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

Langham Hospitality Inv Ss / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/langham-hospitality-inv-ss" target="_blank" data-smartkarma-citation="entities:760:1" rel="noopener">Langham Hospitality Inv Ss (1270 HK)</a> received a notice from <a href="https://www.smartkarma.com/entities/great-eagle-holdings-ltd" target="_blank" data-smartkarma-citation="entities:758:1" rel="noopener">Great Eagle Holdings (41 HK)</a>, the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.</li>
<li>The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.</li>
<li>Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.</li>
</ul>



Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.


Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

China Vast Industrial Urban Development / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-vast-industrial-urban-development-company-limited" target="_blank" data-smartkarma-citation="entities:3212:1" rel="noopener">China Vast Industrial Urban Development (6166 HK)</a>'s scheme document is out with the court meeting scheduled for 23 November. The IFA considers the offer to be fair and reasonable. </li>
<li>Key conditions include approval by at least 75% of independent shareholders (&lt;10% rejection). Shareholders with blocking stakes either provided irrecovables or will likely support the offer.</li>
<li>The offer is not great but headcount test is not applicable. At last close and for the 14 December payment, the gross and annualised spread is 0.8% and 6.7%, respectively.</li>
</ul>



China Vast Industrial Urban Development (6166 HK)'s scheme document is out with the court meeting scheduled for 23 November. The IFA considers the offer to be fair and reasonable. 
Key conditions include approval by at least 75% of independent shareholders (&lt;10% rejection). Shareholders with blocking stakes either provided irrecovables or will likely support the offer.
The offer is not great but headcount test is not applicable. At last close and for the 14 December payment, the gross and annualised spread is 0.8% and 6.7%, respectively.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-vast-industrial-urban-development-company-limited" target="_blank" data-smartkarma-citation="entities:3212:1" rel="noopener">China Vast Industrial Urban Development (6166 HK)</a> announced that all the pre-conditions were fulfilled. <a href="https://www.smartkarma.com/entities/china-jinmao-holdings-group" target="_blank" data-smartkarma-citation="entities:35:1" rel="noopener">China Jinmao Holdings (817 HK)</a>’s offer is HK$2.40 per share.</li>
<li>The key condition is approval by at least 75% of disinterested shareholders (&lt;10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.</li>
<li>The offer is light, but the headcount test is not applicable. At last close and for a year-end payment, the gross and annualised spread is 0.8% and 4.0%, respectively.</li>
</ul>



China Vast Industrial Urban Development (6166 HK) announced that all the pre-conditions were fulfilled. China Jinmao Holdings (817 HK)’s offer is HK$2.40 per share.
The key condition is approval by at least 75% of disinterested shareholders (&lt;10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
The offer is light, but the headcount test is not applicable. At last close and for a year-end payment, the gross and annualised spread is 0.8% and 4.0%, respectively.


China VAST: Pre-Condition Fulfilled for the China Jinmao Offer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-vast-industrial-urban-development-company-limited" target="_blank" data-smartkarma-citation="entities:3212:1" rel="noopener">China Vast Industrial Urban Development (6166 HK)</a> announced a pre-conditional privatisation offer from <a href="https://www.smartkarma.com/entities/china-jinmao-holdings-group" target="_blank" data-smartkarma-citation="entities:35:1" rel="noopener">China Jinmao Holdings (817 HK)</a> at HK$2.40 per share, a 30.4% premium to the undisturbed price.</li>
<li>Key conditions include approval by at least 75% disinterested shareholders (&lt;10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.</li>
<li>The headcount test (if still applicable) is a key challenge as minorities are likely to be unimpressed. We would be buyers up to HK$2.26 per share (implies 75% deal probability).</li>
</ul>



China Vast Industrial Urban Development (6166 HK) announced a pre-conditional privatisation offer from China Jinmao Holdings (817 HK) at HK$2.40 per share, a 30.4% premium to the undisturbed price.
Key conditions include approval by at least 75% disinterested shareholders (&lt;10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
The headcount test (if still applicable) is a key challenge as minorities are likely to be unimpressed. We would be buyers up to HK$2.26 per share (implies 75% deal probability).


