Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> is coming up "cheap" on my monitor, both from a discount to NAV and implied stub angle. </li>
<li>Preceding my comments PCCW / <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT Ltd (6823 HK)</a> and <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



PCCW Ltd (8 HK) is coming up "cheap" on my monitor, both from a discount to NAV and implied stub angle. 
Preceding my comments PCCW / HKT Ltd (6823 HK) and Bank of Kyoto (8369 JP) are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


In two SCMP articles on the <a href="https://www.scmp.com/business/companies/article/3128495/im-very-dissatisfied-tvbs-performance-says-chinese-media-tycoon" target="_blank" rel="noopener">7 April</a>, PRC media tycoon Li Ruigang, <a href="https://www.smartkarma.com/entities/television-broadcasts-ltd" target="_blank" data-smartkarma-citation="entities:19341:1" rel="noopener">Television Broadcasts (511 HK)</a>'s largest shareholder (via Young Lion Holdings), discussed his dissatisfaction with TVB's performance, saying:
<blockquote>
As a free broadcaster, TVB should be a public open platform welcoming other players in the media and entertainment industry to participate.
</blockquote>
Under the broadcasting ordinance in Hong Kong, non-permanent residents - such as Li - cannot apply for a free TV or pay TV licence, and are branded “disqualified persons”. Li added:
<blockquote>
We respect the ordinance. In the past five years, CMC was a passive investor. [But] if TVB does not reform now, it will shrink, then perish. I am now trying to bring it out from drowning.
</blockquote>
Yesterday, TVB <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0412/2021041200063.pdf" target="_blank" rel="noopener">announced</a> Mark Lee Po On, Vice Chairman (since <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0429/2020042902252.pdf" target="_blank" rel="noopener">April</a> last year) and Group CEO (since January 2015), had resigned. 
This follows the resignation Charles Chan (then Chairman and NED) in <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0122/2020012200238.pdf" target="_blank" rel="noopener">January</a> last year, culminating in the re-oganisation of Young Lion Holding in last August.
One but can't help but speculate there are more changes afoot, one that may ultimately lead to changes in the ordinance.
More below the fold.

In two SCMP articles on the 7 April, PRC media tycoon Li Ruigang, Television Broadcasts (511 HK)'s largest shareholder (via Young Lion Holdings), discussed his dissatisfaction with TVB's performance, saying:

As a free broadcaster, TVB should be a public open platform welcoming other players in the media and entertainment industry to participate.

Under the broadcasting ordinance in Hong Kong, non-permanent residents - such as Li - cannot apply for a free TV or pay TV licence, and are branded “disqualified persons”. Li added:

We respect the ordinance. In the past five years, CMC was a passive investor. [But] if TVB does not reform now, it will shrink, then perish. I am now trying to bring it out from drowning.

Yesterday, TVB announced Mark Lee Po On, Vice Chairman (since April last year) and Group CEO (since January 2015), had resigned. 
This follows the resignation Charles Chan (then Chairman and NED) in January last year, culminating in the re-oganisation of Young Lion Holding in last August.
One but can't help but speculate there are more changes afoot, one that may ultimately lead to changes in the ordinance.
More below the fold.

Equity Bottom-Up

A number of corporate developments have unfolded at <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> over the past year including a partial offer from Richard Li (<a href="https://skr.ma/97Cbz" target="_blank" rel="noopener">PCCW: Partial Offer To Lift Li Above 30%</a>), lifting his stake above the general Offer threshold level of 30%; partially in-specie-ing its stake in <a href="https://www.smartkarma.com/entities/pacific-century-premium-developments-ltd" target="_blank" data-smartkarma-citation="entities:19652:1" rel="noopener">Pacific Century Premium Developments (432 HK)</a>, such that the property developer is no longer consolidated; selling NOW TV to <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT Ltd (6823 HK)</a>; and selling non-core related investments in Malaysia.
The Partial Offer led to a significant narrowing in PCCW's discount to NAV, where it has steadfastly remained. 
PCCW has marginally underperformed the HSI over the past year - -4% vs -1.5% - but has outperformed <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT Ltd (6823 HK)</a>'s -13.5%. 
Despite the gradual cleaning of house, and Li's move to consolidate greater control, PCCW's stub ops - ex-HKT - stubbornly remain in the red (on an EBITDA basis), as they have done so for near-on a decade.
Reports are now emerging PCCW is in the cross-hairs to be deleted from the MSCI in the May review.
As always, more below the fold.

