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Last Week in Event SPACE: Sembcorp, CK Hutch, Prosus/Naspers, Z Energy, Milton, China Logistics

285 Views29 Aug 2021 07:45
SUMMARY

Last Week in Event SPACE ...

  • The final insult to Sembcorp Marine (SMM SP)'s share price should probably occur in the next two weeks.
  • Cashed up CK Hutchison Holdings (1 HK) looks cheap at 6.8x/0.4x forward PE/PBR, together with a 50% discount to NAV. Plus it is in the market every day buying back shares.

  • Prosus (PRX NA)'s buyback was not expected to start so quickly given the buyback in 2020 started with a fair delay. With the buyback now underway, it behooves us to look at flows and impact.

  • Ampol (ALD AU) is committed given it is open to shedding its discount retailer Gull, but Z Energy Ltd (ZEL NZ)'s board stops short of recommending the Offer.

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

EVENTS

Two months ago, Sembcorp Marine (SMM SP) announced a Rights Offering to raise S$1.5bn to recapitalise operations and provide working capital for the 16 projects currently under execution, some of which have been hit by delays where payment was expected sooner and it will instead come later. SMM have now announced of the Rights Trading Period (31 Aug - 8 Sep), the Exercise Period (31 Aug - 14 Sep) and Pay Date (22 Sep) along with a re-delivery of all the documents from late June and early August. At S$0.08/share, the situation becomes interesting because there is a potential but not necessary MGO backup "Compliance Offer." At S$0.075/share, it becomes MUCH more enticing. There should be no noticeable passive fund effect in the market on these rights except for the fact that passive managers can sell shares and buy rights to do the rights arbitrage themselves very easily. Long-only investors can do the same. Link to Travis Lundy's insight: Sembcorp Marine Goes Ex-Rights - Strategy From Here.

China Telecom (601728 CH) (Mkt Cap: $4bn; Liquidity: US$.4bn)

China Telecom Corp Ltd (H) (728 HK)'s new A-share was priced and allocated nearly two weeks ago and had its first day of trading today on 20 August. The shares had been priced at an 87% premium to the H-shares, and the Hs therefore at a 46% discount to the As at IPO price, where the IPO price was supported by a 3.4% 2021 dividend yield, rising to an expected high-4%s range in 2024. I thought a 46% discount "cheap" and expected the Hs to trade better. They did, but then started coming back down in recent days. Shares popped 35% on the first day.

  • Travis expects the China Telecom A-shares to fall back from their fantastic performance on Friday. He does not see a need for the stock to trade with a dividend yield in the low 2s. However, given the "buyback obligation" and the rising payout ratio on expected rising profits, I expect the Telecom A-shares to have significant support around the IPO price of RMB 4.53/share. He also expects the China Telecom Hs to trade in a range which assumes that the As will fall back to near IPO price.
  • Longer-term, Travis expects the China Telecom and Mobile Hs to trade tighter than where China Telecom H/A spread traded at the A-share IPO price (46% discount). Size and HK liquidity behooves it. However, the fact that US investors are barred from investing increases Real World Float relative to most other stocks out there, and this should dampen volatility and interest somewhat.

(link to Travis' insight: China Telecom A-Share Trades - Up 35% on Day 1)

In April 2021, Fubon Financial Holding Co (2881 TT) announced a rights issue to raise NT$50bn (~US$1.8bn) to fund their acquisition of Jih Sun Financial (5820 TT). A few weeks ago, on 2nd August 2021, the FSC approved this capital-raising effort and the company released an exchange announcement on 20th August 2021 with the expected timeline and other key details regarding this rights issue. The company will issue 548,000,000 common shares and 333,330,000 Class C Pref Shares in these offerings. The pricing ranges for the common shares and the Class C Pref Shares are tentatively set to be NT$40-60 and NT$50-70 respectively (with NT$60 indicated). The final pricing is expected to be confirmed in the next few days. Link to Janaghan's insight: Fubon Financial Holding Co (2881 TT): Rights Issue.

The long saga of the hostile takeover become friendly overbid for Invesco Office J Reit (3298 JP) takes its next step on Monday as the TSE indices reduce the FFW of the name in their indices. Travis would be inclined to leave a "cheeky bid" below the market on Monday near the close. He would tend to want to put those cheeky bids in with a second or two left to go. The take-out is ¥22,750 and that is what will get paid. Travis expects cash-out it will take 8-12 weeks from the EGM which is 8 October. As a balance sheet trade, IF it is highly leverage-able to you, then Travis would suggest you'd want to buy in the high JPY 22,500s to low JPY 22,600s. If not, you may want to bid a little lower depending on your return objectives. Link to Travis' insight: Invesco Office Index Deletion Monday 30 Aug.

