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

<ul>
<li>On 12 September, Shenyang SASAC increased its <a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> offer by 21.2% from HK$1.32 to HK$1.60. The IFA opines it is fair and reasonable.</li>
<li>The revised terms should ensure the support of key shareholders. However, the IFA analysis is flawed, and the revised offer is light.</li>
<li>While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares) poses a challenge. </li>
</ul>


On 12 September, Shenyang SASAC increased its Shengjing Bank Co Ltd H (2066 HK) offer by 21.2% from HK$1.32 to HK$1.60. The IFA opines it is fair and reasonable.
The revised terms should ensure the support of key shareholders. However, the IFA analysis is flawed, and the revised offer is light.
While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares) poses a challenge. 


Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens

<ul>
<li>Shenyang SASAC increased its <a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> offer by 21.2% from HK$1.32 to HK$1.60 per H Share, a 40.4% premium to the undisturbed price.</li>
<li>The revised offer has been declared final. The revised terms signal that at least one of the substantial H shareholders would not accept the previous offer.</li>
<li>While the revised terms should ensure the support of key shareholders, the terms remain light. Therefore, there remains a risk around the 90% minimum acceptance condition. </li>
</ul>


Shenyang SASAC increased its Shengjing Bank Co Ltd H (2066 HK) offer by 21.2% from HK$1.32 to HK$1.60 per H Share, a 40.4% premium to the undisturbed price.
The revised offer has been declared final. The revised terms signal that at least one of the substantial H shareholders would not accept the previous offer.
While the revised terms should ensure the support of key shareholders, the terms remain light. Therefore, there remains a risk around the 90% minimum acceptance condition. 


Shengjing Bank (2066 HK): Revised and Final Offer Remains Light

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> disclosed a voluntary conditional offer and delisting proposal by Shenyang SASAC at HK$1.32 per H Share, a 15.8% premium to the undisturbed price.</li>
<li>The key conditions are H Shareholder approval of the delisting and a minimum acceptance condition (50% of outstanding and 90% of H Shares). The offer has NOT been declared final.</li>
<li>The offer is unattractive compared to precedent transactions, peer multiples and historical trading ranges. The satisfaction of the minimum acceptance condition is the key risk.  </li>
</ul>



Shengjing Bank Co Ltd H (2066 HK) disclosed a voluntary conditional offer and delisting proposal by Shenyang SASAC at HK$1.32 per H Share, a 15.8% premium to the undisturbed price.
The key conditions are H Shareholder approval of the delisting and a minimum acceptance condition (50% of outstanding and 90% of H Shares). The offer has NOT been declared final.
The offer is unattractive compared to precedent transactions, peer multiples and historical trading ranges. The satisfaction of the minimum acceptance condition is the key risk.  


Shengjing Bank (2066 HK): A Light Conditional VGO and Delisting Proposal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> entered a trading halt “pending the publication of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers.”</li>
<li>It is likely that the SASAC of Shenyang Municipal People’s Government, the largest shareholder, is seeking to privatise Shengjing.</li>
<li>Precedents point to a voluntary conditional offer and delisting proposal. My estimated offer price range is HK$2.00-HK$2.80, a 75.4%-145% premium to the last close.</li>
</ul>



Shengjing Bank Co Ltd H (2066 HK) entered a trading halt “pending the publication of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers.”
It is likely that the SASAC of Shenyang Municipal People’s Government, the largest shareholder, is seeking to privatise Shengjing.
Precedents point to a voluntary conditional offer and delisting proposal. My estimated offer price range is HK$2.00-HK$2.80, a 75.4%-145% premium to the last close.


Shengjing Bank (2066 HK): Privatisation on the Cards?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Chongqing Rural Commercial Bank / Event-Driven

<ul>
<li>Last week, CICC Hong Kong and SOE Jilin Financial Holding Group tabled a rescue offer for <a href="https://www.smartkarma.com/entities/jilin-jiutai-rural-comm-bank" target="_blank" data-smartkarma-citation="entities:23735:1" rel="noopener">Jilin Bank (6122 HK)</a>, as discussed in<a href="https://skr.ma/UL5z1" target="_blank" rel="noopener"> Jilin Bank (6122 HK): Another Hobson's Choice</a>
</li>
<li>This follows a similar bailout of <a href="https://www.smartkarma.com/entities/bank-of-jinzhou-co-ltd" target="_blank" data-smartkarma-citation="entities:21014:1" rel="noopener">Bank Of Jinzhou (416 HK)</a> in early 2024, as detailed in <a href="https://skr.ma/N19a2" target="_blank" rel="noopener">Bank of Jinzhou (416 HK) To Be Taken Private.</a>
</li>
<li>Tarring the sector with same brush is potentially oversimplifying the situation. But the issues faced by Jilin Bank and BoJ are unlikely to be isolated. Below I dig deeper.  </li>
</ul>


Last week, CICC Hong Kong and SOE Jilin Financial Holding Group tabled a rescue offer for Jilin Bank (6122 HK), as discussed in Jilin Bank (6122 HK): Another Hobson's Choice

This follows a similar bailout of Bank Of Jinzhou (416 HK) in early 2024, as detailed in Bank of Jinzhou (416 HK) To Be Taken Private.

Tarring the sector with same brush is potentially oversimplifying the situation. But the issues faced by Jilin Bank and BoJ are unlikely to be isolated. Below I dig deeper.  


Chinese RCBs: Two Bailouts. How Many More At Risk?

China

Bank of Guizhou Co., Ltd. operates as a commercial bank. The Company offers deposits, loans, international settlement, trade financing, foreign currency exchange, card issuing, and other related services. Bank of Guizhou provides services for enterprises and individuals.

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Bank of Guizhou Co Ltd (6199 HK)

Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens

While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares)...

Arun George

Shengjing Bank (2066 HK): Revised and Final Offer Remains Light

The revised terms signal push back from at least one key shareholder. The revised terms remain light, and there remains a risk around the 90%...

Arun George

Shengjing Bank (2066 HK): A Light Conditional VGO and Delisting Proposal

The offer is low-balled by most measures, and the satisfaction of the minimum acceptance condition is the key risk. There is a chance of a bump, as...

Arun George

Shengjing Bank (2066 HK): Privatisation on the Cards?

Shares are in a trading halt. Precedents point to a voluntary conditional offer and delisting proposal. My estimated offer price range is HK$2.00...

Arun George

Chinese RCBs: Two Bailouts. How Many More At Risk?

This is largely an objective insight. There can be no guarantee/certainty why one bank may need to hoist the white flag, while another does not....

David Blennerhassett

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