HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Hainan Meilan International Airport / Equity Bottom-Up

<ul>
<li>The change in controlling shareholder at <a href="https://www.smartkarma.com/entities/hainan-meilan-international-airport-company-limited" target="_blank" data-smartkarma-citation="entities:12545:1" rel="noopener">Hainan Meilan International Airport (357 HK)</a> will trigger a general offer. At HK$10.62, we do not see the proposed offer price attractive.</li>
<li>The proposed price is only at 10.6% premium to the latest closing price, and equals to 1.15x 12-month forward P/B, way lower than the 5-year peak of 5.1x.</li>
<li>The new parent <a href="https://www.smartkarma.com/entities/hainan-island-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1233:1" rel="noopener">Hainan Airport Infrastructure (600515 CH)</a> can generate synergy, and the turn of Hainan into a Free Trade Port will attract visitors, boosting the long-term outlook. </li>
</ul>


The change in controlling shareholder at Hainan Meilan International Airport (357 HK) will trigger a general offer. At HK$10.62, we do not see the proposed offer price attractive.
The proposed price is only at 10.6% premium to the latest closing price, and equals to 1.15x 12-month forward P/B, way lower than the 5-year peak of 5.1x.
The new parent Hainan Airport Infrastructure (600515 CH) can generate synergy, and the turn of Hainan into a Free Trade Port will attract visitors, boosting the long-term outlook. 


Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer

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

Hainan Meilan International Airport / Event-Driven

<ul>
<li>Haikou Meilan International Airport Company entered an SPA with <a href="https://www.smartkarma.com/entities/hainan-island-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1233:1" rel="noopener">Hainan Island Construction (600515 CH)</a> to sell its <a href="https://www.smartkarma.com/entities/hainan-meilan-international-airport-company-limited" target="_blank" data-smartkarma-citation="entities:12545:1" rel="noopener">Hainan Meilan International Airport (357 HK)</a> 50.19% stake at RMB9.85 per share (HK$10.62).</li>
<li>The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.</li>
<li>Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.  </li>
</ul>


Haikou Meilan International Airport Company entered an SPA with Hainan Island Construction (600515 CH) to sell its Hainan Meilan International Airport (357 HK) 50.19% stake at RMB9.85 per share (HK$10.62).
The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.
Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.  


Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Thematic (Sector/Industry)

<ul>
<li>Chinese airports have turnaround with Xiamen, Guangzhou, and Shanghai airports reported 9M23 profits. The others (Beijing, Shenzhen, Hainan) are still lossmaking, but should turnaround soon   </li>
<li>The upcoming Winter/Spring schedule reveals international capacity at 70% of 2019's level, a catalyst for strong earnings growth, as international flights generate &gt;2.5x higher revenues   </li>
<li>
<a href="https://www.smartkarma.com/entities/xiamen-international-air-a" target="_blank" data-smartkarma-citation="entities:18544:1" rel="noopener">Xiamen International Air A (600897 CH)</a> exhibits the best value; <a href="https://www.smartkarma.com/entities/shanghai-international-airport-co-ltd" target="_blank" data-smartkarma-citation="entities:6511:1" rel="noopener">Shanghai International Airport (600009 CH)</a> is the most appealing due to its size and liquidity </li>
</ul>


Chinese airports have turnaround with Xiamen, Guangzhou, and Shanghai airports reported 9M23 profits. The others (Beijing, Shenzhen, Hainan) are still lossmaking, but should turnaround soon   
The upcoming Winter/Spring schedule reveals international capacity at 70% of 2019's level, a catalyst for strong earnings growth, as international flights generate &gt;2.5x higher revenues   

Xiamen International Air A (600897 CH) exhibits the best value; Shanghai International Airport (600009 CH) is the most appealing due to its size and liquidity 


Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The gold rush continues with another Canadian outfit bidding to take over an Aussie-listed West African gold play. </li>
<li>Junior miner <a href="https://www.smartkarma.com/entities/african-gold-ltd" target="_blank" data-smartkarma-citation="entities:29028:1" rel="noopener">African Gold (A1G AU)</a>has entered into a Scheme with <a href="https://www.smartkarma.com/entities/montage-gold-corp" target="_blank" data-smartkarma-citation="entities:43368:1" rel="noopener">Montage Gold (MAU CN)</a>. African Gold shareholders will receive 0.0628 new MAU shares for every A1G share.</li>
<li>That backs out an implied value of A$0.50/share. Independent directors, holding 11.6% of shares out, are supportive. Montage holds 17.3%. Clean deal.</li>
</ul>


The gold rush continues with another Canadian outfit bidding to take over an Aussie-listed West African gold play. 
Junior miner African Gold (A1G AU)has entered into a Scheme with Montage Gold (MAU CN). African Gold shareholders will receive 0.0628 new MAU shares for every A1G share.
That backs out an implied value of A$0.50/share. Independent directors, holding 11.6% of shares out, are supportive. Montage holds 17.3%. Clean deal.