After the market close on the 25 August,Doosan Infracore (042670 KS) announced that it plans to complete a rights offering worth ₩800bn, which represents nearly 70% of its current market cap of ₩1.15tn. This rights offering will lead to a significant share dilution risk. The company has yet to provide full details of this rights offering but it is likely that the rights offering price will be priced at least 20-25% lower than current share price. Given the huge dilution risk, in Doosan Infracore Announces a Rights Offering Worth 70% of Its Market Cap Douglas Kim we believe that shares of Doosan Infracore will likely face significant weakness in the next several days.

STUBS

CK Hutchison Holdings (1 HK) / CK Infrastructure Holdings (1038 HK)

CKH is currently at an estimated discount to NAV of ~50%, bang in line with its 12-month average. But the longer-term chart - after the 2015 restructuring - paints a different picture, with both the implied stub and simple ratio (CKH/CKI) around all-time lows.

  • Since the release of its 2021 interims on the 5 August, CKH has been in the market every day buying back shares. As at the time of the insight, it had acquired 5.88mn shares (~0.16% of shares out), at a cost of HK$315mn. That buying accounted for ~10% of daily volume on average. By some estimates, taking into account interest savings on account of the cash proceeds from the tower sales, and the added outlay of HK$3bn+ for tower rental expenses, CKH may be looking to buy back ~5% of shares out, or over HK$10bn. At the current clip, buying could continue for well over a year. CKH also acquired ~7.7mn shares in June of this year. As per the interim presentation (page 15), CKH bought HK$460mn since March 2021.
  • CKH has added HK$33.3bn (~HK$8.9/share) in market cap since the tower sales were announced, about one-third of the transaction proceeds. On page 30 of the 2019 interim IR presentation, management provided some initial guidance based on select transactions, with a mid-range value of HK$61bn or ~HK$16/share based on those transactions. Given the final figure was almost 50% higher, and that cash is coming through the door, arguably the share price reaction has not fully reflected the sale.
  • Recommend an outright long CKH; or hedge it with ~76%-held CKI worth 41% of market cap, but just 20% of NAV) together with a basket of European telco players.

(link to my insight: StubWorld: CK Hutch's Ongoing Buybacks)

Pre-open today, a day after the FTSE/JSE announced its expected capping rule for Naspers (NPN SJ) and Prosus NV (PRX SJ) in the September FTSE/JSE index rebalances (the cap at 6% of index for each of the stocks is only valid for the FTSE/JSE Capped SWIX All Share and Capped SWIX Top 40 indices), and a week after the Exchange Offer closed..... Prosus (PRX NA) has announced a US$5.0bn buyback. Travis had expected a bigger buy of NPN in September, which would have necessitated a larder sell on Prosus. The smaller buy now means a smaller sell. Going forward, capping will not help Prosus, or Naspers. Going forward, the more Prosus performs in the next ten days, the more potential there is to sell shares in September. In Prosus Announces US$5bn Buyback of Float, Travis thinks the buyback has positive implications for Prosus and for Prosus vs Tencent.

With a stub value of -¥614.5bn (Holdco net debt of ¥299.1bn) and a NAV discount of 61%, it seems that investors are failing to assign a fair valuation to Keisei Electric Railway Co (9009 JP)'s unlisted assets (transportation and other businesses) that carry a valuation of close to ¥700.0bn on Keisei Electric’s balance sheet. Link to Oshadhi Kumarasiri 's insight: Long Keisei Electric Railway/Short Oriental Land.

Douglas Kim believes that the merger between SK Inc (034730 KS) and SK Materials (036490 KS) is likely to get completed. The long term benefit should be higher for SK Inc as it removes the holdco discount associated with its stake in SK Materials and is able to absorb the company without too much dilution. Link to Douglas' insight: Merger of SK Inc & SK Materials Holdings: A Prelude to An Eventual Merger with SK Square?.

