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

Evergrande Property Services / Event-Driven

<a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> is a Chinese property management provider. The controlling shareholder is 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>, which represents 60.96% of outstanding shares. It floated on 2 December 2020 to raise net proceeds of US$930 million (gross proceeds around US$1.8 billion) at HK$8.80 per share.  Evergrande Property Services entered a trading halt today pursuant to the Hong Kong Code on Takeovers and Mergers. Evergrande is in talks to sell a 51% controlling stake to <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> for more than HK$40 billion ($5 billion), according to the Chinese financial news platform Cailian. Hopson also entered a trading halt today citing a major transaction to acquire the shares of a company listed on the HKEx and the relevant possible mandatory offer pursuant to the Hong Kong Code on Takeovers and Mergers.The potential stake sale was anticipated as Evergrande flagged on 14 September that it was actively exploring with potential investors the sales of part of its interests in <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Auto (708 HK)</a> and Evergrande Property Services.The rumoured Evergrande Property Services valuation implies a possible general offer of HK$3.70 per share, a -27.7% discount to the last close price of HK$5.12 per share. The steep discount to the last close is perhaps unsurprisingly as Evergrande is a distressed seller. The potential sale even at a distressed price could help Evergrande buy short-term breathing space to its liquidity issues.    If the potential deal materialises, Evergrande will cease to be the controlling shareholder and hold 9.96% of the outstanding shares. Evergrande Property Services’ shares have sunk 41% YTD due to the liquidity issues plaquing Evergrande. A new controlling shareholder will gradually reduce Evergrande Property Services reliance on Evergrande and also remove a significant share overhang.<div class="content-highlight">
Clearly, there will be limited shareholders who will accept the possible general offer price at a -27.7% discount to the last close. In the short term, Evergrande Property Services shares will likely be under pressure until the deal closes and there are some signs of closure on Evergrande's liquidity issues. 
While this potential transaction represents a sale at a distressed price (below the all-time low share price), the shift to a more stable controlling shareholder along with a market focus on fundamentals/valuation will help in the re-rating of Evergrande Property Services over the medium-term. 
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Evergrande Property Services (6666 HK) is a Chinese property management provider. The controlling shareholder is the Evergrande (3333 HK), which represents 60.96% of outstanding shares. It floated on 2 December 2020 to raise net proceeds of US$930 million (gross proceeds around US$1.8 billion) at HK$8.80 per share.  Evergrande Property Services entered a trading halt today pursuant to the Hong Kong Code on Takeovers and Mergers. Evergrande is in talks to sell a 51% controlling stake to Hopson Development (754 HK) for more than HK$40 billion ($5 billion), according to the Chinese financial news platform Cailian. Hopson also entered a trading halt today citing a major transaction to acquire the shares of a company listed on the HKEx and the relevant possible mandatory offer pursuant to the Hong Kong Code on Takeovers and Mergers.The potential stake sale was anticipated as Evergrande flagged on 14 September that it was actively exploring with potential investors the sales of part of its interests in Evergrande Auto (708 HK) and Evergrande Property Services.The rumoured Evergrande Property Services valuation implies a possible general offer of HK$3.70 per share, a -27.7% discount to the last close price of HK$5.12 per share. The steep discount to the last close is perhaps unsurprisingly as Evergrande is a distressed seller. The potential sale even at a distressed price could help Evergrande buy short-term breathing space to its liquidity issues.    If the potential deal materialises, Evergrande will cease to be the controlling shareholder and hold 9.96% of the outstanding shares. Evergrande Property Services’ shares have sunk 41% YTD due to the liquidity issues plaquing Evergrande. A new controlling shareholder will gradually reduce Evergrande Property Services reliance on Evergrande and also remove a significant share overhang.
Clearly, there will be limited shareholders who will accept the possible general offer price at a -27.7% discount to the last close. In the short term, Evergrande Property Services shares will likely be under pressure until the deal closes and there are some signs of closure on Evergrande's liquidity issues. 
While this potential transaction represents a sale at a distressed price (below the all-time low share price), the shift to a more stable controlling shareholder along with a market focus on fundamentals/valuation will help in the re-rating of Evergrande Property Services over the medium-term. 


