Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates (127 HK)</a>'s Scheme was always going to be a tricky affair, given Hong Kong's 2021 M&amp;A bloodbath - e.g.  <a href="https://www.smartkarma.com/entities/soho-china-ltd" target="_blank" data-smartkarma-citation="entities:4123:1" rel="noopener">Soho China (410 HK)</a> &amp; <a href="https://www.smartkarma.com/entities/golden-throat-holdings-group" target="_blank" data-smartkarma-citation="entities:22664:1" rel="noopener">Golden Throat (6896 HK)</a>.</li>
<li>95.95% of Disinterested Shareholders voted for the Scheme. However, the Scheme failed the "headcount test", as it was not approved by a majority in number of Scheme Shareholders. </li>
<li>Hong Kong abolished the headcount test in March 2014. Cayman and Bermuda-incorporated companies should follow suit. </li>
</ul>



Chinese Estates (127 HK)'s Scheme was always going to be a tricky affair, given Hong Kong's 2021 M&amp;A bloodbath - e.g.  Soho China (410 HK) &amp; Golden Throat (6896 HK).
95.95% of Disinterested Shareholders voted for the Scheme. However, the Scheme failed the "headcount test", as it was not approved by a majority in number of Scheme Shareholders. 
Hong Kong abolished the headcount test in March 2014. Cayman and Bermuda-incorporated companies should follow suit. 


Chinese Estates (127 HK): Understanding The Scheme Voting

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>
Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;</li>
<li>
Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and</li>
<li>
Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.</li>
</ul>



Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;

Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and

Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.


<ul>
<li>
Stadium Levy:Likely Guangzhou City Construction Investment Group has seized the halted China Evergrande Group’s (3333.HK) [Evergrande] stadium project in order to dispose of it;</li>
<li>
Stake Sale:In order to stave off default, Evergrande’s Chairman reduced his family’s stake, raising the equivalent USD 344 mn; and</li>
<li>
Guarantee and Grace Period:Investors are threatening to re-invoke Evergrande’s Jumbo Fortune bond guarantee, and we await the expiry of another 30-day grace period expiry on December 6, 2021.</li>
</ul>



Stadium Levy:Likely Guangzhou City Construction Investment Group has seized the halted China Evergrande Group’s (3333.HK) [Evergrande] stadium project in order to dispose of it;

Stake Sale:In order to stave off default, Evergrande’s Chairman reduced his family’s stake, raising the equivalent USD 344 mn; and

Guarantee and Grace Period:Investors are threatening to re-invoke Evergrande’s Jumbo Fortune bond guarantee, and we await the expiry of another 30-day grace period expiry on December 6, 2021.


China Evergrande Group – Levies and Liquidations

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/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a> has despatched the scheme document. The offeror will offer HK$4.00 per scheme share. The scheme meeting is scheduled for 9:30 am on 17 December.</li>
<li>Unsurprisingly, the IFA considers the offer to be fair and reasonable. We think that the IFA analysis of historical share prices and privatisation precedents is flawed. </li>
<li>As no shareholder holds a blocking stake, the bid will likely succeed. At last close, the shares trade at a gross spread of 6.4% to the offer price. </li>
</ul>



Chinese Estates Holdings (127 HK) has despatched the scheme document. The offeror will offer HK$4.00 per scheme share. The scheme meeting is scheduled for 9:30 am on 17 December.
Unsurprisingly, the IFA considers the offer to be fair and reasonable. We think that the IFA analysis of historical share prices and privatisation precedents is flawed. 
As no shareholder holds a blocking stake, the bid will likely succeed. At last close, the shares trade at a gross spread of 6.4% to the offer price. 


Chinese Estates’ Scheme Document, IFA Opinion

<ul>
<li>The Scheme Document for <a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a> has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1123/2021112301050.pdf" target="_blank" rel="noopener">dispatched</a>. The Scheme Meeting will take place on the 17 December. </li>
<li>Founder, Joseph Lau, and his wife Chan Hoi Wan, who control 74.99% of shares out, are offering HK$4.00/share for Chinese Estates, a leading property developer in Hong Kong.</li>
<li>The Independent Financial Adviser (Gram Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is on or before the 19 January 2022.</li>
</ul>


The Scheme Document for Chinese Estates Holdings (127 HK) has been dispatched. The Scheme Meeting will take place on the 17 December. 
Founder, Joseph Lau, and his wife Chan Hoi Wan, who control 74.99% of shares out, are offering HK$4.00/share for Chinese Estates, a leading property developer in Hong Kong.
The Independent Financial Adviser (Gram Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is on or before the 19 January 2022.


Chinese Estates (127 HK): Scheme Doc Out. Meeting on 17 December

Hong Kong

Chinese Estates Holdings Limited, through its subsidiaries, invests in and develops real estate properties.  The Company also invests in securities and provides brokerage and money lending services.

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Chinese Estates Holdings (127 HK)

Chinese Estates (127 HK): Understanding The Scheme Voting

This is now a value play, and a relatively illiquid one at that. I'd avoid the stock as I would expect shares to trade sideways and oscillate with...

David Blennerhassett

China Evergrande Group – Fire Sale

EVERGRANDE: Several investors appear to have confirmed that Evergrande failed to cover grace period payments. Shenjing Bank has CNY 129.4 bn...

Thomas J. Monaco

China Evergrande Group – Levies and Liquidations

EVERGRANDE: Authorities have seized Evergrande's stadium project. The Chairman reduced his family’s stake, but we await the outcome of a bond...

Thomas J. Monaco

Chinese Estates’ Scheme Document, IFA Opinion

The scheme meeting is on 17 December. IFA considers the HK$4 per share offer to be fair and reasonable. At last close, the shares trade at a gross...

Arun George

Chinese Estates (127 HK): Scheme Doc Out. Meeting on 17 December

A gross/annualised spread 8.1%/66.2% is not unattractive. But I'd expect pushback due to low liquidity and heading into year-end.

David Blennerhassett

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