M&A - ASIA

Z Energy Ltd (ZEL NZ) (Mkt Cap: $1.2bn; Liquidity: $3mn)

Kiwi fuel distributor ZEL has announced it has received a non-binding indicative acquisition proposal from Ampol (ALD AU). The Offer of NZ$3.78/share, by way of a Scheme, is a 22% premium to the last closing price. According to the announcement, negotiations started at NZ$3.35/share. As per Ampol's separate announcement, the Offer price is a 35% premium to the last close on the 26 July, the day prior to the first press speculation of corporate activity. Dividends up to a limit of NZ$0.10/share may be payable depending on when all approvals are secured.

  • The proposal requires a raft of approvals including ZEL's shareholder's approval, and both the New Zealand Commerce Commission and the New Zealand Overseas Investment Office. Ampol is committed to divesting discount retailer Gull if need be to gain necessary regulatory approvals. It has been argued that if Ampol successfully took over ZEL, it would make minimal difference to Kiwi motorists, given competition in the fuel market had increased following NZCC's law changes.
  • The Offer still looks light, most noticeably when compared to pre-Covid levels. The share price had fallen from around $4.50 in February last year to ~$3, prior to this offer.
  • ZEL's chief executive Mike Bennetts said the company’s board did not think Ampol’s offer was high enough, and it had not recommended the proposal to shareholders. It is ZEL's intention to grant DD (a four-week period on an exclusive basis) on the expectations a bump is forthcoming in terms. Ampol is clearly committed given its intention to divest Gull, if need be, to secure the deal.

Links to:
my insight: Z Energy (ZEL NZ) Tentatively Backs Ampol's Approach
Brian Freitas' insight: Ampol's NBIO for Z Energy: May Need More to Go Through

Milton Corp Ltd (MLT AU) (Mkt Cap: $3.2bn; Liquidity: $4mn)

The Marvelous Milton Merger which is the proposed joining of two of Australia's longest-lived Listed Investment Companies - Milton to be absorbed in a share swap by Washington H. Soul Pattinson and Co. Ltd (SOL AU) ("WHSP") - is coming closer to its do-or-die date. There is less than one week until the Reference Date which will decide the share swap ratio. Travis has not been shy in writing about this situation. This time, I note that with both Milton and WHSP hitting new 30-year highs today, despite the merger arb spread remaining reasonably wide, there are signs that the situation has started "accruing value." The rise in both stocks should be a good thing for the vote. Better performance tells voters that it is a good thing for them. Deal break on MLT - assuming it is 10% below NAV - is now further down than before because MLT has been running against future terms (i.e. WHSP share price), not just NAV.

  • The Risk Arb itself is still trading slightly wide. Travis attributes this to some laziness on the part of arbitrageurs. They may feel uncomfortable with the vote risk, or they may feel uncomfortable with the liquidity. As of the 25 August close, Buy A$6.59mm of MLT vs short A$5.23mm of the NAV basket. Short A$5.76mm of WHSP. Monitor this ratio based on the movement of the MLT NAV. For every 1% that MLT NAV goes up vs 25 Aug, short 1.1% more shares (not dollars) of WHSP. For every 1% it goes down, you can buy back 1.1% of the shares of WHSP you are short. Buy the NAV basket at the close of 2 Sep and then you will be long MLT and short the appropriate number of shares of WHSP at the close.
  • The combined trade is the best one. There is more to love. Buy A$6.59mm of MLT vs short A$5.23mm of the MLT NAV basket. Borrow the share equivalent of say A$6.2mm of WHSP. Don't short it yet. Buy back the MLT NAV basket at the close of 2 Sep. That gets you a) long the risk arb spread at 3% & b) +long the equivalent of A$5.76mm of WHSP (today) on a forward basis. Short the WHSP into the index inclusion at the ratio to be announced on 2 Sep.
  • The index inclusion trade is still good to buy. There is still a LOT of stock to buy. Buy A$6.59mm of MLT and short A$6.12mm of ASX200, or...Buy A$6.12mm of WHSP and short A$6.12mm of ASX200.

(link to Travis' insight: Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks)

China Logistics Property Holdings (1589 HK)(Mkt Cap: $1.9bn; Liquidity: $4mn)

After shares increased 14% the previous day on massive volume, before being suspended, CLPH announced that Chairman Li Shifa was is in discussion with a potential purchaser of 26.38% of the total issued shares, which, if completed, may lead to a change in control and a mandatory general offer. In all likelihood, the purchaser is JD.com. To trigger the MGO, the acquirer must already own at least 3.62%, to clear the 30% mandatory takeover threshold. Either JD.com or ESR Cayman fits the bill. And JD has made its intentions known by bumping its stake above 10% leading to CLPH be in breach of Hong Kong's public float.

