Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<li>
<strong><a href="https://www.smartkarma.com/entities/gmo-internet-inc-919fd60b-ad2a-4c5f-b333-167a849b67b0" target="_blank" data-smartkarma-citation="entities:9029:1" rel="noopener">GMO Internet (4784 JP)</a></strong> stays listed if/when <strong><a href="https://www.smartkarma.com/entities/gmo-internet-group-inc" target="_blank" data-smartkarma-citation="entities:13631:1" rel="noopener">GMO Internet Group (9449 JP)</a></strong> sells (a lot of) shares. Yet 4784 remains stubbornly - manipulated (?) - at nosebleed valuations. </li>
<li>Preceding my comments on the GMO group - and <strong><a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a></strong> and <strong><a href="https://www.smartkarma.com/entities/axiata-group-berhad" target="_blank" data-smartkarma-citation="entities:944:1" rel="noopener">Axiata Group (AXIATA MK)</a> </strong>- are the current setup/unwind tables for Asia-Pacific Holdcos</li>
<li>Hese relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



GMO Internet (4784 JP) stays listed if/when GMO Internet Group (9449 JP) sells (a lot of) shares. Yet 4784 remains stubbornly - manipulated (?) - at nosebleed valuations. 
Preceding my comments on the GMO group - and Dah Sing Financial (440 HK) and Axiata Group (AXIATA MK) - are the current setup/unwind tables for Asia-Pacific Holdcos
Hese relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Absent Borrow, GMO Internet (4784) Is An Avoid

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<li>The benefits of <strong><a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a></strong> China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. </li>
<li>Should <strong><a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a></strong> continue its Brazil market launch, <strong><a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus NV (PRX NA)</a></strong> will have little reason to continue to hold on to its Meituan stake.</li>
<li>Look for value to be realised for<strong> Japanese banks</strong> with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.</li>
</ul>


The benefits of China Medical System (867 HK) China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. 
Should Meituan (3690 HK) continue its Brazil market launch, Prosus NV (PRX NA) will have little reason to continue to hold on to its Meituan stake.
Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.


Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

<ul>
<li>In the setup/unwind tables highlighted in<em><strong><a href="https://skr.ma/JEUKB" target="_blank" rel="noopener"> StubWorld: Haw Par Looking Stretched</a></strong></em>, I see <strong><a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a></strong> at trading "cheap" to 74.4%-held <strong><a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a></strong>.</li>
<li>I see DSF at a 51% discount to NAV, around its one-year average. However the simple ratio (DSF/DSB) and implied stub are at multi-year lows.</li>
<li>Separately, DSB is trading at a ~62% discount to NAV - applying its 13.2%-holding in <strong><a href="https://www.smartkarma.com/entities/bank-of-chongqing-co-ltd-h" target="_blank" data-smartkarma-citation="entities:658:1" rel="noopener">Bank of Chongqing (1963 HK)</a></strong> - around a one-year high.  This is, however, a weak stub. </li>
</ul>


In the setup/unwind tables highlighted in StubWorld: Haw Par Looking Stretched, I see Dah Sing Financial (440 HK) at trading "cheap" to 74.4%-held Dah Sing Banking (2356 HK).
I see DSF at a 51% discount to NAV, around its one-year average. However the simple ratio (DSF/DSB) and implied stub are at multi-year lows.
Separately, DSB is trading at a ~62% discount to NAV - applying its 13.2%-holding in Bank of Chongqing (1963 HK) - around a one-year high.  This is, however, a weak stub. 


Dah Sing Financial (2356 HK): Discounts On Discounts

Silver Point

Thomas J. Monaco

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

<p><strong><em>*Results Better Than Expected: </em></strong>Bank of East Asia (23.HK) [BEA] reported 1H21 results of HKD 2.3 bn – improving HKD 579 mn (34.3%) HOH despite a tax rate of 14.9% (negative 6.8% in 2H20). Results were supported by both a reduced loss provision and net interest income improvement; and  </p><p><strong><em>*Credit Turn, But Premature Provision Cut: </em></strong> By our analysis, we find that credit deterioration appears to be decelerating as net new NPLs have increased 29.3% on an annualized basis versus over 60% at 2H20. Assuming that the decelerated breakdown in credit at BEA holds, we find that loss reserves remain wanting by HKD 4.5 bn or nearly one year of bottom-line results. </p>

*Results Better Than Expected: Bank of East Asia (23.HK) [BEA] reported 1H21 results of HKD 2.3 bn – improving HKD 579 mn (34.3%) HOH despite a tax rate of 14.9% (negative 6.8% in 2H20). Results were supported by both a reduced loss provision and net interest income improvement; and  *Credit Turn, But Premature Provision Cut:  By our analysis, we find that credit deterioration appears to be decelerating as net new NPLs have increased 29.3% on an annualized basis versus over 60% at 2H20. Assuming that the decelerated breakdown in credit at BEA holds, we find that loss reserves remain wanting by HKD 4.5 bn or nearly one year of bottom-line results. 

Bank of East Asia – Premature Provision Cut

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<p>This week in StubWorld ...</p>
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<p>Both <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a> and 74.4%-held <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a> enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. </p>
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<p>Preceding my comments on Dah Sing are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Both Dah Sing Financial (440 HK) and 74.4%-held Dah Sing Banking (2356 HK) enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. 

Preceding my comments on Dah Sing are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.







StubWorld: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

Hong Kong

Dah Sing Financial Holdings Limited is an investment holding company that provides banking, insurance, and other financial-related services. The company offers personal banking, commercial banking, treasury services, and general insurance services across Hong Kong, Macau, and Mainland China. It was founded in 1987 and is headquartered in Hong Kong.

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Dah Sing Financial (440 HK)

StubWorld: Absent Borrow, GMO Internet (4784) Is An Avoid

The trade is simple - avoid GMO Internet (4784 JP). Or take down borrow, where possible, for the persistent few who are up to the challenge.

David Blennerhassett

Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Dah Sing Financial (2356 HK): Discounts On Discounts

Fundamentally, DSF's stubs ops are not exactly blowing the lights out. IF you think credit impairment losses have peaked, or are peaking, you might...

David Blennerhassett

Bank of East Asia – Premature Provision Cut

BANK OF EAST ASIA: BEA reported 1H21 HOH results improvement of 34.3% supported by both a reduced loss provision and net interest income...

Thomas J. Monaco

StubWorld: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

I'd still be long both DSF (440 HK) and DSB (2356 HK) here. I find it wholly unlikely there was no substance to that move last Friday.

David Blennerhassett

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