Hopson Development’s Potential 51% Stake in Evergrande Property Services

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Trading in <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> was halted pre-market today along with <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>.There are reports now that <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> is looking to buy 51% in <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> at a valuation of more than HK$40bn. This amends an earlier report that <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> would pay HK$40bn for 51% of <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>. The HK$40bn number values <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> at HK$3.7/share, a 27.7% discount  to its last close.<a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> will need to make a Mandatory General Offer (MGO) to all existing shareholders in cash at HK$3.70/share or higher. With a closing low of HK$4.03/share since listing, it is unlikely that there will be many takers in the MGO.<a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> is a very high probability deletion from the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> at the December rebalance and is expected to be replaced by <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a>.<a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> is also an <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituent and is a high probability deletion from the index at the March 2022 review, where <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a> is a potential inclusion.

Trading in Hopson Development (754 HK) was halted pre-market today along with Evergrande (3333 HK) and Evergrande Property Services (6666 HK).There are reports now that Hopson Development (754 HK) is looking to buy 51% in Evergrande Property Services (6666 HK) at a valuation of more than HK$40bn. This amends an earlier report that Hopson Development (754 HK) would pay HK$40bn for 51% of Evergrande Property Services (6666 HK). The HK$40bn number values Evergrande Property Services (6666 HK) at HK$3.7/share, a 27.7% discount  to its last close.Hopson Development (754 HK) will need to make a Mandatory General Offer (MGO) to all existing shareholders in cash at HK$3.70/share or higher. With a closing low of HK$4.03/share since listing, it is unlikely that there will be many takers in the MGO.Evergrande (3333 HK) is a very high probability deletion from the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance and is expected to be replaced by Xinyi Solar Holdings (968 HK).Evergrande Property Services (6666 HK) is also an Hang Seng China Enterprises Index (HSCEI INDEX) constituent and is a high probability deletion from the index at the March 2022 review, where Innovent Biologics Inc (1801 HK) is a potential inclusion.

Hopson (754 HK) To Buy 51% of Evergrande Property Services? Upcoming MGO & Potential HSCEI Changes

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - September 2021 - Lucror Analytics

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Sep 10.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 494.2 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 341.7 million worth of buybacks), Hopson Development Holdings Limited (754 HK) (HKD 85.9 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Sep 10.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 494.2 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 341.7 million worth of buybacks), Hopson Development Holdings Limited (754 HK) (HKD 85.9 million worth of buybacks).

Hong Kong Buybacks: Xiaomi Tencent Led the Buybacks

Hong Kong

Hopson Development Holdings Limited, through its subsidiaries, develops, manages and invests in properties in China. The Company also operates residential property, commercial property, hotels, tourism and property management.

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Hopson Development (754 HK)

Hopson Development’s Potential 51% Stake in Evergrande Property Services

Evergrande is in talks to sell a 51% stake in Evergrande Services to Hopson Dev for more than HK$40 bn. The shift to a more stable controlling...

Arun George

Hopson (754 HK) To Buy 51% of Evergrande Property Services? Upcoming MGO & Potential HSCEI Changes

Hopson is reportedly looking to buy 51% in Evergrande Prop Serv for more than HK$40bn.That is a 41.7% premium to the last close and will trigger an...

Brian Freitas

Asia HY Trade Book - September 2021 - Lucror Analytics

The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report...

Lucror Analytics

Asia HY Trade Book - September 2021 - Lucror Analytics

The Asia HY Trade Book for the month of September includes a summary of our recommendations, as well as our high-conviction ideas. The report...

Lucror Analytics

Hong Kong Buybacks: Xiaomi Tencent Led the Buybacks

We highlight the top 3 companies that repurchased the most shares from the market were Xiaomi (1810 HK), Tencent (700 HK), and Hopson...

Ke Yan, CFA, FRM

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