Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>HR solutions provider <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> has announced it has received a preliminary non-binding <a href="https://sec.report/Document/0001104659-20-105912/" target="_blank" rel="noopener">Proposal</a> from DCP Capital Partners to acquire all of its shares for US$79.05/common share.</p>
<p>The Proposal represents a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.</p>
<p>DCP Capital? It is an international private equity firm in Asia, where the team previously led KKR and Morgan Stanley’s private equity businesses in Asia.</p>
<p>This Offer makes a change from the usual management buyouts in which the Offer consideration often finds minority shareholders left wanting.</p>
<p>However, pricing appears opportunistic after 51job was down 20% YTD, ahead of the Offer. Currently, trading through terms at US$79.42.</p>
<p>There are no super-voting rights in 51job. Directors hold 22.8% of shares including Rick Yau (co-founder, CEO) with 19.2%. The major shareholder is <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> with 35%.</p>
<p>As always, more below the fold.</p>
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HR solutions provider 51 Job Inc Adr (JOBS US) has announced it has received a preliminary non-binding Proposal from DCP Capital Partners to acquire all of its shares for US$79.05/common share.
The Proposal represents a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.
DCP Capital? It is an international private equity firm in Asia, where the team previously led KKR and Morgan Stanley’s private equity businesses in Asia.
This Offer makes a change from the usual management buyouts in which the Offer consideration often finds minority shareholders left wanting.
However, pricing appears opportunistic after 51job was down 20% YTD, ahead of the Offer. Currently, trading through terms at US$79.42.
There are no super-voting rights in 51job. Directors hold 22.8% of shares including Rick Yau (co-founder, CEO) with 19.2%. The major shareholder is Recruit Holdings (6098 JP) with 35%.
As always, more below the fold.





You're Hired! DCP's Proposal For 51job.Inc.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

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<p>Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that are planning to follow in Baba’s footsteps.</p>
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<p>In our previous insight, <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020, we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </p>
<p>Since then <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> and <a href="https://www.smartkarma.com/entities/netease-inc-adr" target="_blank" data-smartkarma-citation="entities:17203:1" rel="noopener">NetEase Inc (NTES US)</a> have both filed for a secondary listing in Hong Kong. In this insight, we'll touch upon the recent updates over the past few months and how the names on our short list have been faring.</p>
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Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that are planning to follow in Baba’s footsteps.


In our previous insight, China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020, we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 
Since then JD.com Inc (ADR) (JD US) and NetEase Inc (NTES US) have both filed for a secondary listing in Hong Kong. In this insight, we'll touch upon the recent updates over the past few months and how the names on our short list have been faring.


China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<p style="text-align: justify;">We believe cash balance may not tell the truth, but companies’ moves will.</p>
<ul>
<li>Alibaba (BABA) plans to invest in computing infrastructure – fat cash.</li>
<li>Pinduoduo (PDD) will purchase Gome (493 HK) – fat cash.</li>
<li>Baidu (BIDU)’s internal audit – short of cash.</li>
<li>Xiaomi issues 10-year notes – short of cash.</li>
<li>51job.com (JOBS) lays off employees in eleven branch offices – short of cash.</li>
</ul>

We believe cash balance may not tell the truth, but companies’ moves will.

Alibaba (BABA) plans to invest in computing infrastructure – fat cash.
Pinduoduo (PDD) will purchase Gome (493 HK) – fat cash.
Baidu (BIDU)’s internal audit – short of cash.
Xiaomi issues 10-year notes – short of cash.
51job.com (JOBS) lays off employees in eleven branch offices – short of cash.


China Internet Weekly (27Apr2020): BABA, PDD, BIDU, Xiaomi, JOBS, Most Moves Are About Cash

<p>Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that are planning to follow in Baba’s footsteps.</p>
<p>However, not all US listed China ADRs are eligible for undertaking a secondary listing and not all are likely to make as big a splash.</p>
<p>In this insight, we’ll aim to shortlist the ones that are most likely to undertake a secondary listing by highlighting: </p>
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<p>The recent factors that have been creating a pull effect, as well as the factors creating a push effect in the US</p>
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<p>The additional incentives provided for a Hong Kong listing via the South-connect trading</p>
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<p>Eligibility as per HKSE rules for a secondary listing </p>
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<p>Short-list of ADRs that meet the requirements and a ranking based on our quantitative criteria</p>
</li>
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<p>A look at how Alibaba and Beigene traded and lessons from the same</p>
</li>
</ol>

Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that are planning to follow in Baba’s footsteps.
However, not all US listed China ADRs are eligible for undertaking a secondary listing and not all are likely to make as big a splash.
In this insight, we’ll aim to shortlist the ones that are most likely to undertake a secondary listing by highlighting: 


The recent factors that have been creating a pull effect, as well as the factors creating a push effect in the US


The additional incentives provided for a Hong Kong listing via the South-connect trading


Eligibility as per HKSE rules for a secondary listing 


Short-list of ADRs that meet the requirements and a ranking based on our quantitative criteria


A look at how Alibaba and Beigene traded and lessons from the same



China ADRs Secondary Listing Deep-Dive: Yin and Yang

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Renrui Human Resources / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/renrui-human-resources-techn" target="_blank" data-smartkarma-citation="entities:28134:1" rel="noopener">Renrui Human Resources (6919 HK)</a> is the largest company operating in China’s flexible staffing services market by revenue in 2018, accounting for a 2.5% market share. Renrui has launched a Hong Kong IPO to raise net proceeds of HK$971 million ($124 million) at the mid-point of the IPO price range.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/renrui-hr-technology-ipo-initiation-not-the-perfect-candidate" target="_blank" rel="noopener">our initiation note</a>, we stated that on the surface, Renrui appears to be heading in the right direction as the 1H19 results demonstrated robust growth, margin progression and cash generation. However, a closer look reveals several areas of caution. Our valuation analysis shows that the IPO price range is unattractive. Consequently, we would not participate in the IPO. </p></div>

Renrui Human Resources (6919 HK) is the largest company operating in China’s flexible staffing services market by revenue in 2018, accounting for a 2.5% market share. Renrui has launched a Hong Kong IPO to raise net proceeds of HK$971 million ($124 million) at the mid-point of the IPO price range.In our initiation note, we stated that on the surface, Renrui appears to be heading in the right direction as the 1H19 results demonstrated robust growth, margin progression and cash generation. However, a closer look reveals several areas of caution. Our valuation analysis shows that the IPO price range is unattractive. Consequently, we would not participate in the IPO. 

Renrui HR Technology IPO: Valuation Unappealing

China

51job, Inc. provides integrated human resource services in China, with a strong focus on recruitment related services.  The Company's recruitment related services are delivered in both print and online formats.

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51 Job Inc Adr (JOBS US)

You're Hired! DCP's Proposal For 51job.Inc.

Sina Corp (Class A) (SINA US) looks sets to join the growing list of Chinese companies seeking to delist in the US and relist, ostensibly in Hong...

David Blennerhassett

China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List

Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies...

Sumeet Singh

China Internet Weekly (27Apr2020): BABA, PDD, BIDU, Xiaomi, JOBS, Most Moves Are About Cash

We believe cash balance may not tell the truth, but companies’ moves will. Alibaba (BABA) plans to invest in computing infrastructure – fat...

Ming Lu

China ADRs Secondary Listing Deep-Dive: Yin and Yang

Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that...

Sumeet Singh

Renrui HR Technology IPO: Valuation Unappealing

Renrui Human Resources (6919 HK) is the largest company operating in China’s flexible staffing services market by revenue in 2018, accounting for a...

Arun George

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