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.

Event-Driven

Continental Aerospace Technologies / Event-Driven

Continental Aerospace Technologies (232 HK)

<ul>
<li>The <a href="https://www.smartkarma.com/entities/continental-aerospace-technologies-holding-ltd" target="_blank" data-smartkarma-citation="entities:15249:1" rel="noopener">Continental Aerospace Technologies (232 HK)</a> IFA opines that the terms of the sale of the revenue-generating business to Arcline and the disposal of the property are fair and reasonable. </li>
<li>The proceeds from the Arcline sale (HK$0.4238 to HK$0.4350 per share), the property sale (HK$0.0073), and the remaining cash (HK$0.062) total between HK$0.493 and HK$0.504.</li>
<li>Despite the emergence of new substantial shareholders, the SGM vote will pass. At the last close, the gross spread for the minimum and maximum offers was 3.8% and 6.2%, respectively.</li>
</ul>


The Continental Aerospace Technologies (232 HK) IFA opines that the terms of the sale of the revenue-generating business to Arcline and the disposal of the property are fair and reasonable. 
The proceeds from the Arcline sale (HK$0.4238 to HK$0.4350 per share), the property sale (HK$0.0073), and the remaining cash (HK$0.062) total between HK$0.493 and HK$0.504.
Despite the emergence of new substantial shareholders, the SGM vote will pass. At the last close, the gross spread for the minimum and maximum offers was 3.8% and 6.2%, respectively.


Con Aero Tech (232 HK): SGM Vote on Disposal, Delisting and Special Div on 21 September

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On the 5th June, <a href="https://www.smartkarma.com/entities/continental-aerospace-technologies-holding-ltd" target="_blank" data-smartkarma-citation="entities:15249:1" rel="noopener">Continental Aerospace Technologies (232 HK)</a> (CAT) confirmed an SPA to sell its core business, potentially leading to a cash distribution (HK$0.419-HK$0.436/share), and subsequent winding up.</li>
<li>The SPA requires reg approvals and a Scheme-like vote. 46.4% of the register is supportive. Additional dividends expected from the sale of property. And any leftover funds. </li>
<li>
The Circular is now out. The SGM is the 21st September. With payment of the special/property dividend (on or before) the 12th October. "Surplus cash" distribution is expected shortly thereafter.</li>
</ul>


On the 5th June, Continental Aerospace Technologies (232 HK) (CAT) confirmed an SPA to sell its core business, potentially leading to a cash distribution (HK$0.419-HK$0.436/share), and subsequent winding up.
The SPA requires reg approvals and a Scheme-like vote. 46.4% of the register is supportive. Additional dividends expected from the sale of property. And any leftover funds. 

The Circular is now out. The SGM is the 21st September. With payment of the special/property dividend (on or before) the 12th October. "Surplus cash" distribution is expected shortly thereafter.


Con Aero Tech (232 HK): 21st Sept SGM.  "Surplus Cash" Into Focus

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>China's defense budget will reach Rmb1.55trn in 2023, a 7.2% YoY increase and up from 7.1% in 2022. This also equals to 1.22% of GDP, vs. 1.2% in 2022. </li>
<li>
<a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> has the most direct exposure to China's aerospace and defense developments given its holdings in A-share defense stocks.</li>
<li>
<a href="https://www.smartkarma.com/entities/avic-shenyang-aircraft-co-ltd" target="_blank" data-smartkarma-citation="entities:12150:1" rel="noopener">Avic Shenyang Aircraft (600760 CH)</a> will benefit from its unique position as the key manufacturer of aircraft, parts and components for China's combat fighter fleet.</li>
</ul>


China's defense budget will reach Rmb1.55trn in 2023, a 7.2% YoY increase and up from 7.1% in 2022. This also equals to 1.22% of GDP, vs. 1.2% in 2022. 

AviChina Industry &amp; Technology H (2357 HK) has the most direct exposure to China's aerospace and defense developments given its holdings in A-share defense stocks.

Avic Shenyang Aircraft (600760 CH) will benefit from its unique position as the key manufacturer of aircraft, parts and components for China's combat fighter fleet.


