Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<p>The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. </p><p>The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).</p><p>The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.          </p>

The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.          

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<div>
<p>Back on the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.</p>
<p>Below is a timeline of events that subsequently unfolded:</p>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 139.871px;">
<h3>Date</h3>
</td>
<td style="width: 606.141px;">
<h3>Data in the Date</h3>
</td>
</tr>
<tr>
<td style="width: 139.871px;">30-Mar-21</td>
<td style="width: 606.141px;">The controlling shareholders of <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN), including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</td>
</tr>
<tr>
<td style="width: 139.871px;">9-Apr-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
</tr>
<tr>
<td style="width: 139.871px;">26-May-21</td>
<td style="width: 606.141px;">At an SGM, KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
</tr>
<tr>
<td style="width: 139.871px;">7-Jun-21</td>
<td style="width: 606.141px;">The free float waiver has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a> from the HKEx.</td>
</tr>
<tr>
<td style="width: 139.871px;">15-Jun-21</td>
<td style="width: 606.141px;">
<p>Approval by the shareholders of <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">obtained</a></p>
</td>
</tr>
<tr>
<td style="width: 139.871px;">29-Jun-21</td>
<td style="width: 606.141px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>
</td>
</tr>
<tr>
<td style="width: 139.871px;">20-Jul-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
</tr>
<tr>
<td style="width: 139.871px;">2-Aug-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</td>
</tr>
<tr>
<td style="width: 139.871px;">9-Aug-21</td>
<td style="width: 606.141px;">Exactly on the Long Stop date, KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. </td>
</tr>
<tr>
<td style="width: 139.871px;">12-Aug-21</td>
<td style="width: 606.141px;">Composite Doc <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0811/2021081101136.pdf" target="_blank" rel="noopener">dispatched</a>
</td>
</tr>
<tr>
<td style="width: 139.871px;">17-Aug-21</td>
<td style="width: 606.141px;">The Record Date for the Special Dividend is expected to be the 1 <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0817/2021081701332.pdf" target="_blank" rel="noopener">September</a>. The Special Dividend is expected to be paid on or about Friday, 17 September 2021</td>
</tr>
<tr>
<td style="width: 139.871px;">18-Aug-21</td>
<td style="width: 606.141px;">Irrevocables <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800881.pdf" target="_blank" rel="noopener">received</a>. Thai MGO waiver received,. </td>
</tr>
<tr>
<td colspan="2" style="width: 746.012px;"><em>Source: HKEx announcements</em></td>
</tr>
</tbody>
</table>
</div>
</div>
<p>All appears to be going to plan.  The first close is the 2 September. </p>
<p>Then KLN announced on the 24 August a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0824/2021082401338.pdf" target="_blank" rel="noopener">delay</a> in the record date for the Special Dividend. KLN estimates:</p>
<blockquote>
<p>that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.</p>
</blockquote>
<p>With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?</p>
</div>
<div>
<p>More below the fold. </p>
<p>Plus updated <em><strong>Ye Olde Arb Grids</strong></em>. </p>
<div>
<div></div>
</div>
</div>



Back on the 9 February, Kerry Logistics Network (636 HK) (KLN) announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.
Below is a timeline of events that subsequently unfolded:





Date


Data in the Date



30-Mar-21
The controlling shareholders of Kerry Logistics Network (636 HK) (KLN), including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.


9-Apr-21
KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


26-May-21
At an SGM, KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver has been received from the HKEx.


15-Jun-21

Approval by the shareholders of Kerry Properties (683 HK) obtained



29-Jun-21
CFIUS approval received



20-Jul-21
KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21
KLN announced NDRC and MoC approval has been received as to the partial offer.


9-Aug-21
Exactly on the Long Stop date, KLN announced all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. 


12-Aug-21
Composite Doc dispatched



17-Aug-21
The Record Date for the Special Dividend is expected to be the 1 September. The Special Dividend is expected to be paid on or about Friday, 17 September 2021


18-Aug-21
Irrevocables received. Thai MGO waiver received,. 


