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

Beijing Enterprises Urban Resources / Event-Driven

Beijing Enterprises Urban Resources (3718 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/beijing-enterprises-urban-re" target="_blank" data-smartkarma-citation="entities:29131:1" rel="noopener">Beijing Enterprises Urban Resources (3718 HK)</a> composite document is out with the MGO’s first closing date of 17 June. The IFA considers <a href="https://www.smartkarma.com/entities/beijing-enterprises-water-group-limited" target="_blank" data-smartkarma-citation="entities:1660:1" rel="noopener">Beijing Enterprises Water Group (371 HK)</a>'s offer fair. </li>
<li>The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights. With the offeror currently at 44.16%, the MGO should become unconditional. </li>
<li>At last close and for a 28 June payment, the gross and annualised spread to the MGO price (including final dividend) of HK$0.81 per share is 2.5% and 31.5%, respectively.</li>
</ul>



Beijing Enterprises Urban Resources (3718 HK) composite document is out with the MGO’s first closing date of 17 June. The IFA considers Beijing Enterprises Water Group (371 HK)'s offer fair. 
The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights. With the offeror currently at 44.16%, the MGO should become unconditional. 
At last close and for a 28 June payment, the gross and annualised spread to the MGO price (including final dividend) of HK$0.81 per share is 2.5% and 31.5%, respectively.


Beijing Enterprises Urban Resources’ MGO Open, First Closing Date 17 June

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Following listing of <a href="https://www.smartkarma.com/entities/china-conch-environment-protection-holdings-ltd" target="_blank" data-smartkarma-citation="entities:4827:1" rel="noopener">China Conch Environment (587 HK)</a>, <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19943:1" rel="noopener">China Conch Venture (586 HK)</a> is seeking a spin-off of CV Green Energy in A-share market and we view this move positively.</li>
<li>Limited details are currently available, but we think CV Green Energy, which operates WTE businesses, will trade at significantly higher multiples than its Hong Kong peers. </li>
<li>Assuming CV Green Energy to hold all Conch Venture's WTE businesses, we estimate the IPO will boost the latter's sum-of-the-parts value by 8% or HK$2.14 per share.</li>
</ul>


Following listing of China Conch Environment (587 HK), China Conch Venture (586 HK) is seeking a spin-off of CV Green Energy in A-share market and we view this move positively.
Limited details are currently available, but we think CV Green Energy, which operates WTE businesses, will trade at significantly higher multiples than its Hong Kong peers. 
Assuming CV Green Energy to hold all Conch Venture's WTE businesses, we estimate the IPO will boost the latter's sum-of-the-parts value by 8% or HK$2.14 per share.


Conch Venture (586 HK): Another Spin-Off in the Pipeline

<ul>
<li>
<a href="https://www.smartkarma.com/entities/beijing-enterprises-water-group-limited" target="_blank" data-smartkarma-citation="entities:1660:1" rel="noopener">Beijing Enterprises Water Group (371 HK)</a>/(BEWG) will launch a conditional mandatory general offer (MGO) for <a href="https://www.smartkarma.com/entities/beijing-enterprises-urban-re" target="_blank" data-smartkarma-citation="entities:29131:1" rel="noopener">Beijing Enterprises Urban Resources (3718 HK)</a> at HK$0.78 as it crossed the 30%+ voting threshold. </li>
<li>The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 38.64%). The MGO price is unattractive, in our view.</li>
<li>BEWG's justification for the offer and lack of a “no increase in offer price” wording suggests the possibility of a bump. The shares closed 2.6% above the MGO price.    </li>
</ul>



Beijing Enterprises Water Group (371 HK)/(BEWG) will launch a conditional mandatory general offer (MGO) for Beijing Enterprises Urban Resources (3718 HK) at HK$0.78 as it crossed the 30%+ voting threshold. 
The MGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 38.64%). The MGO price is unattractive, in our view.
BEWG's justification for the offer and lack of a “no increase in offer price” wording suggests the possibility of a bump. The shares closed 2.6% above the MGO price.    


