confidentiality agreement in June) made a non-binding offer for Osram at €38.50, but withdrew the offer after a few hours on a lack of funds. AMS then made a takeover proposal for Osram at €38.50, and the two started discussions on the 13th August. AMS said it would launch the takeover offer as soon as Osram waives the 12-month standstill agreement which was signed in June as a requirement for gaining access to due diligence.

• AMS' offer is expected to open by 5 September, which is when the Bain & Carlyle takeover offer ends. Bain & Carlyle's offer at €35.00 looks like it won't fly. Allianz Global at 9.36% and SdK representing small shareholders who number 400,000+ and hold 25% of the shares probably have enough to make 70% a difficult hurdle.
• The new AMS offer - not yet "approved" by Osram - is 10% higher. And since the Bain Offer was made official the Dax index is down 10% and EuroStoxx50 is down 7+%. That changes the equation a bit for both. But it does not make this super easy. On a FY21 basis, Osram is at <8x EBITDAe. And a 70% offer success threshold is a high hurdle for people not utterly convinced.
• If buying now and holding to €38.50, Travis is not convinced this is a good risk here. He would prefer to wait a bit. He is not convinced that even now AMS could get to 70%. If you think that IF Osram and AMS come to terms then this deal will tighten to a 5% spread, then this is a good risk.

(link to Travis' insight: Ams Deal for Osram On the Table: Trading Wide)

Millennium & Copthorne Hotels (MLC LN) (Mkt Cap: $2.7bn; Liquidity: $3.3mn)

On the 7 June, City Developments (CIT SP) and M&C announced a pre-conditional Final Offer of £6.85/share - a 37% premium to last close - for shares it does not own. The pre-condition refers to the granting of consent from New Zealand's Overseas Investment Office. That condition was satisfied on the 9 August. The Offer Document will be issued within 28 days, or on or before the 6 September.

• The Offer is subject to CDL receiving valid acceptances of more than 50% of the shares in M&C it does not own. CDL has received irrevocables totaling 43.58%.
• The Final Offer also represents the highest price since June 2007. And with CDL holding 65.2%, it is unlikely a third-party competing offer will emerge. Shares have not closed through terms following the announcement of the new Offer.
• This is a done deal and is duly trading tight to terms - ~1% gross spread - with an expected payment of mid-October.

(link to my insight: City Developments' Latest Offer For M&C Is A Done Deal)

Mylan Nv (MYL US) (Mkt Cap: $9.3bn; Liquidity: $154mn)

On July 29, 2019, Mylan and Pfizer Inc (PFE US) announced a definitive agreement to combine Mylan with Upjohn, Pfizer's off-patent branded and generic established medicines business to create the world’s largest generics pharmaceuticals company measured by sales. Pfizer expects to spin off its Upjohn unit to its shareholders through an exchange of 0.12 new SpinCo shares for each PFE share held. Based on the latest outstanding Pfizer share count, a total of new ~664mn new SpinCo shares are expected to be distributed which will be converted to Mylan shares on a 1-for-1 basis. On completion of the transaction, which is anticipated in mid-2020, PFE shareholders will hold ~57% of the combination’s equity with existing Mylan shareholders owning ~43%.

• Robert Sassoon assessed that Pfizer is effectively selling Upjohn for ~6X guided 2020 EBITDA, while Mylan currently trades at ~6.5X its guided 2020 EBITDA. Teva Pharmaceutical Sp Adr (TEVA US) trades a little higher at ~7X.
• Teva remains challenged by its heavy debt load and opioid lawsuits which could result in significant penalties. While Mylan is not free of these challenges either, it does appear to be in a better place than Teva as a result of its pending merger with Upjohn. The merger puts Mylan in a much stronger position to return capital to its shareholders - the Upjohn/Mylan combination intends to start paying a dividend from the first full quarter post transaction close.
• Teva, on the other hand, is expected to remain free cash flow constrained by its debt servicing obligations. Also, Teva does not get as much free cash flow out of its profit as does Mylan or its successor company based on current estimates. Yet, based on 2020 estimates, Teva trades at a premium valuation over Mylan on an LTM basis. Although this trade has effectively been in play since early May 2019, Robert advocates going long MYL and shorting TEVA.

(link to Robert's insight: MergerTalk: Pfizer/Mylan -Don't Overdose on the Sector, but Mylan Over Teva Pair Trade Is Still On)

JPX Nikkei 400 rebalances

The previous week, Travis published the basics of the 2019 JPX Nikkei 400 Rebalance in JPX Nikkei 400 Rebalance - 2019 Edition Part I. It included basic analysis of the trade, the dynamics, the inclusions and exclusions, and how the trade has historically performed. His first follow-on insight JPX Nikkei 400 Rebal - 2019 Edition Part 1.1 contains significantly more granular detail.

