Equity Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a>.</li>
<li>Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  </li>
<li>Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. </li>
</ul>


According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for Vinda International (3331 HK).
Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  
Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. 


Vinda International (3331 HK):  Worst Is Likely Over

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Hengan International Group / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hengan-international-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan International Group (1044 HK)</a> and <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> are both market leaders in China's personal care industry.</li>
<li>Hengan's operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda's revenue. Both companies have been impacted by an increase in wood pulp prices.</li>
<li>Hengan is trading cheap; but Vinda's bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds. </li>
</ul>



Hengan International Group (1044 HK) and Vinda International (3331 HK) are both market leaders in China's personal care industry.
Hengan's operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda's revenue. Both companies have been impacted by an increase in wood pulp prices.
Hengan is trading cheap; but Vinda's bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds. 


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

<ul>
<li>Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-11-10/asia-pulp-paper-is-said-to-bid-for-stake-in-tissue-maker-vinda#xj4y7vzkg" target="_blank" rel="noopener">reported</a> Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring <a href="https://www.smartkarma.com/entities/essity-ab" target="_blank" data-smartkarma-citation="entities:28203:1" rel="noopener">Essity (ESSITYB SS)</a>’s controlling <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> stake at more than HK$20 per share.</li>
<li>Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.</li>
<li>Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.</li>
</ul>


Bloomberg reported Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring Essity (ESSITYB SS)’s controlling Vinda International (3331 HK) stake at more than HK$20 per share.
Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.
Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.


Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

<ul>
<li>On the 27 April, <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda (3331 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0427/2023042700007.pdf" target="_blank" rel="noopener">announced</a> its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See <a href="https://www.smartkarma.com/compose/insight/115530/Essity%20Mulls%20Holding%20In%20Vinda%20(3331%20HK).%20Read%20more:%20https:/skr.ma/nexgL" target="_blank" rel="noopener">Essity Mulls Holding In Vinda (3331 HK). </a>
</li>
<li>That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.</li>
<li>The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. </li>
</ul>


On the 27 April, Vinda (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See Essity Mulls Holding In Vinda (3331 HK). 

That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.
The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. 


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.</li>
<li>We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.</li>
<li>All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.</li>
</ul>


There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.


HSI Index Rebalance Preview: Better Late Than Never?

China

Hengan International Group Company Limited, through its subsidiaries, manufactures and sells personal hygiene products such as sanitary napkins and disposable baby diapers in China.  The Company's products are sold under the Anerle brand name.

Hengan International Group (1044 HK)

Vinda International (3331 HK): Worst Is Likely Over

Major pick up in trading volume in recent trading sessions - suggest to keep a close eye on the company. Thesis remain in tact.

Steve Zhou, CFA

Hengan/Vinda: Pulp Friction

Of the two, Hengan looks unduly beaten up here. I'd tilt outright long in Hengan; or hedge with Vinda (although that's been an awful trade in...

David Blennerhassett

Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

Vinda’s improving performance has supported the increasing list of potential bidders. The most likely bid structure is the acquisition of Essity’s...

Arun George

Vinda (3331 HK): Tanoto Sees The Wood

I would still tilt outright long in Hengan; or hedge with Vinda; although that has been a shocking trade in recent years.

David Blennerhassett

HSI Index Rebalance Preview: Better Late Than Never?

Adding 4 stocks gets us to 80 members - a target that was to be reached by mid-2022. We list 10 potential adds where passive trackers will need to...

Brian Freitas