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/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1024/2024102401219.pdf" target="_blank" rel="noopener">announced</a> that the Shenzhen Stock Exchange has no further comment on <a href="https://www.smartkarma.com/entities/org-technology-co-ltd-a" target="_blank" data-smartkarma-citation="entities:17510:1" rel="noopener">ORG Technology (002701 CH)</a>'s MAR report, and therefore that specific pre=condition has been fulfilled. </li>
<li>ORG will now hold an general meeting on the 11th November for shareholders to vote on the Offer for CPMC - this should be a two-thirds majority vote. </li>
<li>The pre-cons long stop date is the 6th January. Should all go to plan, you could be looking at late Janaury 2025 payment.</li>
</ul>



CPMC Holdings (906 HK) has announced that the Shenzhen Stock Exchange has no further comment on ORG Technology (002701 CH)'s MAR report, and therefore that specific pre=condition has been fulfilled. 
ORG will now hold an general meeting on the 11th November for shareholders to vote on the Offer for CPMC - this should be a two-thirds majority vote. 
The pre-cons long stop date is the 6th January. Should all go to plan, you could be looking at late Janaury 2025 payment.


CPMC (906 HK): ORG Ticks Off Another Pre-Con

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance. </li>
<li>Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was "inappropriate".</li>
<li>If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.</li>
</ul>


Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance. 
Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was "inappropriate".
If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.


China TCM (570.HK) Privatization Update - The Long Stop Date to Extend or Not?

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/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update notes that the consortium has secured SAMR approval and made progress in obtaining the other regulatory approvals. </li>
<li>As expected, the precondition will not be satisfied before the 18 October long stop date. Unexpectedly, whether the consortium members will consent to the extension remains uncertain.</li>
<li>The extension will be forthcoming as the delay is procedural, there is a reputational risk from a deal break, the time investment is significant, and the warning was legally required.</li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update notes that the consortium has secured SAMR approval and made progress in obtaining the other regulatory approvals. 
As expected, the precondition will not be satisfied before the 18 October long stop date. Unexpectedly, whether the consortium members will consent to the extension remains uncertain.
The extension will be forthcoming as the delay is procedural, there is a reputational risk from a deal break, the time investment is significant, and the warning was legally required.


China Traditional Chinese Medicine (570 HK): Theatre of the Absurd

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. </li>
<li>The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.</li>
<li>If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. </li>
</ul>



China Traditional Chinese Medicine (570 HK) profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. 
The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.
If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. 


China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

<ul>
<li>What disappoints investors is that privatization progress is slower-than-expected. Since approval is in "advanced stage", August update is eye-catching. Investors may need more patience with this type of SOE deal. </li>
<li>The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.</li>
<li>According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don't forget, the privatization is still on the agenda.</li>
</ul>


What disappoints investors is that privatization progress is slower-than-expected. Since approval is in "advanced stage", August update is eye-catching. Investors may need more patience with this type of SOE deal. 
The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.
According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don't forget, the privatization is still on the agenda.


China TCM (570.HK) Privatization Update - Things Are Still Manageable

China

Chongqing Taiji Industry (Group) Co., Ltd. manufactures and markets medicines, healthcare products, medical packing products, and medical instruments.  The Company also imports and exports Chinese medicine materials and medical packing materials.

Chongqing Taiji Industry (Group) A (600129 CH)

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Chongqing Taiji Industry (Group) A (600129 CH)

CPMC (906 HK): ORG Ticks Off Another Pre-Con

Assuming mid-late Jan 2025 payment, this is trading at a gross/annualised spread of 4.9%/21.6%. That's out from a gross spread of 3.9% this time...

David Blennerhassett

China TCM (570.HK) Privatization Update - The Long Stop Date to Extend or Not?

The announcement is “annoying” as “It remains uncertain whether such consent from the Investor Group will be obtained”.The risk is since it's not...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Theatre of the Absurd

The update will do little to soothe frayed nerves. The extension will be forthcoming as the delay is procedural, there is a reputational risk from...

Arun George

China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

According to the Beijing Municipal Government website, China TCM has received unconditional approval from SAMR. This news was largely expected and...

Arun George

China TCM (570.HK) Privatization Update - Things Are Still Manageable

The hiring of IFA signifies that privatization is progressing step by step according to CNPGC's agenda, which is well on its way. But China TCM's...

Xinyao (Criss) Wang

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