A number of corporate developments have unfolded at PCCW Ltd (8 HK) over the past year including a partial offer from Richard Li (PCCW: Partial Offer To Lift Li Above 30%), lifting his stake above the general Offer threshold level of 30%; partially in-specie-ing its stake in Pacific Century Premium Developments (432 HK), such that the property developer is no longer consolidated; selling NOW TV to HKT Ltd (6823 HK); and selling non-core related investments in Malaysia.
The Partial Offer led to a significant narrowing in PCCW's discount to NAV, where it has steadfastly remained. 
PCCW has marginally underperformed the HSI over the past year - -4% vs -1.5% - but has outperformed HKT Ltd (6823 HK)'s -13.5%. 
Despite the gradual cleaning of house, and Li's move to consolidate greater control, PCCW's stub ops - ex-HKT - stubbornly remain in the red (on an EBITDA basis), as they have done so for near-on a decade.
Reports are now emerging PCCW is in the cross-hairs to be deleted from the MSCI in the May review.
As always, more below the fold.

Beijing Jingneng Clean Energy / Event-Driven

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On the 17 November, <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1117/2020111701054.pdf" target="_blank" rel="noopener">announced</a> a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.
</div>
<div>
Jingneng is PRC-incorporated therefore there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.
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At the time, I thought the Offer looked done. I still think that. And in today's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1231/2020123100105.pdf" target="_blank" rel="noopener">Composite Document</a>, the IFA reckons the Offer is fair and reasonable.
The H-share class meeting is scheduled for the 19 February with an expected payment under the Offer on the 10 March. 
</div>
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More below the fold.
</div>


On the 17 November, Beijing Jingneng Clean Energy (579 HK) announced a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.


Jingneng is PRC-incorporated therefore there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.


At the time, I thought the Offer looked done. I still think that. And in today's Composite Document, the IFA reckons the Offer is fair and reasonable.
The H-share class meeting is scheduled for the 19 February with an expected payment under the Offer on the 10 March. 


More below the fold.


Beijing Jingneng (579 HK): Doc Out. IFA Says Fair & Reasonable

<div>
Following a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0703/2020070300108.pdf" target="_blank" rel="noopener">suspension</a> on the 3 July this year pursuant to the Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a>, an SOE utility, subsequently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0706/2020070602025.pdf" target="_blank" rel="noopener">announced</a> it had received a letter from Beijing Energy Holdings (BEH), its controlling shareholder, of an intention to make a Conditional General Offer.
Late last night, a voluntary conditional offer was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1117/2020111701054.pdf" target="_blank" rel="noopener">announced</a> at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.
Jingneng is incorporated in the PRC, and as such, there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.
This looks done. There is just a question mark over timing.
More below the fold.
</div>


Following a suspension on the 3 July this year pursuant to the Code on Takeovers and Mergers, Beijing Jingneng Clean Energy (579 HK), an SOE utility, subsequently announced it had received a letter from Beijing Energy Holdings (BEH), its controlling shareholder, of an intention to make a Conditional General Offer.
Late last night, a voluntary conditional offer was announced at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.
Jingneng is incorporated in the PRC, and as such, there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.
This looks done. There is just a question mark over timing.
More below the fold.


Beijing Jingneng (579 HK): Privatisation Offer From Parent

Hong Kong

Asia Satellite Telecommunications Holdings Limited, through its subsidiaries, owns and operates satellites for commercial services primarily to the broadcasting and telecommunications industries.  The Company's satellite capacity is used for video, high speed Internet, broadband multimedia, and direct to home (DTH) services.

Asia Satellite Telecom Holdings Ltd (1135 HK)

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Asia Satellite Telecom Holdings Ltd (1135 HK)

StubWorld: PCCW Coming Up "Cheap"

I would still be invested where Richard Li is - and therefore be Long PCCW, short HKT here. I expect the NAV discount to narrow towards its one...

David Blennerhassett

TVB (511 HK): Small Screen Saver

This stock is very beaten up. Li has a plan, it would seem. If he is given the green light, shares will pop, if not on the economics, but at least...

David Blennerhassett

PCCW (8 HK): Possible MSCI Deletion

PCCW appears to be fully priced at 2+STD on a NAV discount. I would look to unwind here if already in, and look to reverse the stub - Short PCCW,...

David Blennerhassett

Beijing Jingneng (579 HK): Doc Out. IFA Says Fair & Reasonable

Currently trading at a gross/annualised spread of 6.3%/38.1%, assuming payment on the 10 March. The tendering condition is the key risk. However,...

David Blennerhassett

Beijing Jingneng (579 HK): Privatisation Offer From Parent

Currently trading at a gross/annualised spread of 7.6%/18.9%, assuming the transaction takes five and a half months to complete. This appears a...

David Blennerhassett

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