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.

Event-Driven

<a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a>, the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. <div class="content-highlight">The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. </div>

Cp Pokphand (43 HK) (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from CP FOODS (CPF TB), the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. 

C.P. Pokphand’s Privatisation Bid from CPF

Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Equity Bottom-Up

<ul>
<li>mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, received an unsolicited bid for their Singapore and Malaysian cinema business. The offer made would imply a share price of about SGD 16.2cents, +140% from today’s close.</li>
<li>We uncover a massive buyback program underway at Alliance Global Group (AGI PM), Emperador (EMP PM) and Megaworld (MEG PM).</li>
<li>The US$1.5bn IPO of Indonesian online flea market Bukalapak (BUKA IJ) is planned for next week. While another Asia focused SPAC files for US listing.</li>
</ul>


mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, received an unsolicited bid for their Singapore and Malaysian cinema business. The offer made would imply a share price of about SGD 16.2cents, +140% from today’s close.
We uncover a massive buyback program underway at Alliance Global Group (AGI PM), Emperador (EMP PM) and Megaworld (MEG PM).
The US$1.5bn IPO of Indonesian online flea market Bukalapak (BUKA IJ) is planned for next week. While another Asia focused SPAC files for US listing.


Wickhams Hill Research | Under-The-Radar Issue 2

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

We met up with two very different small-cap companies in the recent weeks, and here's a quick rundown:<ul>
<li>
McJean's earnings collapsed 38% on the back of a 16% revenue decline, hurting their credibility big time. SSS plunged 14%, and new product lines like UP doesn't look like they will turn things around.</li>
<li>
GFPT's earnings soared 56% despite revenues inching up only 6.2%, largely due to the subsidiary profit improfit at McKey, a McDonald's supplier of chicken.</li>
<li>Earnings growth at GFPT set to moderate going forward, but positives in 2019 include the relatively tame feed prices (soybeans/corn), which reduces their cost.</li>
</ul>

We met up with two very different small-cap companies in the recent weeks, and here's a quick rundown:

McJean's earnings collapsed 38% on the back of a 16% revenue decline, hurting their credibility big time. SSS plunged 14%, and new product lines like UP doesn't look like they will turn things around.

GFPT's earnings soared 56% despite revenues inching up only 6.2%, largely due to the subsidiary profit improfit at McKey, a McDonald's supplier of chicken.
Earnings growth at GFPT set to moderate going forward, but positives in 2019 include the relatively tame feed prices (soybeans/corn), which reduces their cost.


Research-Intensive Fundamental Value Advisor

Wickhams Hill

Wickhams Hill Capital is a research-intensive fundamental value advisor, on long and occasionally short investment opportunities concentrated in small and mid-cap public companies.

<h2>Earnings weaknesses likely prolonged</h2>A drawback in the domestic chicken price combined with a sharp rise in soy-meal and corn feedstock prices led to a 10% reduction in FY17 Cons. Earnings and 30% fall in share price from their recent October peak.The unfavourable trading environment, made worse by sluggish domestic demand and strong THB, is likely to extend into 2018, leading to a 20% drop in FY18 consensus estimates.Although it may seem like an enticing point of entry following the sell-off, we…

Earnings weaknesses likely prolongedA drawback in the domestic chicken price combined with a sharp rise in soy-meal and corn feedstock prices led to a 10% reduction in FY17 Cons. Earnings and 30% fall in share price from their recent October peak.The unfavourable trading environment, made worse by sluggish domestic demand and strong THB, is likely to extend into 2018, leading to a 20% drop in FY18 consensus estimates.Although it may seem like an enticing point of entry following the sell-off, we…

Too Early to Bottom Feed as Chickens Fly into More Headwinds

Charoen Pokphand Foods / Equity Bottom-Up

In this review, we compare the two largest food processors in Thailand and favor CPF over TU (Thai Union), the world's biggest seafood company, with five reasons in favor of the former and three in favor of the latter. While slightly more expensive, CPF operates in less political terrain, and its recent deal track record is much better than TU.For investors who can buy less liquid stocks, we actually prefer TVO (soybean meal giant) and CFRESH (a much smaller and opportunistic seafood company than TU). Both of them trade well below market average valuations and have dividend yields of almost 7%. If you prefer only one, we pick TVO because of better demographics and lower risk, since human trafficking concerns have become an issue for all seafood companies operating from Thailand.

In this review, we compare the two largest food processors in Thailand and favor CPF over TU (Thai Union), the world's biggest seafood company, with five reasons in favor of the former and three in favor of the latter. While slightly more expensive, CPF operates in less political terrain, and its recent deal track record is much better than TU.For investors who can buy less liquid stocks, we actually prefer TVO (soybean meal giant) and CFRESH (a much smaller and opportunistic seafood company than TU). Both of them trade well below market average valuations and have dividend yields of almost 7%. If you prefer only one, we pick TVO because of better demographics and lower risk, since human trafficking concerns have become an issue for all seafood companies operating from Thailand.

Thailand

GFPT Public Company Limited operates a fully integrated poultry business, encompassing feed mills, breeder and broiler farms, hatcheries, chicken evisceration, and processed food production. The company produces and distributes fresh, frozen, and cooked chicken products, as well as land and aquatic animal feed, for both domestic and international markets. GFPT was founded in 1981 and is headquartered in Bangkok, Thailand.

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GFPT (GFPT TB)

C.P. Pokphand’s Privatisation Bid from CPF

CPP announced a privatisation offer from CPF at HK$1.15 cash for each scheme share. Overall, we think the offer price is attractive and that the...

Arun George

Wickhams Hill Research | Under-The-Radar Issue 2

mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, receivedan unsolicited bid for their Singapore and Malaysian cinema business

Lloyd Moffatt

McJeans & GFPT: Can It Get Any Worse?

We met up with two very different small-cap companies in the recent weeks, and here's a quick rundown: McJean's earnings collapsed 38% on the back...

Athaporn Arayasantiparb, CFA

Too Early to Bottom Feed as Chickens Fly into More Headwinds

Earnings weaknesses likely prolongedA drawback in the domestic chicken price combined with a sharp rise in soy-meal and corn feedstock prices led...

Lloyd Moffatt

Food Fight: CPF Vs TU

In this review, we compare the two largest food processors in Thailand and favor CPF over TU (Thai Union), the world's biggest seafood company,...

Athaporn Arayasantiparb, CFA

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