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 19 September, Boyu completed the auction share transfer to take its <a href="https://www.smartkarma.com/entities/jinke-smart-services-group-co" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> shareholding to 55.91% of outstanding shares.</li>
<li>Pursuant to Rule 26.1 of the Takeovers Code, Boyu is required to make a mandatory unconditional general offer at HK$6.67. The offer should open by 26 September.</li>
<li>The offer price is unattractive, suggesting a low chance of breaching the public float requirements (23.4% of outstanding shares). At the last close, the gross/annualised spread is 0.9%/10.0%.</li>
</ul>


On 19 September, Boyu completed the auction share transfer to take its Jinke Smart Services (9666 HK) shareholding to 55.91% of outstanding shares.
Pursuant to Rule 26.1 of the Takeovers Code, Boyu is required to make a mandatory unconditional general offer at HK$6.67. The offer should open by 26 September.
The offer price is unattractive, suggesting a low chance of breaching the public float requirements (23.4% of outstanding shares). At the last close, the gross/annualised spread is 0.9%/10.0%.


Jinke Smart Services (9666 HK): Boyu’s Unconditional Offer Set to Open

Evergrande Property Services / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> is in a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers which contains inside information of the Company.” </li>
<li>The trading halt likely relates to <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> liquidators’ efforts to sell Evergrande Group’s majority interest in Evergrande Services.</li>
<li>The sale is likely to trigger an unconditional mandatory general offer. I estimate the potential offer price to be around HK$1.08 per share, a 17.8% premium to the last close.</li>
</ul>



Evergrande Property Services (6666 HK) is in a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers which contains inside information of the Company.” 
The trading halt likely relates to Evergrande (3333 HK) liquidators’ efforts to sell Evergrande Group’s majority interest in Evergrande Services.
The sale is likely to trigger an unconditional mandatory general offer. I estimate the potential offer price to be around HK$1.08 per share, a 17.8% premium to the last close.


Evergrande Services (6666 HK): Liquidation of Evergrande’s Stake to Trigger an Unconditional MGO?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jinke-smart-services-group-co" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”</li>
<li>It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.</li>
<li>I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.</li>
</ul>



Jinke Smart Services (9666 HK) is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”
It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.
I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.


Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Japan equity ETF flows have not recovered from the carry trade sell off.  Hong Kong Southbound Connect flows continue to be positive this month.</li>
<li>
<a href="https://www.smartkarma.com/entities/qifu-technology-inc" target="_blank" data-smartkarma-citation="entities:36657:1" rel="noopener">Qifu Technology (3660 HK)</a> , <a href="https://www.smartkarma.com/entities/q-technology-group-co-ltd" target="_blank" data-smartkarma-citation="entities:79:1" rel="noopener">Q Technology Group (1478 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-logistics-inc" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> all advanced on strong 2Q earnings announcements. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-music-entertainment-group" target="_blank" data-smartkarma-citation="entities:36601:1" rel="noopener">Tencent Music Entertainment Group (1698 HK)</a> disappointed on earnings and monthly user numbers.  <a href="https://www.smartkarma.com/entities/country-garden-services-holdin" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services (6098 HK)</a> declined in anticipation of a large drop in earnings in 2Q 2024.
</li>
</ul>


Japan equity ETF flows have not recovered from the carry trade sell off.  Hong Kong Southbound Connect flows continue to be positive this month.

Qifu Technology (3660 HK) , Q Technology Group (1478 HK) and JD Logistics (2618 HK) all advanced on strong 2Q earnings announcements. 


Tencent Music Entertainment Group (1698 HK) disappointed on earnings and monthly user numbers.  Country Garden Services (6098 HK) declined in anticipation of a large drop in earnings in 2Q 2024.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 16)

Huafa Property Services Group / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huafa-property-services-group" target="_blank" data-smartkarma-citation="entities:5841:1" rel="noopener">Huafa Property Services Group (982 HK)</a> announced a privatisation offer from <a href="https://www.smartkarma.com/entities/huafa-industrial-co-ltd-zhuhai" target="_blank" data-smartkarma-citation="entities:2329:1" rel="noopener">Huafa Industrial Co., Ltd. Zhuhai (600325 CH)</a> at HK$0.29 per share, a 30.6% premium to the undisturbed price.</li>
<li>Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.</li>
<li>The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.  </li>
</ul>



Huafa Property Services Group (982 HK) announced a privatisation offer from Huafa Industrial Co., Ltd. Zhuhai (600325 CH) at HK$0.29 per share, a 30.6% premium to the undisturbed price.
Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.  


Huafa Property Services (982 HK): Scheme Offer at HK$0.29

China

Binjiang Service Group Co. Ltd. operates as a reputable property management service provider. The Company offers property management services including security, cleaning, gardening, repair, maintenance, and ancillary services to at residential and non-residential properties. Binjiang Service Group serves customers in China.

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Binjiang Service Group (3316 HK)

Jinke Smart Services (9666 HK): Boyu’s Unconditional Offer Set to Open

Boyu’s unconditional offer is open and closes on 17 October. The IFA opines that the HK$6.67 offer is fair and reasonable. The long-term play is...

Arun George

Evergrande Services (6666 HK): Liquidation of Evergrande’s Stake to Trigger an Unconditional MGO?

The trading halt likely relates to Evergrande liquidators’ efforts to sell Evergrande Group’s majority interest in Evergrande Services, which could...

Arun George

Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45%...

Arun George

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 16)

Japan ETF flows have been light after the massive outflow from carry trade unwind. Qifu Tech, Q Tech and JDL all had positive earnings announcement...

David Mudd

Huafa Property Services (982 HK): Scheme Offer at HK$0.29

The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment...

Arun George

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