Last Week in Event SPACE ...
(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)
M1 Ltd (M1 SP) (Mkt Cap: $1.4bn; Liquidity: $2.6mn)
Singapore telecom firm M1 announced on the 28th of December 2018 that Konnectivity Pte. Ltd. (a company jointly owned by Keppel Corp Ltd (KEP SP) and Singapore Press Holdings (SPH SP)) had made a Voluntary Conditional General Offer following the satisfaction of the pre-condition (IMDA approval) mentioned in the pre-conditional offer made in September.
(link to Travis' insight: M1 Offer Coming - Market Odds Suggest a Bump But....)
Notwithstanding the price, as Healius is an owner of sensitive medical data, the FIRB would take a very close look at this transaction, especially one where the acquirer is a Chinese entity, given the recent rejection of the CKI/APA Group (APA AU) deal and Huawei's 5G.
(link to Arun George 's insight: Healius (HLS AU): An Unattractive Bid)
Thanachart Capital (TCAP TB) (Mkt Cap: $1.8bn; Liquidity: $4.5mn)
As the merger between TMB and Thanachart gets a nudge from the Ministry of Finance and could be finalized this month, Athaporn Arayasantiparb, CFA tackles the obvious questions - what price and what benefits?
(link to Athaporn's insight: Reality Check 2019: What Premium Does Thanachart Deserve from TMB's Takeover?)
Nexon Co Ltd (3659 JP) (Mkt Cap: $11.4bn; Liquidity: $33mn)
Reportedly Nexon's founder Kim Jung-Joo and other related parties plan to sell their 98.64% stake in NXC Corp, which owns a 47.98% stake in Nexon. Nexon has a market cap of $11.6bn but the rumoured price tag for the 47.98% take is $8.9bn implying a significant management premium.
(link to Douglas' insight: Korea M&A Spotlight: Nexon's Founder Plans to Sell; Will Tencent Buy Nexon?)
Faroe Petroleum (FPM LN) (Mkt Cap: $721mn; Liquidity: $5.5mn)
Initially launched as a voluntary conditional Offer late November, DNO ASA (DNO NO) crept over 30% in Faroe this week and is now required to launch an MGO. The Offer price remains the same at GBP 1.52/share, however, the acceptance condition falls to 50% from 57.5% previously.
(link to my insight: DNO Closes In On Faroe)
Jardine Cycle & Carriage (JCNC SP) / Astra International (ASII IJ)
Curtis Lehnert recommends closing out the set-up trade, now that he sees the stub having reverted to its long-term average level. Since his recommendation, the trade has made a notional gain of 5% in a two and a half month time span. As an aside I back out a discount to NAV of 21%, off its recent low of ~28% in early Nov, and compares to a 12-month average of 19%.
(link to Curtis' insight: Jardine C&C (JCNC SP): Close the Stub Trade)
Jardine Matheson Hldgs (JM SP) / Jardine Strategic Hldgs (JS SP)
Back in September, I discussed in StubWorld: Matheson Unloads JLT, Unwind Takara that Matheson may use the net proceeds of £1.7bn (US$2.2bn) from selling its 40.16% stake in Jardine Lloyd Thompson Group P (JLT LN) into Marsh & Mclennan Cos (MMC US)'s Offer, towards increasing its stake in JS, as there was/is still some room before the maximum 85% ownership level was reached. This is what happened (or at least a token amount of the proceeds), with Matheson buying ~2.5mn shares in Strategic for ~US90mn in early October. Matheson now holds a little less than 84% by my calculation - the group unhelpfully states it holds 84% without going into decimal places.
Stub Wrap
Using a basket of 40 Holdcos I constructed, the average NAV discount in 2018 steadily widened throughout the year. Elsewhere:
(link to my insight: StubWorld: A 2018 Review In Charts)
Briefly ...
Nong Shim Holdings Co (072710 KS)'s 32.72% stake in Nongshim Co Ltd (004370 KS) accounts for ~70% of its NAV. Sanghyun Park backs out a current discount to NAV of 54%, a 2-year low. Using his numbers, I see the Holdco at 2STD to the 12-month average. The problem is the parent's liquidity or lack of it.
(link to Sanghyun's insight: Nongshim Holdings Stub Trade: Time for Holdco To Catch Up)
Ke Yan, CFA, FRM looked at the southbound flow for the month of December. Shandong Gold Mining Co Ltd (1787 HK) topped the list of Southbound inflow amongst the big cap names, followed by Shanghai Fosun Pharmaceutical (Group) (2196 HK) and Guangzhou Baiyunshan Phrmcl Hldgs (874 HK). In the mid-cap space, Yichang Hec Changjiang Pharm (1558 HK) saw a big increase of holdings by mainland investors, followed by Greentown Service Group (2869 HK), Fullshare Holdings (607 HK) and Beijing Tong Ren Tang Chinese Medicine (3613 HK).
(link to Ke Yan's insight: Discover HK Connect: Mainlanders Were Buying Pharma and Property Managers in December)
Takeda Pharmaceutical (4502 JP) announced that the Royal Court of Jersey had sanctioned the Shire Scheme.
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.
Name | % change | Into | Out of | Comment |
Silver Base Group (886 HK) | 37.41% | Ever Joy | CCB | |
Tianhe Chemicals (1619 HK) | 29.27% | BNP | Kingston |
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