China VAST’s Underwhelming Privatisation Bid from China Jinmao

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<div class="content-highlight">
<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: [Under the section “On the Evergrande holding”], that (unrealised &amp; realised) loss on the investment in Evergrande (3333 HK) of HK$10.4bn almost certainly includes the HK$3.99bn loss on investment included in the 2021 interims.</strong></em></p>
<p><em><strong>Therefore the additional (unrealised &amp; realised) loss on investment, using the $2.95/share price for Evergrande as provided in the announcement, is ~HK$6.4bn, or HK$3.37/share, giving an adjusted NAV of HK$9.61/share (ignoring forward earnings), implying a P/B under the Offer of ~0.42x compared to a three-year average of 0.31x.</strong></em></p>
</div>
<p>After being <a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%2Fwww1.hkexnews.hk%2Flistedco%2Flistconews%2Fsehk%2F2021%2F0929%2F2021092900219.pdf&amp;clen=26125&amp;chunk=true" target="_blank" rel="noopener">suspended</a> on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a>, a leading property developer in Hong Kong, has now <a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%2Fwww1.hkexnews.hk%2Flistedco%2Flistconews%2Fsehk%2F2021%2F1006%2F2021100601285.pdf&amp;clen=203491&amp;chunk=true" target="_blank" rel="noopener">announced</a> an Offer, by way of a Scheme, from its founder, Joseph Lau, and his wife Chan Hoi Wan.</p>
</div>
<div>
<p>The consideration is $4.00/share, a 37.9% premium to last close, but an impressive 83.5% premium to the close on the last full trading day. The Offer price will NOT be increased.</p>
</div>
<div>
<p>Lau and Chan control <a href="https://di.hkex.com.hk/di/NSAllSSList.aspx?sa2=as&amp;sid=206&amp;corpn=Chinese+Estates+Holdings+Ltd.&amp;sd=29/09/2013&amp;ed=29/09/2021&amp;cid=0&amp;sa1=cl&amp;scsd=29%2f09%2f2013&amp;sced=29%2f09%2f2021&amp;sc=127&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">74.99%</a> of the company. Disinterested shareholders comprise 21.41% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 2.141% of shares out. </p>
<p>The headcount test applies.</p>
</div>
<div>
<p>In <em><a href="https://skr.ma/1HQM2" target="_blank" rel="noopener">Chinese Estates (127 HK): Potential Privatisation?</a></em>, I expected a punchy premium (to the "undisturbed price") upwards of up 75%, or $3.82/share, to get this over the line. This has been exceeded. </p>
<p>Optically, Lau and Chan appear to be getting Chinese Estates at a bargain. But the current realised plus unrealised losses on the <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> holding is HK$10.4bn, which dramatically alters what is deemed to be book value, and therefore the implied valuation metric under the Offer.</p>
<p>This looks like a done deal and should trade tight to terms.</p>
</div>
<div>
<div>
<p></p>
</div>
</div>



Corrigenda: There is an error in this Insight. Please note the correction.
Correction: [Under the section “On the Evergrande holding”], that (unrealised &amp; realised) loss on the investment in Evergrande (3333 HK) of HK$10.4bn almost certainly includes the HK$3.99bn loss on investment included in the 2021 interims.
Therefore the additional (unrealised &amp; realised) loss on investment, using the $2.95/share price for Evergrande as provided in the announcement, is ~HK$6.4bn, or HK$3.37/share, giving an adjusted NAV of HK$9.61/share (ignoring forward earnings), implying a P/B under the Offer of ~0.42x compared to a three-year average of 0.31x.

After being suspended on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Chinese Estates Holdings (127 HK), a leading property developer in Hong Kong, has now announced an Offer, by way of a Scheme, from its founder, Joseph Lau, and his wife Chan Hoi Wan.


The consideration is $4.00/share, a 37.9% premium to last close, but an impressive 83.5% premium to the close on the last full trading day. The Offer price will NOT be increased.


Lau and Chan control 74.99% of the company. Disinterested shareholders comprise 21.41% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 2.141% of shares out. 
The headcount test applies.


In Chinese Estates (127 HK): Potential Privatisation?, I expected a punchy premium (to the "undisturbed price") upwards of up 75%, or $3.82/share, to get this over the line. This has been exceeded. 
Optically, Lau and Chan appear to be getting Chinese Estates at a bargain. But the current realised plus unrealised losses on the Evergrande (3333 HK) holding is HK$10.4bn, which dramatically alters what is deemed to be book value, and therefore the implied valuation metric under the Offer.
This looks like a done deal and should trade tight to terms.







Chinese Estates (127 HK): $4.00/Share Offer

Hong Kong

Hopewell Holdings Limited, through its subsidiaries, develops and invests in properties.  The Company also operates hotels, restaurants and food catering businesses, provides agency, construction, and project management services as well as invests in treasuries and infrastructure projects.

Hopewell Holdings (54 HK)

Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47%...

Arun George

China VAST’s Vote on 23 November

The offer is not great but this is a done deal. At the last close and for the 14 December payment, the annualised spread is 6.7%.

Arun George

China VAST: Pre-Condition Fulfilled for the China Jinmao Offer

The headcount test is not applicable, and this is a done deal. At the last close and for a year-end payment, the annualised spread is 4.0%.

Arun George

China VAST’s Underwhelming Privatisation Bid from China Jinmao

The offer price is unattractive to historical multiples and precedent transactions. We would be buyers up to HK$2.26 per share (implies 75% deal...

Arun George

Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47%...

Arun George

China VAST’s Vote on 23 November

The offer is not great but this is a done deal. At the last close and for the 14 December payment, the annualised spread is 6.7%.

Arun George

China VAST: Pre-Condition Fulfilled for the China Jinmao Offer

The headcount test is not applicable, and this is a done deal. At the last close and for a year-end payment, the annualised spread is 4.0%.

Arun George

China VAST’s Underwhelming Privatisation Bid from China Jinmao

The offer price is unattractive to historical multiples and precedent transactions. We would be buyers up to HK$2.26 per share (implies 75% deal...

Arun George

Chinese Estates (127 HK): $4.00/Share Offer

There may be some pushback on pricing, but factoring in the Evergrande loss (real & unrealised), the Offer Price appears fair.

David Blennerhassett