Beijing Enterprises Urban Resources’ MGO at HK$0.78. Is A Bump Possible?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/beijing-enterprises-urban-re" target="_blank" data-smartkarma-citation="entities:29131:1" rel="noopener">Beijing Enterprises Urban Resources (3718 HK)</a>/BEUR and <a href="https://www.smartkarma.com/entities/beijing-enterprises-water-group-limited" target="_blank" data-smartkarma-citation="entities:1660:1" rel="noopener">Beijing Enterprises Water Group (371 HK)</a>/BEWG entered trading halts relating to the Code on Takeovers and Mergers and “<em>a proposed notifiable transaction</em>”, respectively. </li>
<li>BEWG, the largest BEUR shareholder, has steadily increased its stake from 26.25% at BEUR’s IPO on 15 January 2020 to 29.45% as of 31 March 2022.</li>
<li>Our best guess is that the trading halts relate to a potential mandatory general offer associated with BEWG acquiring 30%+ of the voting rights. </li>
</ul>



Beijing Enterprises Urban Resources (3718 HK)/BEUR and Beijing Enterprises Water Group (371 HK)/BEWG entered trading halts relating to the Code on Takeovers and Mergers and “a proposed notifiable transaction”, respectively. 
BEWG, the largest BEUR shareholder, has steadily increased its stake from 26.25% at BEUR’s IPO on 15 January 2020 to 29.45% as of 31 March 2022.
Our best guess is that the trading halts relate to a potential mandatory general offer associated with BEWG acquiring 30%+ of the voting rights. 


Beijing Enterprises Urban Resources’ Trading Halt: Is an MGO on the Cards?

<ul>
<li>Following CCEP spin-off and share price decline, <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19943:1" rel="noopener">China Conch Venture (586 HK)</a> is now at more attractive valuations relative to the stub, on sum-of-the-parts and on PER multiple. </li>
<li>Growth profile should improve in next two years and it has an optimistic expectation of of 76% increase in waste treatment and 79% growth in on-grid electricity for FY22.</li>
<li>New business initiatives including anode and cathode materials of lithium iron phosphate and lithium batteries and used lithium batteries treatment may provide potential medium term upside.</li>
</ul>


Following CCEP spin-off and share price decline, China Conch Venture (586 HK) is now at more attractive valuations relative to the stub, on sum-of-the-parts and on PER multiple. 
Growth profile should improve in next two years and it has an optimistic expectation of of 76% increase in waste treatment and 79% growth in on-grid electricity for FY22.
New business initiatives including anode and cathode materials of lithium iron phosphate and lithium batteries and used lithium batteries treatment may provide potential medium term upside.


Conch Venture (586 HK): Improving Risk-Reward Profile

Hong Kong

China Everbright Environment Group is a global leader in environmental protection, specializing in integrated environmental solutions. It is recognized as the world's largest waste-to-energy investor and operator, also providing waste management, water treatment, and renewable energy services. The company was founded in 1993 and is headquartered in Hong Kong.

China Everbright Environment Group (257 HK)

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China Everbright Environment Group (257 HK)

Beijing Enterprises Urban Resources’ MGO Open, First Closing Date 17 June

With the offeror currently at 44.16% of voting rights, the MGO should become unconditional. For a 28 June payment, the annualised spread to the MGO...

Arun George

Conch Venture (586 HK): Another Spin-Off in the Pipeline

The proposed spin-off of CV Green Energy in Shanghai should benefit Conch Venture's valuations given the higher multiples for waste-to-energy...

Osbert Tang, CFA

Beijing Enterprises Urban Resources’ MGO at HK$0.78. Is A Bump Possible?

BEWG will launch a MGO at HK$0.78. The shares closed above terms. BEWG's justification for the offer and lack of a “no increase in offer price”...

Arun George

Beijing Enterprises Urban Resources’ Trading Halt: Is an MGO on the Cards?

Our best guess is that the trading halts of BUER and BEWG (the largest shareholder) relate to a potential mandatory general offer associated with...

Arun George

Conch Venture (586 HK): Improving Risk-Reward Profile

Following CCEP spin-off and recent share price decline, Conch Venture is now at more attractive valuation level. In the medium term, upside will...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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