Source: HKEx announcements





All appears to be going to plan.  The first close is the 2 September. 
Then KLN announced on the 24 August a delay in the record date for the Special Dividend. KLN estimates:

that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.

With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?


More below the fold. 
Plus updated Ye Olde Arb Grids. 





Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

<div>
<p>On the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> ("KLN") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH"). SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price is HK$18.80/share - a 19.83% discount to last close, although KLN's shares gained 25% prior to the suspension.</p>
<p>Pre-conditions were numerous - 17 all-told - including approvals from SAMR, NDRC, MoC, CFIUS, FTC, and a waiver from the relevant Thai authorities not to make a downstream Offer for <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a>.</p>
<p>The Partial Offer was also conditional on KLN selling its Hong Kong and Taiwan warehouses to its parent company. Proceeds from that sale would be paid to shareholders on the Record Date (means the date immediately prior to the Final Closing Date of the Partial Offer) as a special dividend totalling HK$7.28/share. Shareholders who tender will get HK$7.28 on <em>all</em> their shares and HK$18.80 for the shares taken up under the Partial Offer. </p>
<p>Below is a timeline of events since the initial announcement:</p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 108.135px;">
<h3>Date</h3>
</td>
<td style="width: 637.877px;">
<h3>Data in that Date</h3>
</td>
</tr>
<tr>
<td style="width: 108.135px;">30-Mar-21</td>
<td style="width: 637.877px;">
<p>The controlling shareholders of KLN, including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</p>
<p> </p>
<p>Elsewhere, KLN/ SF Holdings transaction is understood to be under a SAMR simple case review.</p>
</td>
</tr>
<tr>
<td style="width: 108.135px;">9-Apr-21</td>
<td style="width: 637.877px;">
<a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener"></a>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
</tr>
<tr>
<td style="width: 108.135px;">3-May-21</td>
<td style="width: 637.877px;">KLN announced it will hold an SGM on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0503/2021050300069.pdf" target="_blank" rel="noopener">26 May</a> for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. </td>
</tr>
<tr>
<td style="width: 108.135px;">26-May-21</td>
<td style="width: 637.877px;">At the SGM KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
</tr>
<tr>
<td style="width: 108.135px;">7-Jun-21</td>
<td style="width: 637.877px;">The free float waiver from the SFC was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a>. </td>
</tr>
<tr>
<td style="width: 108.135px;">15-Jun-21</td>
<td style="width: 637.877px;">Shareholders of Kerry Props <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">approve</a> the Partial Offer. </td>
</tr>
<tr>
<td style="width: 108.135px;">29-Jun-21</td>
<td style="width: 637.877px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>. </td>
</tr>
<tr>
<td style="width: 108.135px;">20-Jul-21</td>
<td style="width: 637.877px;">
<a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener"></a>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
</tr>
<tr>
<td style="width: 108.135px;">2-Aug-21</td>
<td style="width: 637.877px;">
<p>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</p>
</td>
</tr>
<tr>
<td colspan="2" style="width: 108.135px;"><em>Source: Various HKEx announcements</em></td>
</tr>
</tbody>
</table>
</div>
<div>
<p>Exactly on the Long Stop date, KLN has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular) - and that the Composite Document is expected to be dispatched, on or before, the 16 August.</p>
<p>The timing of that Record Date and the Close of the Offer suggests the FY21 Interim Dividend will likely be added to terms.</p>
</div>
<div>
<p>More below the fold.  Plus Ye Olde Arb Grids - or at least one of them. </p>
</div>


On the 9 February, Kerry Logistics Network (636 HK) ("KLN") announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH"). SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price is HK$18.80/share - a 19.83% discount to last close, although KLN's shares gained 25% prior to the suspension.
Pre-conditions were numerous - 17 all-told - including approvals from SAMR, NDRC, MoC, CFIUS, FTC, and a waiver from the relevant Thai authorities not to make a downstream Offer for Kerry Express Thailand (KEX TB).
The Partial Offer was also conditional on KLN selling its Hong Kong and Taiwan warehouses to its parent company. Proceeds from that sale would be paid to shareholders on the Record Date (means the date immediately prior to the Final Closing Date of the Partial Offer) as a special dividend totalling HK$7.28/share. Shareholders who tender will get HK$7.28 on all their shares and HK$18.80 for the shares taken up under the Partial Offer. 
Below is a timeline of events since the initial announcement:




Date


Data in that Date



30-Mar-21

The controlling shareholders of KLN, including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.
 
