Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>A double-dose of StubWorld this week ...</p>
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<p><a href="https://www.smartkarma.com/entities/hang-lung-group-ltd" target="_blank" data-smartkarma-citation="entities:50:1" rel="noopener">Hang Lung (10 HK)</a>'s is coming up expensive on my monitor,  yet at 0.3x P/B, against 0.47x for a basket of peers, HLG is one of the cheapest property plays in Hong Kong.</p>
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<p>Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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A double-dose of StubWorld this week ...



Hang Lung (10 HK)'s is coming up expensive on my monitor,  yet at 0.3x P/B, against 0.47x for a basket of peers, HLG is one of the cheapest property plays in Hong Kong.

Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.



These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



StubWorld: Hang Lung Group Is Still Cheap

Travis Lundy

<p>In January 2019, <a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55:1" rel="noopener">Capitaland (CAPL SP)</a> and Ascendas-Singbridge <a href="https://investor.capitaland.com/newsroom/20190114_080328_C31_NG341OU6TBGTR31P.1.pdf" target="_blank" rel="noopener">announced</a> a deal for Capitaland to purchase Ascendas-Singbridge in a 50/50 cash/scrip deal, and recently-promoted CEO Mr. Lee Choo Koon and his executive team put forth the idea of Capitaland 3.0, which among other things meant "Creating Asia's Largest Diversified Real Estate Group."</p><p>The plan was...</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/145/original/Screenshot+2021-03-22+at+11.44.22+AM.png?1616384726" class="editor-image img-responsive" data-smartkarma-image-id="196145"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/146/original/Screenshot+2021-03-22+at+11.44.36+AM.png?1616384736" class="editor-image img-responsive" data-smartkarma-image-id="196146"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/147/original/Screenshot+2021-03-22+at+11.45.06+AM.png?1616384749" class="editor-image img-responsive" data-smartkarma-image-id="196147"></figure></section><p></p><p>It got to that position, but two years later (one of those years admittedly with covid-19), in an announcement of a NEW deal, the proposed real estate investment manager has dropped down to 12th largest real estate investment manager. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/148/original/Screenshot+2021-03-22+at+12.03.41+PM.png?1616385866" class="editor-image img-responsive" data-smartkarma-image-id="196148"></figure></section><hr><h2>The NEW News</h2><p>Today, after seeing all the Capitaland names halted early, Capitaland has <a href="https://links.sgx.com/FileOpen/20210322_CL_Announcement%20Presentation_Restructuring.ashx?App=Announcement&amp;FileID=652735" target="_blank" rel="noopener">announced</a> a restructuring whereby Capitaland will split itself into three pillars - Fund Management, Lodging, and Development. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/149/original/Screenshot+2021-03-22+at+12.07.03+PM.png?1616386071" class="editor-image img-responsive" data-smartkarma-image-id="196149"></figure></section><p>If this deal gets approved, Capitaland shareholders will receive cash, shares in <a href="https://www.smartkarma.com/entities/capitaland-integrated-commercial-trust" target="_blank" data-smartkarma-citation="entities:105:1" rel="noopener">Capitaland Integrated Commercial Trust (CICT SP)</a>, and shares in a newly-listed Capitaland Investment Management spun out of Capitaland. </p><div class="content-highlight"><p>The question investors will need to ask themselves is whether this is a good thing for them.  </p></div>

In January 2019, Capitaland (CAPL SP) and Ascendas-Singbridge announced a deal for Capitaland to purchase Ascendas-Singbridge in a 50/50 cash/scrip deal, and recently-promoted CEO Mr. Lee Choo Koon and his executive team put forth the idea of Capitaland 3.0, which among other things meant "Creating Asia's Largest Diversified Real Estate Group."The plan was...It got to that position, but two years later (one of those years admittedly with covid-19), in an announcement of a NEW deal, the proposed real estate investment manager has dropped down to 12th largest real estate investment manager. The NEW NewsToday, after seeing all the Capitaland names halted early, Capitaland has announced a restructuring whereby Capitaland will split itself into three pillars - Fund Management, Lodging, and Development. If this deal gets approved, Capitaland shareholders will receive cash, shares in Capitaland Integrated Commercial Trust (CICT SP), and shares in a newly-listed Capitaland Investment Management spun out of Capitaland. The question investors will need to ask themselves is whether this is a good thing for them.  

