Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>HK$1.32/Share, a 15.79% premium to undisturbed, and a massive 86.49% discount to NAV. For a rural commercial bank privatisation, there is nothing pretty in those numbers.</li>
<li>Even the Offers for <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> and <a href="https://www.smartkarma.com/entities/jilin-jiutai-rural-comm-bank" target="_blank" data-smartkarma-citation="entities:23735:1" rel="noopener">Jilin Jiutai Rural Comm Bank (6122 HK)</a> were pitched (slightly) higher, from a P/NAV standpoint. And both were perennially suspended.</li>
<li>This is privatisation via a voluntary offer, NOT a privatisation via a Merger by Absorption. As such there is scheme-like vote AND a 90% tendering condition.</li>
</ul>


HK$1.32/Share, a 15.79% premium to undisturbed, and a massive 86.49% discount to NAV. For a rural commercial bank privatisation, there is nothing pretty in those numbers.
Even the Offers for Bank Of Jinzhou (416 HK) and Jilin Jiutai Rural Comm Bank (6122 HK) were pitched (slightly) higher, from a P/NAV standpoint. And both were perennially suspended.
This is privatisation via a voluntary offer, NOT a privatisation via a Merger by Absorption. As such there is scheme-like vote AND a 90% tendering condition.


Shengjing Bank (2066 HK): Dire Straits, Dire Offer Price

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.

<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?

<ul>
<li>In <a href="https://skr.ma/2u8b1" target="_blank" rel="noopener">Chinese RCBs: Two Bailouts. How Many More At Risk?</a>, I concluded <a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank (2066 HK)</a> was one bank I would avoid. It's now suspended pursuant to the Takeovers code.</li>
<li>Shengjing Bank had one of the largest P/B and net income declines in recent years. It had borderline allowance/provision coverage. It also had the lowest net interest margin.</li>
<li>Shengjing Bank is PRC-incorporated, therefore any delisting proposal would involve a Merger by Absorption, incorporating a Scheme-like vote. And probably a tendering condition.</li>
</ul>


In Chinese RCBs: Two Bailouts. How Many More At Risk?, I concluded Shengjing Bank (2066 HK) was one bank I would avoid. It's now suspended pursuant to the Takeovers code.
Shengjing Bank had one of the largest P/B and net income declines in recent years. It had borderline allowance/provision coverage. It also had the lowest net interest margin.
Shengjing Bank is PRC-incorporated, therefore any delisting proposal would involve a Merger by Absorption, incorporating a Scheme-like vote. And probably a tendering condition.


Shengjing Bank (2066 HK): Another Rural Commercial Bank Delisting

<ul>
<li>The benefits of <a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a> China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. </li>
<li>Should <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> continue its Brazil market launch, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus NV (PRX NA)</a> will have little reason to continue to hold on to its Meituan stake.</li>
<li>Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.</li>
</ul>


The benefits of China Medical System (867 HK) China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. 
Should Meituan (3690 HK) continue its Brazil market launch, Prosus NV (PRX NA) will have little reason to continue to hold on to its Meituan stake.
Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.


Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

China

Bank of Jinzhou provides a range of banking products and services, including corporate banking, retail banking, and treasury business. Its corporate banking services encompass deposits, loans, settlement, clearing, and trade financing for corporate customers. Retail banking offers deposits, bank cards, personal loans, and wealth management services to individuals. The company was incorporated in 1997 and is headquartered in Jinzhou, People's Republic of China.

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Bank of Jinzhou (2JI GR)

Shengjing Bank (2066 HK): Dire Straits, Dire Offer Price

This probably gets up, in short succession. If illiquid arbs are your bag, pay up to HK$1.25 assuming a four-month off-ramp. Otherwise, look...

David Blennerhassett

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

Shengjing Bank (2066 HK): Another Rural Commercial Bank Delisting

An Offer appears forthcoming. Shengjing Bank is super illiquid - look away now if this is not your thing. Shengjing Bank is also suspended, so...

David Blennerhassett

Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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