Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Sichuan Languang Justbon Service Group / Event-Driven

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After property management service provider <a href="https://www.smartkarma.com/entities/sichuan-languang-justbon-h" target="_blank" data-smartkarma-citation="entities:28337:1" rel="noopener">Languang Justbon Services (2606 HK)</a> was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0223/2021022300073.pdf" target="_blank" rel="noopener">suspended</a> "pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers", Justbon has now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0225/2021022500961.pdf" target="_blank" rel="noopener">announced</a> its major shareholder has entered into a MOU with <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> (CGS) to sell a 64.62% stake.
The seller is Languang Hejun, a wholly-owned entity of <a href="https://www.smartkarma.com/entities/sichuan-languang-development-co-ltd" target="_blank" data-smartkarma-citation="entities:7403:1" rel="noopener">Sichuan Languang Development (600466 CH)</a>.
Terms under the MOU are RMB42.1105/share. No HK$-equivalent figure was quoted, but at today's exchange rate. this is roughly equivalent to HK$50.61/share, or a ~30% premium to last close.
The announcement is light on detail as to the MOU, although it does provide exclusivity for CGS, such that "Languang Hejun is required to seek the Potential Purchaser’s consent before providing information or making an offer or invitation to or conducting any discussion with any third party, regarding the transfer of securities by or security transactions of the H shares or domestic shares held by Languang Hejun."
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<div>More below the fold.</div>


After property management service provider Languang Justbon Services (2606 HK) was suspended "pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers", Justbon has now announced its major shareholder has entered into a MOU with Country Garden Services Holdings (6098 HK) (CGS) to sell a 64.62% stake.
The seller is Languang Hejun, a wholly-owned entity of Sichuan Languang Development (600466 CH).
Terms under the MOU are RMB42.1105/share. No HK$-equivalent figure was quoted, but at today's exchange rate. this is roughly equivalent to HK$50.61/share, or a ~30% premium to last close.
The announcement is light on detail as to the MOU, although it does provide exclusivity for CGS, such that "Languang Hejun is required to seek the Potential Purchaser’s consent before providing information or making an offer or invitation to or conducting any discussion with any third party, regarding the transfer of securities by or security transactions of the H shares or domestic shares held by Languang Hejun."

More below the fold.

Languang Justbon (2606 HK): Potential General Offer From Country Gardens

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.

On Thursday after market close, <a href="https://www.smartkarma.com/entities/sichuan-languang-justbon-service-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:28337:1" rel="noopener">Sichuan Languang Justbon Service Group (2606 HK)</a> announced that Languang Hejun, the controlling shareholder, entered a memorandum of understanding (MOU) with <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> to sell 115.1 million H shares (64.62% of the outstanding shares) at a price of RMB42.1105 per H share. If the potential transaction materialises it may lead to a general offer at the higher of (i) the price paid to Languang Hejun, and (ii) the HK$ equivalent of RMB42.1105 (HK$50.62 per share at an FX rate of 0.8319).The possible general offer price of HK$50.62 per share is a 30.0% premium to the unaffected price of HK$38.95 per share (22 February prior to the trading halt) and a 36.8% premium to the IPO price of HK$37 per H Share (listed on 18 October 2019). <div class="content-highlight">We believe that the transaction will proceed as Country Garden Services is acquiring Languang Justbon at an attractive multiple and <a href="https://www.smartkarma.com/entities/sichuan-languang-development-co-ltd" target="_blank" data-smartkarma-citation="entities:7403:1" rel="noopener">Sichuan Languang Development (600466 CH)</a> (through Languang Hejun) is cashing out at a healthy premium to the IPO price and last close price. Overall, we think that at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a general offer).  </div>

On Thursday after market close, Sichuan Languang Justbon Service Group (2606 HK) announced that Languang Hejun, the controlling shareholder, entered a memorandum of understanding (MOU) with Country Garden Services Holdings (6098 HK) to sell 115.1 million H shares (64.62% of the outstanding shares) at a price of RMB42.1105 per H share. If the potential transaction materialises it may lead to a general offer at the higher of (i) the price paid to Languang Hejun, and (ii) the HK$ equivalent of RMB42.1105 (HK$50.62 per share at an FX rate of 0.8319).The possible general offer price of HK$50.62 per share is a 30.0% premium to the unaffected price of HK$38.95 per share (22 February prior to the trading halt) and a 36.8% premium to the IPO price of HK$37 per H Share (listed on 18 October 2019). We believe that the transaction will proceed as Country Garden Services is acquiring Languang Justbon at an attractive multiple and Sichuan Languang Development (600466 CH) (through Languang Hejun) is cashing out at a healthy premium to the IPO price and last close price. Overall, we think that at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a general offer).  

