Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

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<p>This week in StubWorld ...</p>
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<p>Both <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a> and 74.4%-held <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a> enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. </p>
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<p>Preceding my comments on Dah Sing 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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This week in StubWorld ...



Both Dah Sing Financial (440 HK) and 74.4%-held Dah Sing Banking (2356 HK) enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. 

Preceding my comments on Dah Sing 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: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

China and US Equity Analyst

Roger Xie

Thematic (Sector/Industry)

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<li>Hong Kong de facto central bank, HKMA (Hong Kong Monetary Authority), issued a strategic paper exploring the feasibility of issuing a retail-focused CBDC (central bank digital currency), an e-HKD, within 12 months. One of the major use cases of e-HKD is to link with e-CNY and facilitate cross-border payment or transfer. This has underscored China's ambition to take further step rolling out its most advanced digital currency among major economies.</li>
<li>Based on the latest quarterly statistics on mobile app usage, digital currency app has become a dominant factor in user engagement. Stock trading and crypto trading apps show much higher daily user visits and viewing time, compared with other financial management apps. The proliferation of CBDC (central bank digital currency), such as e-HKD and e-CNY, will likely accelerate user growth and engagement. The major crypto exchange <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a> has shown its registered users jumping 65% year-over-year in 21Q1 during the wider acceptancy of bitcoin. </li>
<li>We expect the majority of Hong Kong-based retail banks will likely roll out their own mobile apps with capability to transact on e-HKD and e-CNY in near term. The successful integration of this feature might likely impact user engagement, which might become a key KPI for banks' mobile app in our view. MAU/DAU (Month/Daily Active User) might become the differentiators for Hong Kong based retail banks such as  <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a> , <a href="https://www.smartkarma.com/entities/hang-seng-bank-ltd" target="_blank" data-smartkarma-citation="entities:24:1" rel="noopener">Hang Seng Bank (11 HK)</a> , <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a> , <a href="https://www.smartkarma.com/entities/boc-hong-kong-holdings-ltd" target="_blank" data-smartkarma-citation="entities:343:1" rel="noopener">BOC Hong Kong (BOC HK) (2388 HK)</a> , <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK). </a>
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Hong Kong de facto central bank, HKMA (Hong Kong Monetary Authority), issued a strategic paper exploring the feasibility of issuing a retail-focused CBDC (central bank digital currency), an e-HKD, within 12 months. One of the major use cases of e-HKD is to link with e-CNY and facilitate cross-border payment or transfer. This has underscored China's ambition to take further step rolling out its most advanced digital currency among major economies.
Based on the latest quarterly statistics on mobile app usage, digital currency app has become a dominant factor in user engagement. Stock trading and crypto trading apps show much higher daily user visits and viewing time, compared with other financial management apps. The proliferation of CBDC (central bank digital currency), such as e-HKD and e-CNY, will likely accelerate user growth and engagement. The major crypto exchange Coinbase (COIN US) has shown its registered users jumping 65% year-over-year in 21Q1 during the wider acceptancy of bitcoin. 
We expect the majority of Hong Kong-based retail banks will likely roll out their own mobile apps with capability to transact on e-HKD and e-CNY in near term. The successful integration of this feature might likely impact user engagement, which might become a key KPI for banks' mobile app in our view. MAU/DAU (Month/Daily Active User) might become the differentiators for Hong Kong based retail banks such as  HSBC Holdings (5 HK) , Hang Seng Bank (11 HK) , Bank of East Asia (23 HK) , BOC Hong Kong (BOC HK) (2388 HK) , Dah Sing Financial (440 HK). 



Hong Kong to Embrace Digital Currency E-HKD, Boosting Fintech Investment and Connectivity With E-CNY

Event-Driven

Last Week in Event SPACE: Japan Post Ins, Straits Trad., Invesco Office, Chong Hing, Toshiba, JD.com

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<p>As discussed in <em><a href="https://skr.ma/p8tiS" target="_blank" rel="noopener">Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light</a></em>, Yue Xiu has made an Offer for <a href="https://www.smartkarma.com/entities/chong-hing-bank-ltd" target="_blank" data-smartkarma-citation="entities:344:1" rel="noopener">Chong Hing Bank (1111 HK)</a> shares not owned, at HK$20.80/share, which is a 10.1% discount to its NAV.</p>
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<p>This privatisation renews interest in Hong Kong's remaining  "family"-owned banks, such as <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a> and <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a>.</p>
<p>Of the two, DSB is the most obvious candidate. It is 74.4% held by <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a>, which in turn is controlled by the Wong family with 42.96%.</p>
<p>More below the fold.</p>
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As discussed in Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light, Yue Xiu has made an Offer for Chong Hing Bank (1111 HK) shares not owned, at HK$20.80/share, which is a 10.1% discount to its NAV.