• The "Adds" are included in the index at the close before the Effective Date (so they can be used in the calculation as of the opening print, vis-a-vis the close of the day before). The "Deletes" are taken out at the same time. This is usually where the majority of the action should be.
• The index caps stocks at a 1.5% weight in the index, adjusting the coefficients every year for stocks which fall afoul of the rules. For stocks which have gone above 1.5%, they see their weight factors reduced. For those who had previously fallen afoul but are now below 1.5%, they see their weights re-upped (to the extent possible so that they don't break the 1.5% rule).
• The conclusions remain the same for Travis. From announcement to inclusion date, this is not a very interesting trade to take risk on historically.

(link to Travis's insight: JPX Nikkei 400 Rebal - 2019 Edition Part 1.1)

E Mart Inc (139480 KS) (Mkt Cap: $24.9bn; Liquidity: $94mn)

Emart has announced a recapitalisation plan which will be implemented in the form of asset sale and leaseback. Emart plans to sell 10 stores to a leasing firm and lease them back long-term. Through this, it expects to raise around ₩1tn. Emart directly owns 80% of its stores compared to direct rival Lotte's 60%. Emart is saying that it will use this money to improve the price competitiveness of mainly its fresh food products, which are most vulnerable to the local online retailers' fierce attack. But this ₩1tn may be used for Emart's own M&A efforts.

• Emart needs to find a way to fend off local online retailers. Coupang and the other online players are not the only ones that Emart (and Lotte and Homeplus) should worry about. Mid-sized offline retailers, most prominently Hanaro Mart, are also threatening.
• Emart shares were up nearly 7% on the announcement suggesting that the market isn't enamoured with Emart's 'organic' turnaround. Korea is unique in that it is virtually the only one among the advanced countries where the online retail market isn't monopolized (or duopolized). This means Korea's retail market needs consolidation, and one of the most talked-about speculations in the local market is a 11st+Coupang merger. Emart's ₩1tn injection may trigger the much-awaited industry consolidation. How that scenario pans out for Emart is the big unknown.

(link to Sanghyun Park's insight: Emart Crisis: Huge Recap & Industry Consolidation)

HSCEI Rebalance

The Hang Seng Indexes Company Limited announced the results of its review of the Hang Seng Family of Indexes on Friday. The rebalance will be effective 9 September and the implementation date is 6 September.

• Stocks being included in the Hang Seng China Enterprises Index are Want Want China Holdings Ltd (151 HK), Geely Auto (175 HK), Fosun International (656 HK), China Taiping Insurance Hldgs (966 HK) and Sunac China Holdings (1918 HK) while the exclusions are Dongfeng Motor (489 HK), China Cinda Asset Management (1359 HK), Guangzhou Automobile Group (2238 HK), China Huarong Asset Management (2799 HK) and Huatai Securities Co Ltd (H) (6886 HK).

(link to Brian Freitas's insight: HSCEI Index Review - Out with the Old, In with the New)

Swire Pacific Ltd Cl A (19 HK) / Swire Properties (1972 HK)

Overall, I had a discount to NAV for Swire of 25.6% (& still at 25% as of Friday), slightly wider than its 12-month average of 23.5%. Of interest is the disruption effect on various property plays from the Hong Kong protests. In my stub monitor New World Development (17 HK) and Henderson Land Development (12 HK) are coming up "cheap", and Jardine Strategic Hldgs (JS SP) is "expensive" versus Hongkong Land Holdings (HKL SP). The Hong Kong Property Index is down around 20% from its 2019 high in April.

• What to do? Swire Pac has its own issues, over and above its stake in Swire Props (which is exposed to retail/hotel disruptions). Cathay's issues - the ten-week protest has dampened ticket sales for Cathay for both inbound and outbound travelers - may be protracted and there are extenuating factors at work given Cathay's access to the lucrative mainland market - one-fifth of its flights service the mainland, accounting for ~50% of revenue. It recently reversed its stance on employees attending protests with four of its staff now sacked. CEO Rupert Hogg stepped down on Friday.
• It is also challenging to get excited about Swire Pac's unlisted ops. The beverage segment is flat, the marine ops show signs of life but continue to hemorrhage and the trading segment has dipped into the red, again. HAECO is the one bright spot, although the improvement in the past year is mainly sourced from the Hong Kong side.
• Swire Pac's discount to NAV has already undergone a significant correction since late July when it was ~18%. A short-term correction is probable, but continued weakness in Swire Pac in the face of political headwinds looks plausible. Swire Props, at 0.5x P/B comprising predominantly investment property, doesn't look expensive.
• Separately, Swire's A premium over the Swire Pacific Ltd-Cl B (87 HK) has declined slightly to around 27% from 31% late last month - the high was 33% in February this year. The A-share premium expansion since 3Q17 - premised by the SFC's push for WVRs - appears to have run out puff. The long-term average (from Jan 1992) is an 18% premium (A over B) and the 10-year average is 10%.