Languang Justbon Possible General Offer from Country Garden Services

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

China Resources Beer Holdings / Index Rebalance

Last evening, Hang Seng Indexes announced that the conclusions of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> market consultation will be released on 1 March. This means that the implementation of the changes using the new methodology will begin at the June 2021 review and conclude at the March 2022 review.With the results of the March 2021 review scheduled to be announced post market close tomorrow (26 February), the review will follow the current methodology. But with the leeway afforded to the index committee to decide on the stocks to be included/ excluded, stocks could be selected based on whether they will make the cut for inclusion based on the future methodology. This will also reduce the turnover at future reviews.The <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> already has 52 constituents and we expect this to increase further at the March review. We expect only inclusions and the number of stocks in the index could increase to 55-56. This too will reduce the turnover at future reviews. The stocks included at the March review will see a big impact since they will be included in one shot, as opposed to stocks included at the June review where the implementation will most likely occur in 4 tranches.Potential inclusions are <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a>. Outside possibilities are <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>, <a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> and <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a>.

Last evening, Hang Seng Indexes announced that the conclusions of the Hong Kong Hang Seng Index (HSI INDEX) market consultation will be released on 1 March. This means that the implementation of the changes using the new methodology will begin at the June 2021 review and conclude at the March 2022 review.With the results of the March 2021 review scheduled to be announced post market close tomorrow (26 February), the review will follow the current methodology. But with the leeway afforded to the index committee to decide on the stocks to be included/ excluded, stocks could be selected based on whether they will make the cut for inclusion based on the future methodology. This will also reduce the turnover at future reviews.The Hong Kong Hang Seng Index (HSI INDEX) already has 52 constituents and we expect this to increase further at the March review. We expect only inclusions and the number of stocks in the index could increase to 55-56. This too will reduce the turnover at future reviews. The stocks included at the March review will see a big impact since they will be included in one shot, as opposed to stocks included at the June review where the implementation will most likely occur in 4 tranches.Potential inclusions are ENN Energy (2688 HK), China Resources Beer Holdings (291 HK), Country Garden Services Holdings (6098 HK). Outside possibilities are Haidilao (6862 HK), China Gas Holdings (384 HK) and Longfor Properties (960 HK).

HSI March Index Rebalance Preview - Last One Before New Methodology Kicks In

Property management service provider <a href="https://www.smartkarma.com/entities/sichuan-languang-justbon-h" target="_blank" data-smartkarma-citation="entities:28337:1" rel="noopener">Languang Justbon Services (2606 HK)</a> is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0223/2021022300073.pdf" target="_blank" rel="noopener">suspended</a> "pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers".
Listed on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1008/ltn20191008009.pdf" target="_blank" rel="noopener">18 October 2019</a> at <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1017/02606_3890184/e102.pdf" target="_blank" rel="noopener">$37/share</a>, shares last closed at $38.95. The IPO was covered by <a href="https://www.smartkarma.com/profiles/zhen-zhou-toh" target="_blank" data-smartkarma-citation="accounts:673" rel="noopener">Zhen Zhou, Toh</a> beginning with <a href="https://www.smartkarma.com/insights/languang-justbon-services-pre-ipo-review-weaning-off-its-parent" target="_blank" data-smartkarma-citation="insights:32940" rel="noopener">Languang Justbon Services (蓝光嘉宝) Pre-IPO Review - Weaning off Its Parent</a>.
Justbon is 65.04%-held by Yang Keng, the founder. Yang holds no senior management role in the company, although his son, Yang Wuzheng,  is a NED following the EGM <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0218/2021021800818.pdf" target="_blank" rel="noopener">last week</a>. 
Reportedly <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> (CGS), China's largest PM service provider (by market cap), is kicking the tyres.
More below the fold.