This privatisation renews interest in Hong Kong's remaining  "family"-owned banks, such as Dah Sing Banking (2356 HK) and Bank of East Asia (23 HK).
Of the two, DSB is the most obvious candidate. It is 74.4% held by Dah Sing Financial (440 HK), which in turn is controlled by the Wong family with 42.96%.
More below the fold.


Dah Sing (2356 HK): Trading Cheap As Chong Hing Gets Bid

<p>On the 25 October 2013, <a href="https://www.smartkarma.com/entities/chong-hing-bank-ltd" target="_blank" data-smartkarma-citation="entities:344:1" rel="noopener">Chong Hing Bank (1111 HK)</a> ("CHB") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2013/1025/ltn20131025786.pdf" target="_blank" rel="noopener">announced</a> an agreement with Yue Xiu (the investment arm of the Guangzhou municipal government) to acquire a maximum of 75% of the bank for a consideration of HK$11.5bn (HK$35.7/share, a 2.1x P/B).  The deal was subject to approval from the HKMA. It was Yue Xiu's intention to maintain the bank's listing.</p>
<p>That Offer was widely seen as supportive for the remaining family-owned banks in Hong Kong such as <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a>, <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a>, and Wing Hang Bank, the latter of which was taken out by <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">OCBC (OCBC SP)</a> in 2014 at 1.81x P/B in a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2014/0629/ltn20140629025.pdf" target="_blank" rel="noopener">US$4.9bn deal</a>.</p>
<p>The partial Offer for CHB closed on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2014/0205/ltn201402051310.pdf" target="_blank" rel="noopener">5 February 2014</a>. Shares closed yesterday at HK$10.56/share (and 0.4x P/B), down ~70% from the Partial Offer Price. BEA and DSB have similarly languished, down 33% and 42% respectively in the last five years.</p>
<h3>The New News</h3>
<p>CHB was suspended at <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0506/2021050600453.pdf" target="_blank" rel="noopener">10.45am</a> this morning, but not before gaining 30% to close at HK$13.76/share. That's worth a second look.</p>
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On the 25 October 2013, Chong Hing Bank (1111 HK) ("CHB") announced an agreement with Yue Xiu (the investment arm of the Guangzhou municipal government) to acquire a maximum of 75% of the bank for a consideration of HK$11.5bn (HK$35.7/share, a 2.1x P/B).  The deal was subject to approval from the HKMA. It was Yue Xiu's intention to maintain the bank's listing.
That Offer was widely seen as supportive for the remaining family-owned banks in Hong Kong such as Bank of East Asia (23 HK), Dah Sing Banking (2356 HK), and Wing Hang Bank, the latter of which was taken out by OCBC (OCBC SP) in 2014 at 1.81x P/B in a US$4.9bn deal.
The partial Offer for CHB closed on the 5 February 2014. Shares closed yesterday at HK$10.56/share (and 0.4x P/B), down ~70% from the Partial Offer Price. BEA and DSB have similarly languished, down 33% and 42% respectively in the last five years.
The New News
CHB was suspended at 10.45am this morning, but not before gaining 30% to close at HK$13.76/share. That's worth a second look.


Chong Hing Bank (1111 HK): Takeover Talk As Shares Pop

Hong Kong

Dah Sing Financial Holdings Ltd through its subsidiaries, offers general banking services. The Company also invests in properties and provides insurance broking and nominee services.

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Dah Sing Financial (440 HK)

StubWorld: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

I'd still be long both DSF (440 HK) and DSB (2356 HK) here. I find it wholly unlikely there was no substance to that move last Friday.

David Blennerhassett

Hong Kong to Embrace Digital Currency E-HKD, Boosting Fintech Investment and Connectivity With E-CNY

Hong Kong Monetary Authority issued a strategic paper exploring the feasibility of issuing e-HKD within 12 months. Banking app MAU/DAU might become...

Roger Xie

Last Week in Event SPACE: Japan Post Ins, Straits Trad., Invesco Office, Chong Hing, Toshiba, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Dah Sing (2356 HK): Trading Cheap As Chong Hing Gets Bid

I think one could be long both DSF and DSB. DSF is cheaper, and because of the securities holdings, the discount is more egregious.

David Blennerhassett

Chong Hing Bank (1111 HK): Takeover Talk As Shares Pop

A 30% gain ahead of suspension suggests there is evident news leakage of something big afoot, which would have a positive read-across for the other...

David Blennerhassett

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