African Gold Ltd (A1G AU) Enters Scheme With Montage Gold (MAU CN)

<ul>
<li>Late Friday (28th November), general building contractor <a href="https://www.smartkarma.com/entities/low-keng-huat-singapore-ltd" target="_blank" data-smartkarma-citation="entities:1928:1" rel="noopener">Low Keng Huat Singapore (LKH SP)</a> ("LKH") announced a voluntary conditional Offer from Dato' Marco Low Peng Kiat, LKH's controlling shareholder (54.13%).</li>
<li>Low is offering S$0.72/share, a so-so 17.1% premium to undisturbed, but a decade-high price. Plus the share price is up 104% YTD. Recent results (to 31st July) were also underwhelming.</li>
<li>The Offer has a 90% acceptance hurdle condition. Low does not intend to maintain listing. The price hasn't been declared final, possibly leading to a bump in the home stretch. </li>
</ul>


Late Friday (28th November), general building contractor Low Keng Huat Singapore (LKH SP) ("LKH") announced a voluntary conditional Offer from Dato' Marco Low Peng Kiat, LKH's controlling shareholder (54.13%).
Low is offering S$0.72/share, a so-so 17.1% premium to undisturbed, but a decade-high price. Plus the share price is up 104% YTD. Recent results (to 31st July) were also underwhelming.
The Offer has a 90% acceptance hurdle condition. Low does not intend to maintain listing. The price hasn't been declared final, possibly leading to a bump in the home stretch. 


China

Hainan Meilan International Airport Company Limited provides airfield services, terminal facilities, ground handling services, passenger and cargo handling services. The Company also leases commercial and retail space at the Meilan Airport, operates airport-related business franchising, advertising, car parking, tourism services, and sells duty-free and consumable goods.

Hainan Meilan International Airport (357 HK)

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Hainan Meilan International Airport (357 HK)

Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer

Meilan Airport's change in parent company triggers a general offer, but the proposed price is unattractive at 10.6% premium. Synergy with new...

Osbert Tang, CFA

Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62

The parent is selling out to Hainan Airport Infrastructure at HK$10.62. Completion will trigger an unconditional MGO. Timing is the key risk.

Arun George

Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...

Mohshin Aziz

African Gold Ltd (A1G AU) Enters Scheme With Montage Gold (MAU CN)

As this is a cross-border trade, you could try to go short MAU late in its trading day; long African Gold, early in its trading day; however the...

David Blennerhassett

Low Keng Huat (LKH SP)'s Clean MBO

Clean deal. If super illiquid arbs are your bag, get involved at S$0.70/share or better, assuming late Jan 2026 payment. A bump in terms cannot be...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer

Meilan Airport's change ​in parent company triggers a general offer, but the proposed price is unattractive at 10.6% premium. Synergy with new...

Osbert Tang, CFA

Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62

The parent is selling out to Hainan Airport Infrastructure at HK$10.62. Completion will trigger an unconditional MGO. Timing is the key risk.

Arun George

Chinese Airports at Inflection Point, Low Risk and High Visibility Growth Sector

​Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...

Mohshin Aziz

African Gold Ltd (A1G AU) Enters Scheme With Montage Gold (MAU CN)

As this is a cross-border trade, you could try to go short MAU late in its trading day; long African Gold, early in its trading day; however the...

David Blennerhassett

Low Keng Huat (LKH SP)'s Clean MBO

Clean deal. If super illiquid arbs are your bag, get involved at S$0.70/share or better, assuming late Jan 2026 payment. A bump in terms cannot be...

David Blennerhassett

Meilan Airport's change in parent company triggers a general offer, but the proposed price is unattractive at 10.6% premium. Synergy with new...

Chinese airports have underperformed the CSI 300 despite a successful turnaround. There will be a surge in lucrative international flights that...