Capitaland (CAPL SP) Restructuring Is Big But Still Vague. Lots of Fine Print to Read.

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<p>After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900089.pdf" target="_blank" rel="noopener">halted</a> before trading opened on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers,  <a href="https://www.smartkarma.com/entities/cimc-tianda-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15431:1" rel="noopener">CIMC-TianDa Holdings (445 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1004/2020100400027.pdf" target="_blank" rel="noopener">announced</a> on the 4 October an Offer by way of a Scheme primarily from <a href="https://www.smartkarma.com/entities/china-international-marine-cntnrs-gp-ltd" target="_blank" data-smartkarma-citation="entities:11752:1" rel="noopener">China International Marine Cntnrs Gp (2039 HK)</a> (CIMC). </p>
<p>The cancellation price is HK$0.266/share, a 20.66% premium to last close. The price is final.</p>
<p>CIMC, together with joint offeror concert parties hold 75.53% of CIMC-Tianda, following the conversion of a CB held by <a href="https://www.smartkarma.com/entities/wison-engineering-services-co" target="_blank" data-smartkarma-citation="entities:24534:1" rel="noopener">Wison Engineering Services Co (2236 HK)</a>. Therefore Scheme Shareholders will comprise 24.47% of shares out.</p>
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<p>Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.447% of shares out. The headcount applies as CIMC-Tianda is Cayman incorporated.</p>
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<p>Despite solid 1H20 earnings, the announcement indicates those earnings were propped up by orders from last year, and it has proven challenging to procure a stable supply of raw materials and to complete new orders. Given this uncertain backdrop - one expected when exposed to the global aviation industry -  pricing appears <em>okay</em>.</p>
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<p>As always, more below the fold.</p>
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After shares were halted before trading opened on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers,  CIMC-TianDa Holdings (445 HK) announced on the 4 October an Offer by way of a Scheme primarily from China International Marine Cntnrs Gp (2039 HK) (CIMC). 
The cancellation price is HK$0.266/share, a 20.66% premium to last close. The price is final.
CIMC, together with joint offeror concert parties hold 75.53% of CIMC-Tianda, following the conversion of a CB held by Wison Engineering Services Co (2236 HK). Therefore Scheme Shareholders will comprise 24.47% of shares out.


Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.447% of shares out. The headcount applies as CIMC-Tianda is Cayman incorporated.


Despite solid 1H20 earnings, the announcement indicates those earnings were propped up by orders from last year, and it has proven challenging to procure a stable supply of raw materials and to complete new orders. Given this uncertain backdrop - one expected when exposed to the global aviation industry -  pricing appears okay.


As always, more below the fold.


CIMC-Tianda (445 HK): Scheme Offer Lead By CIMC

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<p>After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900255.pdf" target="_blank" rel="noopener">halted</a> after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/hengxing-gold-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:8874:1" rel="noopener">Hengxing Gold Holding (2303 HK)</a> (HGH) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0930/2020093001586.pdf" target="_blank" rel="noopener">announced</a> on the 30 September a pre-conditional Scheme from <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> ("SGM").</p>
<p>Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900669.pdf" target="_blank" rel="noopener">29 September</a>, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. </p>
<p>The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.</p>
<p>Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.</p>
<p>SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.</p>
<p>This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.</p>
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<p>As always, more below the fold.</p>
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After shares were halted after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Hengxing Gold Holding (2303 HK) (HGH) announced on the 30 September a pre-conditional Scheme from Shandong Gold Mining Co., Ltd. (1787 HK) ("SGM").
Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the 29 September, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. 
The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.
Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.
SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.
This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.


