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>
<a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> will sell to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  </li>
<li>The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.</li>
<li>The offer for <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).</li>
</ul>



Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).


Yashili’s HK$1.20 Privatisation Offer from Mengniu

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Orient Overseas (International) / Index Rebalance

<ul>
<li>Current at 66 constituents, we expect to reach 80 <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI INDEX</a> constituents by the end of the year before moving higher towards 100 index members in 2023.</li>
<li>We list 10 stocks that could be added to the index in June - with one-way turnover close to 6%, the actual number of inclusions will be lower.</li>
<li>We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.</li>
</ul>


Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
We list 10 stocks that could be added to the index in June - with one-way turnover close to 6%, the actual number of inclusions will be lower.
We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.


HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> announced its controlling shareholder, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, is in discussions regarding its holdings in Yashili and several potential transactions.</li>
<li>If the transactions proceed, the potential privatisation offer is HK$1.20 per Yashili share, a 31.9% premium to the last close price of HK$0.91 (prior to the trading halt).</li>
<li>The potential transactions are subject to a number of pre-conditions and conditions. We think the potential offer is attractive.  </li>
</ul>



Yashili International Holdings (1230 HK) announced its controlling shareholder, China Mengniu Dairy Co (2319 HK), is in discussions regarding its holdings in Yashili and several potential transactions.
If the transactions proceed, the potential privatisation offer is HK$1.20 per Yashili share, a 31.9% premium to the last close price of HK$0.91 (prior to the trading halt).
The potential transactions are subject to a number of pre-conditions and conditions. We think the potential offer is attractive.  


Yashili’s Potential Pre-Conditional Privatisation Offer from Mengniu

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/farm-fresh-berhad" target="_blank" data-smartkarma-citation="entities:34617:1" rel="noopener">Farm Fresh Berhad (FF MY)</a> is a leading vertically integrated dairy player in Malaysia. It has launched an IPO to raise $239 million. </li>
<li>The business is navigating the normalisation of consumer demand and input cost inflation by delivering healthy growth, market share gains, creditable margin performance and cash generation. </li>
<li>Overall, this IPO is worth a closer look. The offer period is from 28 February to 10 March. The listing is on 22 March.   </li>
</ul>



Farm Fresh Berhad (FF MY) is a leading vertically integrated dairy player in Malaysia. It has launched an IPO to raise $239 million. 
The business is navigating the normalisation of consumer demand and input cost inflation by delivering healthy growth, market share gains, creditable margin performance and cash generation. 
Overall, this IPO is worth a closer look. The offer period is from 28 February to 10 March. The listing is on 22 March.   


<ul>
<li>
<a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a> has launched a conditional MGO at HK$10.06 per share with a first and final closing date of 3 and 17 March, respectively. </li>
<li>The MGO is conditional on the offeror and concert parties holding more than 50% of <a href="https://www.smartkarma.com/entities/ausnutria-dairy-corp-ltd" target="_blank" data-smartkarma-citation="entities:13799:1" rel="noopener">Ausnutria Dairy Corp (1717 HK)</a>'s voting rights. Yili owns 34.33% of outstanding shares.</li>
<li>Around 37.5% of public shareholders (assuming other directors accept the offer) will need to accept the MGO for it to become unconditional. Achieving the 50%+ voting threshold could be challenging. </li>
</ul>



Inner Mongolia Yili Industrial Group (A) (600887 CH) has launched a conditional MGO at HK$10.06 per share with a first and final closing date of 3 and 17 March, respectively. 
The MGO is conditional on the offeror and concert parties holding more than 50% of Ausnutria Dairy Corp (1717 HK)'s voting rights. Yili owns 34.33% of outstanding shares.
Around 37.5% of public shareholders (assuming other directors accept the offer) will need to accept the MGO for it to become unconditional. Achieving the 50%+ voting threshold could be challenging. 


Ausnutria’s Conditional MGO Open, IFA Opinion

China

China Feihe specializes in the development, production, and sale of infant formula milk, other dairy products, and nutritional supplements. The company offers a range of products including infant milk formula, adult milk powder, liquid milk, and health care products. Founded in 1962, its headquarters are in Beijing, China.

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China Feihe (6186 HK)

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Mengniu will launch a pre-conditional privatisation offer at HK$1.20. The risk around the pre-conditions is low. At the last close, the gross...

Arun George

HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

There could be 5-6 inclusions to the HSI in June as part of the move to 80 members. We list 10 stocks that could be added to the index, and another...

Brian Freitas

Yashili’s Potential Pre-Conditional Privatisation Offer from Mengniu

Yashili announced that Mengniu is in discussions regarding its holdings in Yashili and several potential transactions, which could lead to a...

Arun George

Farm Fresh IPO Initiation: Bet the Farm

Farm Fresh has launched an IPO to raise RM1 bn (US$239 m). The fundamentals are sound and this IPO is worth a look. The offer period is from 28...

Arun George

Ausnutria’s Conditional MGO Open, IFA Opinion

Yili has launched a conditional MGO at HK$10.06 per share. Yili owns 34.33% of outstanding shares and the MGO is conditional on hitting a 50%...

Arun George

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