IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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>On 19 September, Boyu completed the auction share transfer to take its <a href="https://www.smartkarma.com/entities/jinke-smart-services-group-co" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> shareholding to 55.91% of outstanding shares.</li>
<li>Pursuant to Rule 26.1 of the Takeovers Code, Boyu is required to make a mandatory unconditional general offer at HK$6.67. The offer should open by 26 September.</li>
<li>The offer price is unattractive, suggesting a low chance of breaching the public float requirements (23.4% of outstanding shares). At the last close, the gross/annualised spread is 0.9%/10.0%.</li>
</ul>


On 19 September, Boyu completed the auction share transfer to take its Jinke Smart Services (9666 HK) shareholding to 55.91% of outstanding shares.
Pursuant to Rule 26.1 of the Takeovers Code, Boyu is required to make a mandatory unconditional general offer at HK$6.67. The offer should open by 26 September.
The offer price is unattractive, suggesting a low chance of breaching the public float requirements (23.4% of outstanding shares). At the last close, the gross/annualised spread is 0.9%/10.0%.


Jinke Smart Services (9666 HK): Boyu’s Unconditional Offer Set to Open

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Jinmao Property Services / Equity Bottom-Up

<ul><li>Jinmao Services’ revenue grew 19.6% YoY in 1H25 given the drag from nonowner VAS (rev. -17.3% YoY) offset by new business integration (boost basic PM rev. +31% YoY).</li><li>During the period, net profit growth narrowed to +3.1% YoY, in-line with market expectations, weighed by: 1) 2ppts gross margin decline to 22.5% (impacted from basic PM and non-owner VAS); 2) increase in accounts receivable impairment driving c.RMB30mn rise in other expenses.</li><li>Excluding this impact, net profit would have achieved double-digit growth. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Jinmao Services’ revenue grew 19.6% YoY in 1H25 given the drag from nonowner VAS (rev. -17.3% YoY) offset by new business integration (boost basic PM rev. +31% YoY).During the period, net profit growth narrowed to +3.1% YoY, in-line with market expectations, weighed by: 1) 2ppts gross margin decline to 22.5% (impacted from basic PM and non-owner VAS); 2) increase in accounts receivable impairment driving c.RMB30mn rise in other expenses.Excluding this impact, net profit would have achieved double-digit growth. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Jinmao Property Services (816 HK) - New Business Integration Drives New Growth Engines

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jinke-smart-services-group-co" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”</li>
<li>It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.</li>
<li>I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.</li>
</ul>



Jinke Smart Services (9666 HK) is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”
It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.
I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.


Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

<ul><li>The company's FY24 revenue and net profit rose 10% to RMB 3.0bn and RMB 372mn, respectively, missing CMBI's forecasts by 4.2% and 7% due to nonowner VAS drag.</li><li>Despite maintaining a 40% dividend payout ratio, investor expectations were unmet, causing a nearly 10% stock price drop on results release day.</li><li>We observed that parentco China Jinmao, is gradually stepping out of difficulties and its frequent land acquisitions make it rank the 2nd in the industry in terms of land-to-sales ratio during 2024+2M25 (Figure 4), which will provide strong support for GFA growth of Jinmao Services against the backdrop of fierce competition among 3rd party expansion. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The company's FY24 revenue and net profit rose 10% to RMB 3.0bn and RMB 372mn, respectively, missing CMBI's forecasts by 4.2% and 7% due to nonowner VAS drag.Despite maintaining a 40% dividend payout ratio, investor expectations were unmet, causing a nearly 10% stock price drop on results release day.We observed that parentco China Jinmao, is gradually stepping out of difficulties and its frequent land acquisitions make it rank the 2nd in the industry in terms of land-to-sales ratio during 2024+2M25 (Figure 4), which will provide strong support for GFA growth of Jinmao Services against the backdrop of fierce competition among 3rd party expansion. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Jinmao Property Services (816 HK) - Earnings Hurt by Industry Cycle

<ul><li>The company’s earnings were inline with Bloomberg consensus, with NP +18.9% YoY in 1H24 thanks to effective cost control.</li><li>We think the 2024E target NP growth of &gt;20% is not hard given consolidation of an acquired company, continued cost control and a low base in 2H.</li><li>We find that the company’s independence has largely improved, and parentco’s risk has largely eased. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The company’s earnings were inline with Bloomberg consensus, with NP +18.9% YoY in 1H24 thanks to effective cost control.We think the 2024E target NP growth of &gt;20% is not hard given consolidation of an acquired company, continued cost control and a low base in 2H.We find that the company’s independence has largely improved, and parentco’s risk has largely eased. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Jinmao Property Services (816 HK) - Improved Independence with a Recovered Central SOE as Parentco

China

Jinmao Property Services Co., Ltd. is primarily engaged in providing comprehensive property management services for residential, commercial, office, and public properties, including security, cleaning, greening, and maintenance. The company also offers value-added services to non-property owners, such as sales assistance and consultancy, and community value-added services like community space operation and real estate brokerage. It was founded in 1993 and is headquartered in Beijing, People's Republic of China.

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Jinmao Property Services (816 HK)

Jinke Smart Services (9666 HK): Boyu’s Unconditional Offer Set to Open

Boyu’s unconditional offer is open and closes on 17 October. The IFA opines that the HK$6.67 offer is fair and reasonable. The long-term play is...

Arun George