As always, more below the fold.


Hengxing (2303 HK): Offer From Shandong Gold

<p>After entering a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0903/2020090300110.pdf" target="_blank" rel="noopener">trading halt</a> on the 3 September "<em>pursuant to the Hong Kong Code on Takeovers and Mergers</em>", <a href="https://www.smartkarma.com/entities/changshouhua-food-co-ltd" target="_blank" data-smartkarma-citation="entities:18501:1" rel="noopener">Changshouhua Food (1006 HK)</a> ("CFC") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0907/2020090701303.pdf" target="_blank" rel="noopener">announced</a> late last night a privatisation by way of a Scheme.</p>
<p>The Cancellation price of HK$4.19/share is a 16.4% premium to last close, but a 43.2% and 64.1% premium over the average closing price on a 30-day and 60-day basis. The price is Final. No dividends are expected to be paid.</p>
<p>The Offeror, holding 52.14% of shares out, is a wholly-owned subsidiary of Sanxing Group. Independent Shareholders hold 46.82% of shares out. </p>
<p>Typical Scheme conditions apply: at least 75% of Independent Shares FOR &amp; not more than 10% of ALL Independent Shares against. Therefore the blocking stake is 4.682% of shares out, or 26.85mn shares.</p>
<p>Two shareholders have sufficient shares to block the vote - one has been a passive investor for almost five years; the other, FIL, was selling earlier this month at $3.50.</p>
<p>The headcount test applies as CFC is Cayman incorporated. </p>
<p>The Offer price <em>appears</em> enough to get this over the line. </p>
<p>As always, more below the fold</p>

After entering a trading halt on the 3 September "pursuant to the Hong Kong Code on Takeovers and Mergers", Changshouhua Food (1006 HK) ("CFC") announced late last night a privatisation by way of a Scheme.
The Cancellation price of HK$4.19/share is a 16.4% premium to last close, but a 43.2% and 64.1% premium over the average closing price on a 30-day and 60-day basis. The price is Final. No dividends are expected to be paid.
The Offeror, holding 52.14% of shares out, is a wholly-owned subsidiary of Sanxing Group. Independent Shareholders hold 46.82% of shares out. 
Typical Scheme conditions apply: at least 75% of Independent Shares FOR &amp; not more than 10% of ALL Independent Shares against. Therefore the blocking stake is 4.682% of shares out, or 26.85mn shares.
Two shareholders have sufficient shares to block the vote - one has been a passive investor for almost five years; the other, FIL, was selling earlier this month at $3.50.
The headcount test applies as CFC is Cayman incorporated. 
The Offer price appears enough to get this over the line. 
As always, more below the fold

Hong Kong

Wheelock and Company is a Hong Kong-headquartered property group primarily engaged in property investment, development, and asset management. The company focuses on high-quality residential and commercial properties across Hong Kong, Mainland China, and Singapore. Founded in 1857, it was privatized in 2020.

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Wheelock and Company (1947529D HK)

StubWorld: Hang Lung Group Is Still Cheap

I cannot envisage HLG privatising HLP given the pricing (P/B) disparity. I think Ronnie Chan should follow the Woo/Wheelock (20 HK) template, and...

David Blennerhassett

Capitaland (CAPL SP) Restructuring Is Big But Still Vague. Lots of Fine Print to Read.

Capitaland today announced a restructuring where the parent gets the Developer, minorities get cash plus shares in a new asset-lighter Real Estate...

Travis Lundy

CIMC-Tianda (445 HK): Scheme Offer Lead By CIMC

After shares were halted after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Hengxing Gold Holding...

David Blennerhassett

Hengxing (2303 HK): Offer From Shandong Gold

After shares were halted lunchtime on the 22 September pursuant to the Hong Kong Code on Takeovers and Mergers, Amvig Holdings (2300 HK) last...

David Blennerhassett

Changshouhua (1006 HK): What's Cooking?

After entering a trading halt on the 3 SEptmber

David Blennerhassett

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