HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Underpinned by higher ASP and sequentially lower input costs, <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> should achieve better margin in 2H22. Its 17% fall in share price YTD makes it appealing.</li>
<li>Average aluminum price was down 14% so far in 2H22, vs. 1H21, good to its costs. Well-controlled selling and administrative costs will help to support profitability recovery.</li>
<li>New two-piece can capacity will grow by 54% over the next three years as 5 production lines are expected to be added. Most of them already have demand lined up.</li>
</ul>


Underpinned by higher ASP and sequentially lower input costs, CPMC Holdings (906 HK) should achieve better margin in 2H22. Its 17% fall in share price YTD makes it appealing.
Average aluminum price was down 14% so far in 2H22, vs. 1H21, good to its costs. Well-controlled selling and administrative costs will help to support profitability recovery.
New two-piece can capacity will grow by 54% over the next three years as 5 production lines are expected to be added. Most of them already have demand lined up.


CPMC Holdings (906 HK): Good Time to Re-Visit

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>At a 1.5% gross spread to terms, <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> is trading with completion is mind after the last pre-condition - SAFE - was satisfied on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1213/2024121301235.pdf" target="_blank" rel="noopener">13th December</a>. </li>
<li>The Offer Doc is <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1219/2024121900612.pdf" target="_blank" rel="noopener">now out</a> and the transaction is open for acceptances. The First Close is the 10th January. </li>
<li>I'd expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.  </li>
</ul>


At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition - SAFE - was satisfied on the 13th December. 
The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January. 
I'd expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.  


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/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a>’s offer from <a href="https://www.smartkarma.com/entities/org-technology-co-ltd-a" target="_blank" data-smartkarma-citation="entities:17510:1" rel="noopener">ORG Technology Co., Ltd. A (002701 CH)</a> is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.  </li>
<li>CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.</li>
<li>The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.</li>
</ul>



CPMC Holdings (906 HK)’s offer from ORG Technology Co., Ltd. A (002701 CH) is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.  
CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.
The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.


CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>If ORG cannot obtain the SAFE approval by the end of December, this indicates something is wrong in the process. Then the success rate of this transaction is greatly reduced.</li>
<li>Acquiring CPMC is in line with Baosteel's strategic goals and CPMC is important to Baosteel.So, the possibility of state-owned capital to agree to withdraw completely from CPMC is not high.</li>
<li>It’s unclear whether Zhang Wei will continue to side with ORG, or whether he still want to exit. This actually depends on the renegotiations between Baosteel/China Foods/COFCO and Zhang Wei.</li>
</ul>


If ORG cannot obtain the SAFE approval by the end of December, this indicates something is wrong in the process. Then the success rate of this transaction is greatly reduced.
Acquiring CPMC is in line with Baosteel's strategic goals and CPMC is important to Baosteel.So, the possibility of state-owned capital to agree to withdraw completely from CPMC is not high.
It’s unclear whether Zhang Wei will continue to side with ORG, or whether he still want to exit. This actually depends on the renegotiations between Baosteel/China Foods/COFCO and Zhang Wei.


CPMC Holdings (906.HK) Update - It's Time to Prepare for Different Scenarios

<ul>
<li>My conversation with the FA earlier this week largely put to rest a number of concerns, specifically on regulatory approvals, surrounding the Offer for <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>. </li>
<li>As announced on the 13th December, the last pre-condition, SAFE, has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1213/2024121301235.pdf" target="_blank" rel="noopener">satisfied</a>. All pre-cons have been fulfilled.  The Offer Doc will be dispatched on or before the 20th December</li>
<li>This could turn unconditional before year-end, depending on whether Zhang Wei promptly tenders. Expect the share price to trade tight (er) to terms Monday morning.</li>
</ul>


My conversation with the FA earlier this week largely put to rest a number of concerns, specifically on regulatory approvals, surrounding the Offer for CPMC Holdings (906 HK). 
As announced on the 13th December, the last pre-condition, SAFE, has been satisfied. All pre-cons have been fulfilled.  The Offer Doc will be dispatched on or before the 20th December
This could turn unconditional before year-end, depending on whether Zhang Wei promptly tenders. Expect the share price to trade tight (er) to terms Monday morning.


CPMC (906 HK): Not A Shadow Of Doubt (!) As Pre-Cons Fulfilled

China

CPMC Holdings Ltd. manufactures food packaging products.

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CPMC Holdings (906 HK)