Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>First it was the Li family's, via <a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a>, investment in two Panama ports, which raised the ire of the U.S. government. And remains unresolved.</li>
<li>Now the U.S.'s Federal Communication Commission (FCC) has taken the initial step to “expel Hong Kong Telecom” - i.e. <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT Ltd (6823 HK)</a> - from the US telecommunication network.</li>
<li>The FCC order cites HKT's affiliation with black-listed <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom (762 HK)</a>. Unicom holds a 18.4% stake in <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW (8 HK)</a>, HKT's parent.  A stake it acquired twenty years ago.</li>
</ul>


First it was the Li family's, via CK Hutchison Holdings (1 HK), investment in two Panama ports, which raised the ire of the U.S. government. And remains unresolved.
Now the U.S.'s Federal Communication Commission (FCC) has taken the initial step to “expel Hong Kong Telecom” - i.e. HKT Ltd (6823 HK) - from the US telecommunication network.
The FCC order cites HKT's affiliation with black-listed China Unicom (762 HK). Unicom holds a 18.4% stake in PCCW (8 HK), HKT's parent.  A stake it acquired twenty years ago.


The Li Family's Latest U.S. Setback As The FCC Targets HKT

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Since late-February (2/25/25 Compass and 2/27/25 Int'l Compass) we expected an 8-10% pullback to provide a buying opportunity.</li>
<li>But that all changed last week (4/1/25 Compass and 4/3/25 Int'l Compass), when we downgraded our outlook to bearish/cautious, citing several concerning developments.</li>
<li>Despite the 90-day pause, we remain cautious and we continue to favor defensives as long as the S&amp;P 500 and ACWI-US are below their 200-day MAs.</li>
</ul>


Since late-February (2/25/25 Compass and 2/27/25 Int'l Compass) we expected an 8-10% pullback to provide a buying opportunity.
But that all changed last week (4/1/25 Compass and 4/3/25 Int'l Compass), when we downgraded our outlook to bearish/cautious, citing several concerning developments.
Despite the 90-day pause, we remain cautious and we continue to favor defensives as long as the S&amp;P 500 and ACWI-US are below their 200-day MAs.


Still Favor Defensives Until Market Dynamics Improve; EURO STOXX 50 Testing Crucial 5000 Level

Singapore Telecommunications / Technical Analysis

<ul>
<li>We have been expecting near-term downside on ACWI-US and the S&amp;P 500 since our February 27 Int’l Compass, when both ACWI-US and the S&amp;P 500 displayed false breakouts.</li>
<li>Market dynamics have continued to deteriorate to the point where we don't see it as a buying opportunity, and we believe $115 support is not likely to hold on ACWI-US.</li>
<li>Therefore, we are cautious and would get defensive, as we believe the odds of a more prolonged downturn in global equities are rising.</li>
</ul>


We have been expecting near-term downside on ACWI-US and the S&amp;P 500 since our February 27 Int’l Compass, when both ACWI-US and the S&amp;P 500 displayed false breakouts.
Market dynamics have continued to deteriorate to the point where we don't see it as a buying opportunity, and we believe $115 support is not likely to hold on ACWI-US.
Therefore, we are cautious and would get defensive, as we believe the odds of a more prolonged downturn in global equities are rising.


Odds of a Prolonged Downturn Are Rising; We Are Cautious; Get Defensive

<ul>
<li>There's (still) a LOT of upside here. IF <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> sells the Operating Business at 1x book, there's at least another ¥5,800 in this, and maybe more.</li>
<li>FY25 results reaffirm <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a>'s stub ops continue to burn cash. Deconsolidated net debt touches an all-time high. And <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT (6823 HK)</a>'s dividend pass-through % is trending south. </li>
<li>
<a href="https://www.smartkarma.com/entities/yutaka-giken-co-ltd" target="_blank" data-smartkarma-citation="entities:4033:1" rel="noopener">Yutaka Giken (7229 JP)</a> will end up being a case study of how NOT to execute a takeover for a parent company, which is "responsible" for treating minorities fairly.</li>
</ul>


There's (still) a LOT of upside here. IF Toyota Industries (6201 JP) sells the Operating Business at 1x book, there's at least another ¥5,800 in this, and maybe more.
FY25 results reaffirm PCCW Ltd (8 HK)'s stub ops continue to burn cash. Deconsolidated net debt touches an all-time high. And HKT (6823 HK)'s dividend pass-through % is trending south. 

Yutaka Giken (7229 JP) will end up being a case study of how NOT to execute a takeover for a parent company, which is "responsible" for treating minorities fairly.


Last Week In Event SPACE: Toyota Industries, PCCW, Yutaka Giken, Ferretti, Daishin Securities

<ul>
<li>FY25 results reaffirm <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a>'s stub ops continue to burn cash. Deconsolidated net debt touches an all-time high. And <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT (6823 HK)</a>'s dividend pass-through % is trending south.</li>
<li>Preceding my comments on PCCW/ HKT are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


FY25 results reaffirm PCCW Ltd (8 HK)'s stub ops continue to burn cash. Deconsolidated net debt touches an all-time high. And HKT (6823 HK)'s dividend pass-through % is trending south.
Preceding my comments on PCCW/ HKT are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: PCCW's Irrational NAV Premium & Implied Stub

Hong Kong

HKT is Hong Kong's premier telecommunications service provider and a leading innovator, offering fixed-line, mobile, broadband internet, and media entertainment services. The company also provides enterprise solutions, digital ventures, and other services such as its loyalty program, financial services, and health technology. HKT was incorporated in 2011 and is headquartered in Quarry Bay, Hong Kong, with its origins tracing back to the Hong Kong Telephone Company Limited established in 1925.

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HKT (6823 HK)

The Li Family's Latest U.S. Setback As The FCC Targets HKT

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Vermilion Research

Odds of a Prolonged Downturn Are Rising; We Are Cautious; Get Defensive

Odds of a Prolonged Downturn are Rising; We are Cautious; Get Defensive; $115 on ACWI-US Remains Key Level, and is at Risk of Breakdown. Actionable...

Vermilion Research

Last Week In Event SPACE: Toyota Industries, PCCW, Yutaka Giken, Ferretti, Daishin Securities

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

StubWorld: PCCW's Irrational NAV Premium & Implied Stub

Deconsolidated net debt is now at an an all-time high. And by my calcs, the HKT (6823 HK) dividend pass-through % is consistently trending down. I...

David Blennerhassett

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