Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Less than a week after <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> and <a href="https://www.smartkarma.com/entities/kaisa-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:169:1" rel="noopener">Kaisa (1638 HK)</a> were officially declared defaulters,  <a href="https://www.smartkarma.com/entities/shimao-property-holdings-limited" target="_blank" data-smartkarma-citation="entities:8375:1" rel="noopener">Shimao Property (813 HK)</a>'s bonds and shares plunged, as did <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services (873 HK)</a>'s shares. </li>
<li>
<a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services (1516 HK)</a> is the second-worst worst performing property services play over the past week/month.  Separately, parent <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac (1918 HK)</a> recently sold &gt;US$1bn of <a href="https://www.smartkarma.com/entities/xinjiang-beiken-energy-eng-a" target="_blank" data-smartkarma-citation="entities:29381:1" rel="noopener">Beiken Energy (002828 CH)</a> shares. </li>
<li>
<a href="https://www.smartkarma.com/entities/first-service-holding-ltd" target="_blank" data-smartkarma-citation="entities:34884:1" rel="noopener">First Service (2107 HK)</a>'s long stop date for the share transfer agreements expire at month-end. This may not be the ideal time to second-guess whether Sunac agrees to an extension. </li>
</ul>


Less than a week after Evergrande (3333 HK) and Kaisa (1638 HK) were officially declared defaulters,  Shimao Property (813 HK)'s bonds and shares plunged, as did Shimao Services (873 HK)'s shares. 

Sunac Services (1516 HK) is the second-worst worst performing property services play over the past week/month.  Separately, parent Sunac (1918 HK) recently sold &gt;US$1bn of Beiken Energy (002828 CH) shares. 

First Service (2107 HK)'s long stop date for the share transfer agreements expire at month-end. This may not be the ideal time to second-guess whether Sunac agrees to an extension. 


First Service (2107 HK): Too Hot To Handle

<ul>
<li>
<a href="https://www.smartkarma.com/entities/genting-bhd" target="_blank" data-smartkarma-citation="entities:14210:1" rel="noopener">Genting Bhd (GENT MK)</a> is attractive amid solid US and UK footfall numbers, easing border restrictions, and pent-up demand for international travel.</li>
<li>Preceding my comments on Genting - and <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> - are the weekly setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market cap - &gt;20%.</li>
</ul>



Genting Bhd (GENT MK) is attractive amid solid US and UK footfall numbers, easing border restrictions, and pent-up demand for international travel.
Preceding my comments on Genting - and Sunac China Holdings (1918 HK) - are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market cap - &gt;20%.


StubWorld: Betting On Genting's Recovery; Sunac China Trading "Rich"

Late last month, <a href="https://www.smartkarma.com/entities/modern-land-china-co-ltd" target="_blank" data-smartkarma-citation="entities:16899:1" rel="noopener">Modern Land China (1107 HK)</a> became the latest Chinese developer to miss a payment on a dollar bond. In an HKEx filing on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1026/2021102600163.pdf" target="_blank" rel="noopener">26 October</a>, Modern Land said that principal and interest payments on a US$250mn bond were “not met” by the 25 October deadline.
Modern Land had previously sought a three-month extension to the maturity on the bond, but later withdrew the proposal.  The company blamed the missed payment on “unexpected liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment, the real estate industry environment and the Covid-19 pandemic”.
Shares in Modern Land have been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1021/2021102100209.pdf" target="_blank" rel="noopener">suspended</a> since the 21 October. 
<h3>The New News</h3>
<a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services Holdings (1516 HK)</a> intends to acquire a 32.22% stake in <a href="https://www.smartkarma.com/entities/first-service-holding-limited" target="_blank" data-smartkarma-citation="entities:34884:1" rel="noopener">First Service Holding (2107 HK)</a>, the completion of which will trigger an unconditional mandatory cash offer.
The Offer Price is HK$2.6167/share,  a 91% premium to the closing price of First Service prior to the trading halt on October 8.
Zhang Lei is currently the major shareholder of First Service with 51.39%. He is also the major shareholder and chairman of Modern Land with 65.38%. His holding in First Service will decline to 30% upon the completion of the agreements with Sunac Services. Proceeds from the sale of HK$843mn, which may be subject to revision, are expected to be used to repay Modern Land's debt.
This appears a knock-out Offer for First Service. It is Sunac Services' intention to delist the company, should 90% of disinterested shareholders tender.
Timing is the key issue. 
More below the fold.

Late last month, Modern Land China (1107 HK) became the latest Chinese developer to miss a payment on a dollar bond. In an HKEx filing on the 26 October, Modern Land said that principal and interest payments on a US$250mn bond were “not met” by the 25 October deadline.
Modern Land had previously sought a three-month extension to the maturity on the bond, but later withdrew the proposal.  The company blamed the missed payment on “unexpected liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment, the real estate industry environment and the Covid-19 pandemic”.
Shares in Modern Land have been suspended since the 21 October. 
The New News
Sunac Services Holdings (1516 HK) intends to acquire a 32.22% stake in First Service Holding (2107 HK), the completion of which will trigger an unconditional mandatory cash offer.
The Offer Price is HK$2.6167/share,  a 91% premium to the closing price of First Service prior to the trading halt on October 8.
Zhang Lei is currently the major shareholder of First Service with 51.39%. He is also the major shareholder and chairman of Modern Land with 65.38%. His holding in First Service will decline to 30% upon the completion of the agreements with Sunac Services. Proceeds from the sale of HK$843mn, which may be subject to revision, are expected to be used to repay Modern Land's debt.
This appears a knock-out Offer for First Service. It is Sunac Services' intention to delist the company, should 90% of disinterested shareholders tender.
Timing is the key issue. 
More below the fold.

Sunac Services' Offer For First Service (2107 HK) May Support Modern Land

Hong Kong

First Service Holding Limited provides green property management services and green living solutions. The Company offers comprising cleaning, security, gardening and repair and maintenance, energy operation services, green technology consulting services, parking space management services, and more. First Service Holding conducts businesses in China.

First Service Holding (2107 HK)

First Service (2107 HK): Too Hot To Handle

I expect these share transfer agreements to be extended, if need be, and the spread to tighten once completed. But that outcome is by no means...

David Blennerhassett

StubWorld: Betting On Genting's Recovery; Sunac China Trading "Rich"

Genting Bhd (GENT MK) is attractive amid solid US and UK numbers, easing border restrictions, and pent-up demand for international travel.

David Blennerhassett

Sunac Services' Offer For First Service (2107 HK) May Support Modern Land

At HK$2.14/share, First Service is currently trading at a gross/annualised spread of 22.2%/128.1%, assuming late January completion. Or 39.6%...

David Blennerhassett