  • So, what is going on? On the 29 December 2020, CLPH announced Li and RRJ Capital (~23.35%), were "conducting a preliminary strategic review of their stakes", indicating a possible change of control for the company. This latest announcement appears to be an extension of those negotiations although RRJ's current intentions were noticeably absent in the latest announcement.
  • This space is garnering significant attention. Companies are merging (ESR's recent grab for Ara - see ESR Cayman (1821 HK) Takes Out ARA Asset Management - and assets from Blackstone) or being bought out, such as Blackstone's recent acquisition. Word on the street is ESR was offering HK$4/share, which was rejected, so ESR turned its focus to ARA. JD.com has the patience, and the funding to go large. The rumoured price tag asked by the board? I'm hearing HK$4.50+. 1x CLPH's EV/portfolio (the book value of property, equity investments, PP&E) places a value close to $4.50/share.
  • This remains a pre-event, one that has been percolating for 9 months. There can no guarantee an Offer will be forthcoming. But shares are back down to the same level at the time of the December announcement. With 126m shares traded on Thursday, the correction Friday is probably a reflection of insiders cashing out in response to the "no-deal (yet)" announcement today. This looks a buy here.

(link to my insight: China Logistics (1589 HK): More Talk On "Change Of Control")

Siam Future Development (SF TB) (Mkt Cap: $0.8bn; Liquidity: $4mn)

On the 5 July, Major Cineplex Group (MAJOR TB)'s board approved the entering of a MOU with Central Pattana Pub (CPN TB) in relation to its shares in Siam Future Development (SF TB), at a price of Bt12/share. An IFA was appointed to assess the sale and its opinion on the 19 July, concluded the "Transaction is reasonable with price and conditions that are fair". A SPA was entered into yesterday with an expected completion on the 30 August. I estimate a trailing EV/EBITDA/PER/PBR of 16.3x/12.3x/1.7x under the Offer against a five-year average of 10x/8.2x/1.1x. It is also a life-time high.

  • In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company. Therefore CPN is required to make a tender offer for the remaining shares in SFD at the same price of Bt12/each upon the completion of the SPA. A mandatory tender offer must be unconditional.
  • I would expect a mandatory tender offer to commence early this next month. These offers can be open for 25-45 business days. I've opted for the latter given CPN would prefer to acquire as many shares as possible.

Huon Aquaculture (HUO AU) (Mkt Cap: $0.3bn; Liquidity: $1mn)

On the 6 August, Huon announced a firm Offer, by way of a Scheme, with Brazil's JBS SA (JBSS3 BZ). Huon shareholders would receive A$3.85/share in cash. A fully-franked dividend of $0.0125/share - if paid - will be netted. The cash price was a 61% premium to the last close, before a strategic review was announced on the 26 February. The Bender family with 53% of shares out intend to vote all of their shares in support of the Scheme, in the absence of a superior offer. The Offer also required approval from FIRB. Apart from FIRB signing off - no small ask given JBS had fallen foul of US regulators recently - this looked like a done deal, with possible completion in November.

  • But Andrew Forrest's family fund Tattarang had other plans and promptly upped its stake to 18.51% on the 10 August from 7.33% at the time of the SID announcement. That current stake all but blocks a Scheme. Not to be outdone, JBS announced a parallel takeover bid on the 13 August. This second Offer is conditional on 50.1% acceptances from shareholders. With the Bender's stake, that Offer is effectively done - barring FIRB rejection. The Bender family also entered in a pre-bid acceptance agreement for 19.9% of shares out.
  • Forrest has called on JBS to commit to the same principles as Tattarang’s agri-food business, Harvest Road, and its beef processing company, Harvey Beef. Not altogether surprisingly, JBS took umbrage with this challenge, saying it already adheres to high standards in its animal handling. As did Huon. Huon also added Tattarang had earlier expressed interest in Huon and submitted a non-binding and conditional indicative offer. Tattarang was invited to participate further in the strategic review process but declined to do so. Tattarang’s non-binding and conditional indicative offer was at a material discount to JBS’s $3.85 offer.
  • The company is very much on the back foot in the face of increasing debt amid falling salmon prices and skyrocketing freight prices. Huon needs funding, and JBS emerged as the highest bidder as other suitors fell by the wayside. However, Forrest is very well connected. Marine science is the field in which he received a Ph.D. And JBS has not been a poster child with regulators of late. I doubt there is a bump here. I'd be inclined to avoid this transaction. I think FIRB approval is a very real risk.