Property management service provider Languang Justbon Services (2606 HK) is currently suspended "pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers".
Listed on the 18 October 2019 at $37/share, shares last closed at $38.95. The IPO was covered by Zhen Zhou, Toh beginning with Languang Justbon Services (蓝光嘉宝) Pre-IPO Review - Weaning off Its Parent.
Justbon is 65.04%-held by Yang Keng, the founder. Yang holds no senior management role in the company, although his son, Yang Wuzheng,  is a NED following the EGM last week. 
Reportedly Country Garden Services Holdings (6098 HK) (CGS), China's largest PM service provider (by market cap), is kicking the tyres.
More below the fold.

Languang Justbon (2606 HK): Country Gardens Offer?

On 22 December 2020 post market close, Hang Seng Indexes (HSIL) released the consultation paper on the "Proposal to enhance the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market". Market participants had until 24 January to submit their views to HSIL.HSIL are scheduled to announce the changes to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> as a part of the March review on 26 February. There is a high probability that the conclusions of the market consultation will be announced on the same day.Given some large new listings since then and the price movements on the stocks, we refresh our list of potential inclusions and exclusions assuming that HSIL go up to 65 names or 80 names.In both cases, the turnover is very high in percentage terms and in dollar terms. HSIL will need to implement the changes over 1 year.We continue to believe that the market will probably be fine with increasing the number of constituents to 65, but will likely balk at going up to 80 in one shot.Financials would see the largest decrease in weight, offset by gains in Information Technology, Consumer Discretionary, Properties, Healthcare, Consumer Staples and Utilities.

On 22 December 2020 post market close, Hang Seng Indexes (HSIL) released the consultation paper on the "Proposal to enhance the Hong Kong Hang Seng Index (HSI INDEX) as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market". Market participants had until 24 January to submit their views to HSIL.HSIL are scheduled to announce the changes to the Hong Kong Hang Seng Index (HSI INDEX) as a part of the March review on 26 February. There is a high probability that the conclusions of the market consultation will be announced on the same day.Given some large new listings since then and the price movements on the stocks, we refresh our list of potential inclusions and exclusions assuming that HSIL go up to 65 names or 80 names.In both cases, the turnover is very high in percentage terms and in dollar terms. HSIL will need to implement the changes over 1 year.We continue to believe that the market will probably be fine with increasing the number of constituents to 65, but will likely balk at going up to 80 in one shot.Financials would see the largest decrease in weight, offset by gains in Information Technology, Consumer Discretionary, Properties, Healthcare, Consumer Staples and Utilities.

HSI Market Consultation - Name Changes as We Await the Conclusions

China

Country Garden Services Holdings Company Limited provides real estate development services. The Company develops residential apartments, multi-functional complex buildings, government and public facilities, industrial parks, highway service stations, and schools. Country Garden Services Holdings serves clients in China.

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Country Garden Services (6098 HK)

Languang Justbon (2606 HK): Potential General Offer From Country Gardens

This is, as yet, a non-binding deal. But it is not a lot of money for CGS. Assuming a firm Offer unfolds and five-months to complete, I'd be paying...

David Blennerhassett

Languang Justbon Possible General Offer from Country Garden Services

The controlling shareholder entered an MOU with CG Services to sell a 64.62% stake at RMB42.1105 per H share. The downside is low (close to break...

Arun George

HSI March Index Rebalance Preview - Last One Before New Methodology Kicks In

HSIL will announce the changes to the HSI post market close tomorrow. With the conclusions of the market consultation being announced on 1 March,...

Brian Freitas

Languang Justbon (2606 HK): Country Gardens Offer?

Shares are suspended so there is nothing to do here. I think the Offer needs to be pitched closer to $54/share, around a 39% premium to last close,...

David Blennerhassett

HSI Market Consultation - Name Changes as We Await the Conclusions

The conclusions of the HSI market consultation could be announced on 26 Feb along with the March review. Given recent large listings and price...

Brian Freitas

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