Elsewhere, KLN/ SF Holdings transaction is understood to be under a SAMR simple case review.



9-Apr-21

KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


3-May-21
KLN announced it will hold an SGM on the 26 May for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. 


26-May-21
At the SGM KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver from the SFC was received. 


15-Jun-21
Shareholders of Kerry Props approve the Partial Offer. 


29-Jun-21
CFIUS approval received. 


20-Jul-21

KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21

KLN announced NDRC and MoC approval has been received as to the partial offer.



Source: Various HKEx announcements





Exactly on the Long Stop date, KLN has announced all of the pre-cons have been met - or waived (the Thai waiver in particular) - and that the Composite Document is expected to be dispatched, on or before, the 16 August.
The timing of that Record Date and the Close of the Offer suggests the FY21 Interim Dividend will likely be added to terms.


More below the fold.  Plus Ye Olde Arb Grids - or at least one of them. 


Kerry Logistics (636 HK): Pre-Cons Done. Partial Offer To Commence Next Week

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

<p>Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.</p>

Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.

Defensives Are Worth A Look; Hang Seng, Shanghai Comp, Nikkei 225, STOXX 50 Support Levels Holding

Equity Bottom-Up

<p>The Kerry Group has been busy of late.</p>
<p>Back in December, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> IPO'ed <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> as discussed by <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> in <em><a href="https://skr.ma/uGPdd" target="_blank" rel="noopener">Kerry Express Thailand IPO - Time for Delivery</a></em>.</p>
<p>Last month <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> ("KPL") and <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> ("KLN") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>.  This is an ongoing transaction - see <em><a href="https://skr.ma/D9RK7" target="_blank" rel="noopener">Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer</a></em>. KLN announced last night the composite document has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0308/2021030801425.pdf" target="_blank" rel="noopener">delayed</a> potentially up to the 16 August 201. </p>
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<a href="https://www.smartkarma.com/entities/shangri-la-asia-ltd" target="_blank" data-smartkarma-citation="entities:19690:1" rel="noopener">Shangri-La Asia (69 HK)</a>, majority-owned by the Kerry Group, is well up on its March 2020 COVID low, and up 9.5% YTD.  Around half of its hotels are in China, which have witnessed a strong uptick in local leisure and corporate traveling, generating positive EBITDA as early as June last year, the first time since the first outbreak of the pandemic.</div>
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<div>Currently trading at 0.6x P/B against a pre-COVID average multiple of 0.8x., this is worth a second look.</div>
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<div>More below the fold.</div>

The Kerry Group has been busy of late.
Back in December, Kerry Logistics Network (636 HK) IPO'ed Kerry Express Thailand (KEX TB) as discussed by Sumeet Singh in Kerry Express Thailand IPO - Time for Delivery.
Last month Kerry Properties (683 HK) ("KPL") and Kerry Logistics Network (636 HK) ("KLN") announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH).  This is an ongoing transaction - see Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer. KLN announced last night the composite document has been delayed potentially up to the 16 August 201. 

Shangri-La Asia (69 HK), majority-owned by the Kerry Group, is well up on its March 2020 COVID low, and up 9.5% YTD.  Around half of its hotels are in China, which have witnessed a strong uptick in local leisure and corporate traveling, generating positive EBITDA as early as June last year, the first time since the first outbreak of the pandemic.

Currently trading at 0.6x P/B against a pre-COVID average multiple of 0.8x., this is worth a second look.

More below the fold.

Hong Kong

Kerry Properties Limited, through its subsidiaries, invests in and develops real estate.  The Company also owns and operates logistics, freight and warehouses business.  In addition, Kerry Properties invests in infrastructure-related projects and operates hotels.

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Kerry Properties (683 HK)

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