(link to my insight: Huon Ag (Huo AU): Twiggy Went To Market)

On the 9 July, Beijing Capital Land Ltd H (2868 HK) (BCL) announced a pre-conditional Offer from its controlling shareholder, state-owned Beijing Capital Group. The Offer price of HK$2.80/share was a 62.79% premium to last close, and a 150% premium to the average closing price over the previous 60 trading days. The Offer price would NOT be increased. No dividends are expected to be declared. A concurrent Offer for BCL's domestic shares at RMB2.334080/share was also tabled. The pre-conditions, which could not be waived, included approvals from NDRC, MoC, SAFE, and if applicable, SASAC. Those pre-conditions were satisfied on the 18 August. The Composite Doc is now out. The EGM/H-Class Meeting is scheduled for the 23 September, with an expected payment on the 12 October. This is done and should trade close to terms. Link to my insight: Beijing Capital Land (2868 HK): EGM On The 23 Sept. IFA Says Fair.

Woolworths Ltd (WOW AU) announced earnings to June 2021 with revenues up 5.7%yoy (e-commerce now at 8.3% of the total and up 58% on the year), EBIT +13.7%, and NPAT +22.9% to A$1.972bn for the year. The final dividend was announced at 55 cents, up 14.6% on the year for a full-year dividend of 108cts (+14.9%) after EPS from continuing operations was 119.1cts (+20.7%yoy) and EPS from continuing operations after one-offs was 127.1cts (+73%). In addition to a high payout ratio, the company also announced a A$2bn Off-Market Buyback (OMB). This was not unexpected. Like the previous off-market buyback executed in May 2019, this OMB has a two-tier approach, significantly favouring small investors. Link to Travis' insight: Woolies (WOW AU) Announces ~4.4% Off-Market Buyback.

Just under two weeks after rejecting two take-private proposals from KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company Spark Infrastructure (SKI AU) announced support for the Consortium's improved proposal of $2.95/share. The Offer was up from the initial Offer of $2.70/share. Due diligence was subsequently afforded. On the 10 August, Spark received a request from the Consortium to engage with Public Sector Pension Investment Board (PSP), Canada's largest pension investment managers. OTTPB and KKR said their interest in Spark is not contingent on PSP receiving all internal and external approvals to participate in the Consortium's revised Offer. A firm Offer has now been tabled and a SID entered into with KKR, OTTPB, and PSP. The terms remain the same. Spark's board unanimously recommends the Offer. The Scheme Meeting is expected to be held by the end of 2021. This looks done to me. Link to my insight: Spark Infrastructure (SKI AU): KKR/OTPPB/PSP's Firm Offer.

Dental surgery chain 1300 Smiles Ltd (ONT AU) has announced it has entered into a Scheme Implementation Agreement with BGH/OTPPB-backed Abano Healthcare. Abano is offering $8/share to non-founder shareholders, less any special dividends. Non-founder shareholders (meaning Daryl Holmes), who hold ~59.8% of shares out will receive $6.33/share. These shareholders also have the right to roll over 26.2% of their shares - or ~15.7% - and they have indicated their intention. Therefore the Scheme is for ~84% of shares out. Ellerston Capital, holding 7.1% of shares out, intends to vote in favour of the Scheme. The Scheme is also subject to FIRB approval. This looks done. No definitive timetable was provided, by presumably this transaction could be wrapped up late November, early December. Link to my insight: 1300Smiles (ONT AU): BGH Sinks Its Teeth In.

Back on the 25 June, outdoor leisure products manufacturer Bestway Global Holding (3358 HK) received a privatization Offer by way of a Scheme from founder/chairman/CEO Zhu Qiang. Zhu controls 54.3% of Bestway via Great Success Enterprises Holdings Limited (the Offeror), and offered HK$4.38/share (in cash), a 27% premium to last close. The Offer Price would not be increased. Any dividend declared and paid from hereon would be netted from the Offer price. Together with concert parties, Zhu controls 77.81% of shares out, therefore disinterested shareholders hold 22.19%. The headcount test applies as Bestway is Cayman-incorporated. The Scheme Doc is now dispatched. The Court Meeting will be held on the 15 September with expected payment on or before the 19 October. I expected shares to narrow to $4.25-4.30 - although this is not a particularly liquid arb situation, and why it is trading wide. Link to my insight: Bestway Global (3358 HK): Scheme Doc Out. Court Meeting On Sept 15th.

