Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Yesterday, <a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a>'s <a href="https://www.smartkarma.com/entities/yihai-kerry-arawana-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:29184:1" rel="noopener">Yihai Kerry Arawana Holdings Co Ltd (YKA CH)</a> (YKA) commenced trading on the Shenzhen Stock Exchange (ChiNext Board). Priced at RMB25.70/share, shares closed at RMB56/share. Shares are currently changing hands at RMB49.  That backs out a trailing PER of ~59x.</p>
<p>And Wilmar's reaction yesterday? Down 6.4% in what appears to be a "sell the news" trade.</p>
<p>I see Wilmar's discount to NAV at 55%. Shares haven't retested near-term highs since <a href="https://www.smartkarma.com/entities/archer-daniels-midland-co" target="_blank" data-smartkarma-citation="entities:14746:1" rel="noopener">Archer Daniels Midland Co (ADM US)</a>'s placement in August. But since that placement, uncertainty over YKA's IPO has been removed. Wilmar is cheap here.</p>
<p>As always, more below the fold.</p>
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<p><em>For some background history on YKA's IPO, please refer to past insights below:</em></p>
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<h3>Date </h3>
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<td style="width: 578.75px;">
<h3>Insight</h3>
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<td style="width: 124.782px;">17-Sep-20</td>
<td style="width: 578.75px;"><a href="https://skr.ma/U4wbi" target="_blank" rel="noopener">Wilmar: China Ops IPO One Step Closer</a></td>
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<td style="width: 124.782px;">29-Sep-20</td>
<td style="width: 578.75px;"><a href="https://skr.ma/xBrVA" target="_blank" rel="noopener">Wilmar: YKA's Pricing &amp; Cheap Rump Stake</a></td>
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</tbody>
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<p></p>
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Yesterday, Wilmar International (WIL SP)'s Yihai Kerry Arawana Holdings Co Ltd (YKA CH) (YKA) commenced trading on the Shenzhen Stock Exchange (ChiNext Board). Priced at RMB25.70/share, shares closed at RMB56/share. Shares are currently changing hands at RMB49.  That backs out a trailing PER of ~59x.
And Wilmar's reaction yesterday? Down 6.4% in what appears to be a "sell the news" trade.
I see Wilmar's discount to NAV at 55%. Shares haven't retested near-term highs since Archer Daniels Midland Co (ADM US)'s placement in August. But since that placement, uncertainty over YKA's IPO has been removed. Wilmar is cheap here.
As always, more below the fold.



For some background history on YKA's IPO, please refer to past insights below:






Date 


Insight



17-Sep-20
Wilmar: China Ops IPO One Step Closer


29-Sep-20
Wilmar: YKA's Pricing &amp; Cheap Rump Stake









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<p>Back on the 12 July, major agribusiness outfit <a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> <a href="https://links.sgx.com/FileOpen/Wilmar_announcement_on_proposed_China_IPO_dd_12Jul2019%20.ashx?App=Announcement&amp;FileID=570225" target="_blank" rel="noopener">announced</a> that the China Securities Regulatory Commission (CSRC) had accepted Yihai Kerry Arawana Holdings' (YKA) application for its proposed listing on the Shenzhen Stock Exchange (ChiNext Board).</p>
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<p>YKA is one of the largest agribusiness and food processing companies in China and is currently 99.99% held by Wilmar.</p>
<p>I discussed this IPO in <em><a href="https://skr.ma/U4wbi" target="_blank" rel="noopener">China Ops IPO One Step Closer</a></em>.</p>
<p>An indicative timetable has now been <a href="https://links.sgx.com/FileOpen/Wilmar_announcement_on_China_listing_timetable_18Sep2020.ashx?App=Announcement&amp;FileID=632078" target="_blank" rel="noopener">issued</a> with an expected listing mid-October.</p>
<p>The issue price will be <a href="https://links.sgx.com/FileOpen/Wilmar_announcement_on_update_on_China_listing_24Sept2020.ashx?App=Announcement&amp;FileID=632581" target="_blank" rel="noopener">RMB25.70/share</a>, or a 31.12x YKA's FY19 recurring net profit. The unlisted stub is trading at an implied trailing PER of 3x.</p>
<p>The amount to be raised is RMB13.933bn for 10% of shares out on fully diluted basis. Investor interest has been strong - with the online portion for RMB5.82bn oversubscribed 600+x. </p>
<p>Wilmar is trading flat over the past month, and up 9% YTD. I think the stock has more to run.</p>
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<p></p>
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<p></p>
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Back on the 12 July, major agribusiness outfit Wilmar International (WIL SP) announced that the China Securities Regulatory Commission (CSRC) had accepted Yihai Kerry Arawana Holdings' (YKA) application for its proposed listing on the Shenzhen Stock Exchange (ChiNext Board).


YKA is one of the largest agribusiness and food processing companies in China and is currently 99.99% held by Wilmar.
I discussed this IPO in China Ops IPO One Step Closer.
An indicative timetable has now been issued with an expected listing mid-October.
The issue price will be RMB25.70/share, or a 31.12x YKA's FY19 recurring net profit. The unlisted stub is trading at an implied trailing PER of 3x.
The amount to be raised is RMB13.933bn for 10% of shares out on fully diluted basis. Investor interest has been strong - with the online portion for RMB5.82bn oversubscribed 600+x. 
Wilmar is trading flat over the past month, and up 9% YTD. I think the stock has more to run.






Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<p>In our weekly Shanghai/Shenzhen Connect Ideas series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. </p><p>We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well between USD 1 billion and USD 5 billion.</p><p>In this insight, we will highlight the consecutive two weeks of net outflow from the A-share market. We will also briefly discuss Hikvision, Muyuan, Moutai, and Wuliangye. </p>

In our weekly Shanghai/Shenzhen Connect Ideas series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well between USD 1 billion and USD 5 billion.In this insight, we will highlight the consecutive two weeks of net outflow from the A-share market. We will also briefly discuss Hikvision, Muyuan, Moutai, and Wuliangye. 

Shanghai/Shenzhen Connect Ideas: Technologies, Porks and Hard Liquors (2019-05-17)

<p>In our Discover SZ/SH Connect series, we aim to help our investors understand the flow of northbound trades via the Shanghai Connect and Shenzhen Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by offshore investors in the past seven days.</p><p>We split the stocks eligible for the northbound trade into three groups: those with a market capitalization of above USD 5 billion, and those with a market capitalization between USD 1 billion and USD 5 billion.</p><p>We note that offshore investors were buying all GICS sectors, and had a strong preference for Industrials, Consumer Staples, Consumer Discretionary, and Financials names. We estimate that total inflow into the A-share market via northbound trade amounted to USD 8.4 bn in February.</p>

In our Discover SZ/SH Connect series, we aim to help our investors understand the flow of northbound trades via the Shanghai Connect and Shenzhen Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by offshore investors in the past seven days.We split the stocks eligible for the northbound trade into three groups: those with a market capitalization of above USD 5 billion, and those with a market capitalization between USD 1 billion and USD 5 billion.We note that offshore investors were buying all GICS sectors, and had a strong preference for Industrials, Consumer Staples, Consumer Discretionary, and Financials names. We estimate that total inflow into the A-share market via northbound trade amounted to USD 8.4 bn in February.

Shanghai/Shenzhen Connect - $8.4 Bn Inflows in February (Kweichow Moutai, Aier Eye, Luxshare)

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Equity Bottom-Up

<p>Since my <a href="https://www.smartkarma.com/insights/wh-group-china-s-pork-tariffs-could-trim-ebit-margins-by-1-to-1-5ppt-near-term" target="_blank">bearish note</a> two months ago, the share price of WH Group fell over 25% on the back of US-China trade tensions. However, trade fears are overplayed in my view.  The stock's derating signals that most negative news are likely factored into its share price.</p><p>Instead, investors should look at some silver linings including China's recent lowering of individual tax rates plus the cutting of import tariffs on many consumer goods -- both of which will help boost domestic consumers' purchasing power.  In this article, I estimate the worst possible impact of retaliatory moves by China and Mexico on the company's various segments and present them in a table. This article has five sections as follows:</p><ol><li>Consensus was wrong</li><li>China's and Mexico's responses to US tariffs</li><li>Biggest impact: US Fresh Pork segment for now</li><li>Working in the impact on group revenues</li><li><p>Amidst the negative headlines, investors should look at these positives</p></li></ol>

Since my bearish note two months ago, the share price of WH Group fell over 25% on the back of US-China trade tensions. However, trade fears are overplayed in my view.  The stock's derating signals that most negative news are likely factored into its share price.Instead, investors should look at some silver linings including China's recent lowering of individual tax rates plus the cutting of import tariffs on many consumer goods -- both of which will help boost domestic consumers' purchasing power.  In this article, I estimate the worst possible impact of retaliatory moves by China and Mexico on the company's various segments and present them in a table. This article has five sections as follows:Consensus was wrongChina's and Mexico's responses to US tariffsBiggest impact: US Fresh Pork segment for nowWorking in the impact on group revenuesAmidst the negative headlines, investors should look at these positives

WH Group: Back to Buy Levels, Trade Fears Overplayed

China

Henan Shuanghui Investment & Development Co., Ltd. is an investment holding company.  Through its subsidiaries, the Company manufactures meat products and frozen food, provides processing and printing services, as well as operates in commercial trading.

Henan Shuanghui Investment & Development (000895 CH)

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Henan Shuanghui Investment & Development (000895 CH)

Wilmar Is A Buy After YKA’s Listing

YKA shares jump 118% on its ChiNext debut - yet Wilmar sheds 6.4%. At a 55% discount to NAV, Wilmar is a buy with a view to retesting the pre-ADM...

David Blennerhassett

Wilmar: YKA's Pricing & Cheap Rump Stake

Major agribusiness outfit Wilmar International (WIL SP) announced on the 12 July 2019 that the China Securities Regulatory Commission (CSRC) had...

David Blennerhassett

Shanghai/Shenzhen Connect Ideas: Technologies, Porks and Hard Liquors (2019-05-17)

In our weekly Shanghai/Shenzhen Connect Ideas series, we aim to help our investors understand the flow of northbound trades via the Shanghai and...

Ke Yan, CFA, FRM

Shanghai/Shenzhen Connect - $8.4 Bn Inflows in February (Kweichow Moutai, Aier Eye, Luxshare)

In our Discover SZ/SH Connect series, we aim to help our investors understand the flow of northbound trades via the Shanghai Connect and Shenzhen...

Ke Yan, CFA, FRM

WH Group: Back to Buy Levels, Trade Fears Overplayed

Since my bearish note two months ago, the share price of WH Group fell over 25% on the back of US-China trade tensions. However, trade fears are...

Valerie Law, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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