(link to my insight: StubWorld: Swire Takes A Bath As Protest Issues Weigh)

• Oversea Chinese Banking Corp. (OCBC SP) is in early-stages to bid for Standard Chartered (STAN LN) and Astra International (ASII IJ)'s stakes (44.6% each) in Bank Permata (BNLI IJ) according to Bloomberg. Both parties are natural sellers but there are a number of other suiters out there who have already expressed an interest but in the end its a question of price and fit. OCBC already has a good quality presence in Indonesia through Bank Ocbc Nisp (NISP IJ).
• Glow Energy Pcl (GLOW TB) reports that its shareholders have approved the delisting and the company has published what appears to be a translation of Form 10-7. Historically, the whole thing can get done in 3mos which suggests 3 weeks for the SET approval.
• Elliott has now raised its stake in Unizo Holdings (3258 JP) to 9.90% at an average price of ¥3,470.95/share.
• Cynata Therapeutics (CYP AU) advises that it is continuing to engage with Sumitomo Dainippon Pharma Co (4506 JP) on a non-exclusive basis. Last month CYP announced it had received an indicative, non-binding and conditional proposal from Sumitomo of $2.00/share.
• Dalian Port (Pda) Co Ltd H (2880 HK)'s equity transfer has been approved by SASAC. The outstanding condition to the transfer is the CSRC waiver of the obligation of China Merchants Liaoning and the parties acting in concert with it to make a general offer for the A Shares and the shares of Yingkou Port Liability Company Limited.
• Maanshan Iron & Steel H (323 HK)'s Composite Document has been delayed until not later than the 31 October from the 12 August.
• Stanmore Coal (SMR AU) has announced the Notice under Section 249D by Golden has been deemed invalid and therefore it cannot legally be acted upon. A new 249D notice was subsequently announced. Separately, SMR and Winfield entered into a Process Deed to facilitate Winfield's due diligence.
• Ap Eagers Ltd (APE AU)'s Offer for Automotive Holdings (AHG AU) is now unconditional. The Offer closes on the 16 September.
• Malaysia's Atomic Energy Licensing Board has decided to renew Lynas Corp Ltd (LYC AU) license in Malaysia for 6 months (normally these would be renewed for three years) on four conditions. As long as Lynas shows its committed financing in the next six months, it will get a three-year extension because that will take it to 3.5yrs against a 4yr deadline for a cracking/leaching facility outside Malaysia.
• An SPA has been entered into for 51.56% of shares out in Hydoo International Holding (1396 HK). Should all conditions be satisfied, an unconditional mandatory cash offer - a takeunder - will be made at $0.305/share or a massive 0.2x book. The Offeror is China Guangdong – Hong Kong Greater Bay Area Holdings Limited.
• The Scheme Document for Acacia Mining (ACA LN) has been issued. The Court Meeting is scheduled for the 3 September. Effective date - if the resolutions pass - is the 17 Sept with new shares to be listed on the 17 Sept. Separately, Acacia said it has received approval from the government of Tanzania to resume gold exports from the North Mara mine. However, the Tanzanian Mining Commission also said it believes that certain provisions of the mining regulations from 2010 were violated and directed Acacia to submit a North Mara feasibility study report and mine plan for approval by Friday.
• The Offer Doc on Delong Holdings (DLNG SP) has been despatched. and quickly went unconditional. The closing date of the Offer is 10 September - it will not be extended.
• Raffles United Holdings (RUH SP) announced that the Mandatory Unconditional Offer by Raffles Infinity Holdings Pte Ltd had closed with the buyer owning 95.07% shares out.
• Amer Sports Oyj (AMEAS FH) has announced that it has applied for delisting.
• Capgemini SA (CAP FP) and Altran Technologies Sa (ALT FP) have jointly signed the tender offer agreement.
• Majesty Golf Korea announced a Tender Offer to buy out a majority (at a minimum) of Maruman & (7834 JP) at ¥195/share.

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.

Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.