Activia Properties (3279 JP) announced a follow-on equity offering today after market-close to fund part of their recent property acquisition. The primary offer quantity is 49,030 units. In addition, there will also be an over-allotment quantity of 2,500 units. The total size of this offering could be roughly ¥23bn (~US$210mn). In Activia Properties (3279 JP): Offering Could Trigger Outperformance Vs TSEREIT Index, Janaghan Jeyakumar expects API's latest equity offering to act as a catalyst for outperformance vs TSEREIT Index as most JREITs do in the wake of follow-on equity offerings.

Piped natural gas operator Suchuang Gas Corp (1430 HK) has announced a privatisation Offer by way of a Scheme from a wholly-owned subsidiary of CR Gas (1193 HK). CR Gas is offering HK$2.50/share, a 2.88% premium to last close - or given the pre-announcement pop, a 23.15% premium to the average closing price for the 10 days to the last day of trading. Suchuang shareholders are afforded the option of exchanging their shares on a one-for-one basis into Holdco. Disinterested Shareholders total 62.6% of shares out, ~60% of which have given an irrevocable. The headcount test applies as Suchuang is Cayman incorporated. Regulatory approvals include SASAC. This looks done. Link to my insight: Suchuang Gas (1430 HK): Delisting Proposal From CR Gas.

In Toshiba – Possibility of a Kioxia-Western Digital Deal, Mio Kato discusses a WSJ report that Toshiba Corp (6502 JP)'s Kioxia and Western Digital (WDC US) have been continuing their previously rumoured talks and that discussions appear to be heating up. Details include a potential mid-September timeline, $20bn valuation and the deal being for shares rather than cash which would make sense given WDC’s market cap and leverage. $20bn is still good value for Toshiba and at its 40.2% stake implies about ¥884bn in value or ¥1977 per share. Given the current price of ¥4,650 that is rather chunky.

M&A - EUROPE

In Wm Morrison Supermarkets (MRW LN) (see Fortress/Morrisons: 272p Pre-Emptive Strike ), Jesus Rodriguez Aguilar mentioned that a bid from CD&R could come at 285p. The bid came, recommended, at 285p and the shares closed at 291p on 20 August. Now shares are trading at around 291p, on expectations of a raised offer by Fortress and expectations that Morrisons may enter the FTSE 100, which should support the shares and drive them higher. Link to Jesus' insight: CD&R Leading the Bid War for Morrisons with a Recommended Offer.

M&A - US

Bausch Health Companies (BHC US) recently announced that it intends to split-off via an IPO its highly profitable and fast-growing medical aesthetics business, Solta Medical, adding to the proposed spin/split-off of its eyecare business, Bausch & Lomb (B&L), which it announced a year ago. Although the share price has climbed ~60% since Robert Sassoon published in August 2020, the BHC share price appears to have hit a value wall in recent months. In SpinTalk: Bausch Health Companies- Restructuring Broadens, Considerable Value Still Left On The Table, Robert discusses why BHC's share price momentum has stalled in recent months and why we believe this represents an opportunity to pick up the considerable value still left on the table.

M&A RISK ARB WEEKLY ROUND-UP

  • This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks. I number 36, mostly firm, deals around the region.

INDEX REBALS

  • Kewpie Corp (2809 JP). $3bn Japanese condiment maker Kewpie - famed for its mayonnaise in a slightly-floppy squeeze-bottle - announced that it would buy cancel 8.5 million shares or 5.67% of shares out. The share cancellation takes place on 13 September 2021. That causes an index effect, and given the time of year, I would expect minimal earnings-related updates between now and then. Link to Travis' insight: Kewpie (2809 JP) Share Cancellation Index Event.

OTHER M&A & EVENT UPDATES

CCASS

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, lock-up expiry, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.

Name

% chg

Into

Out of

Hao Tian (1341 HK)21.17%Shanghai CommCCB
F8 (8347 HK)38.29%BluemontGreat Bay
Source: HKEx
The following large movement(s) concern recently listed companies, and therefore are (likely) lock-up related.

Name

% chg

Into

Out of

Shinsun Holdings (2599 HK) 23.00%HSBCCCB
Betterlife (6909 HK)72.29%BOCIOutside CCASS
Honliv (9906 HK)51.065CitiOutside CCASS
Source: HKEx
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