China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending

<ul>
<li>To date, 52 companies listed in Hong Kong have sought the conversion of their PRC domestic (and unlisted foreign shares) into H-shares.</li>
<li>This mechanism, ostensibly, enables founders or major shareholders holding unlisted domestic shares to float (and sell) shares, improving a company's corporate governance and stock liquidity, ultimately increasing a company's valuation.</li>
<li>Or in the case of <a href="https://www.smartkarma.com/entities/china-huarong-asset-management" target="_blank" data-smartkarma-citation="entities:968:1" rel="noopener">China Huarong Asset Management (2799 HK)</a>, the conversion restored its minimum public float.</li>
</ul>


To date, 52 companies listed in Hong Kong have sought the conversion of their PRC domestic (and unlisted foreign shares) into H-shares.
This mechanism, ostensibly, enables founders or major shareholders holding unlisted domestic shares to float (and sell) shares, improving a company's corporate governance and stock liquidity, ultimately increasing a company's valuation.
Or in the case of China Huarong Asset Management (2799 HK), the conversion restored its minimum public float.


Full Circulation 2022 Update: China Huarong, YiChang HEC ChangJiang

<ul>
<li>The winners in the tension are the defense companies including <a href="https://www.smartkarma.com/entities/avic-shenyang-aircraft-co-ltd" target="_blank" data-smartkarma-citation="entities:12150:1" rel="noopener">Avic Shenyang Aircraft (600760 CH)</a>, <a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> and <a href="https://www.smartkarma.com/entities/cssc-offshore-marine-engg-group-co-ltd" target="_blank" data-smartkarma-citation="entities:5089:1" rel="noopener">Cssc Offshore &amp; Marine Engg (317 HK)</a>. </li>
<li>Pelosi's Taiwan visit may ignite another round of nationalistic consumption. This will benefit <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning (2331 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports (2020 HK)</a> but is negative to <a href="https://www.smartkarma.com/entities/topsports-international" target="_blank" data-smartkarma-citation="entities:28153:1" rel="noopener">Topsports International (6110 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">SMIC (981 HK)</a> is a long-term beneficiary. There may be adverse spillover effects on Taiwanese companies like <a href="https://www.smartkarma.com/entities/tingyi-cayman-islands-holding-corp" target="_blank" data-smartkarma-citation="entities:14016:1" rel="noopener">Tingyi (322 HK)</a>, <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a> and <a href="https://www.smartkarma.com/entities/uni-president-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14927:1" rel="noopener">Uni President China (220 HK)</a>. </li>
</ul>


The winners in the tension are the defense companies including Avic Shenyang Aircraft (600760 CH), AviChina Industry &amp; Technology H (2357 HK) and Cssc Offshore &amp; Marine Engg (317 HK). 
Pelosi's Taiwan visit may ignite another round of nationalistic consumption. This will benefit Li Ning (2331 HK) and Anta Sports (2020 HK) but is negative to Topsports International (6110 HK). 

SMIC (981 HK) is a long-term beneficiary. There may be adverse spillover effects on Taiwanese companies like Tingyi (322 HK), Want Want (151 HK) and Uni President China (220 HK). 


China-US Tension Escalation: Winners and Losers on Pelosi's Taiwan Visit

China

AviChina Industry & Technology Co., Ltd. engages in the research, development, manufacture, and sale of civil aviation products. The company operates through segments including Aviation Entire Aircraft, Aviation Ancillary System and Related Business, and Aviation Engineering Services, offering products such as helicopters, trainer aircraft, regional jets, and aero-parts. It was founded on April 30, 2003, and is headquartered in Beijing, China.

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AviChina Industry & Technology (2357 HK)

Con Aero Tech (232 HK): SGM Vote on Disposal, Delisting and Special Div on 21 September

Despite the emergence of new substantial shareholders, the SGM vote will pass. At the last close, the gross spread for the minimum and maximum...

Arun George

Con Aero Tech (232 HK): 21st Sept SGM. "Surplus Cash" Into Focus

Trading at a 7.2% discount to the full cash distribution; with a question mark on the quantum/timing on the final distribution. If not in, I'd get...

David Blennerhassett

China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending

China's 7.2% YoY increase in defense spending budget will filter through to the business prospects of AviChina and AVIC Shenyang, given the rise in...

Osbert Tang, CFA

Full Circulation 2022 Update: China Huarong, YiChang HEC ChangJiang

Full circulation, ostensibly, enables key shareholders holding unlisted domestic shares to float shares, improving corporate governance and stock...

David Blennerhassett

China-US Tension Escalation: Winners and Losers on Pelosi's Taiwan Visit

Chinese defense companies are the major winners in the escalation of the China-US tension following Pelosi's visit to Taiwan. We think Topsports,...

Osbert Tang, CFA

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