Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

<ul>
<li>We initiate our coverage on Health and Happiness International Holding Limited (H&amp;H)’s BTSDF 9.125% 24Jul2028.</li>
<li>H&amp;H has refinanced USD320m of 2026 notes with the new USD300m of 2028 notes at a 9.125% coupon. The new bonds help extend its debt maturity and lower financing cost.</li>
<li>The bonds offer diversification and a chance to invest back in China after the fallout in the property sector. We assign an OVERWEIGHT recommendation.</li>
</ul>


We initiate our coverage on Health and Happiness International Holding Limited (H&amp;H)’s BTSDF 9.125% 24Jul2028.
H&amp;H has refinanced USD320m of 2026 notes with the new USD300m of 2028 notes at a 9.125% coupon. The new bonds help extend its debt maturity and lower financing cost.
The bonds offer diversification and a chance to invest back in China after the fallout in the property sector. We assign an OVERWEIGHT recommendation.


Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

<ul>
<li>SHEIN's US sellers will be able to use Amazon for US fulfillment by end of 2025</li>
<li>SHEIN will open up its Chinese manufacturing capabilities to outside brands</li>
<li>Changes are in response to lost "de minimis" loophole, search for growth drivers</li>
</ul>


SHEIN's US sellers will be able to use Amazon for US fulfillment by end of 2025
SHEIN will open up its Chinese manufacturing capabilities to outside brands
Changes are in response to lost "de minimis" loophole, search for growth drivers


Two Big Changes to SHEIN's Business Model in Response to the End of US "De Minimis" Exemption

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/star-cm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:36658:1" rel="noopener">STAR CM Holdings (6698 HK)</a>, a variety program intellectual property creator and operator, was listed last December and promptly gained 475% by early August. All good so far.</li>
<li>Shares cratered on the 18 August (-23.4%) and are currently 76% adrift from its recent high. The reason? A viral clip from late pop diva Coco Lee discussing unfair treatment.</li>
<li>The music competition show, in which Coco appeared, pushed back on any impropriety; however, its broadcaster has temporarily suspended the program. This is no easy fix.</li>
</ul>



STAR CM Holdings (6698 HK), a variety program intellectual property creator and operator, was listed last December and promptly gained 475% by early August. All good so far.
Shares cratered on the 18 August (-23.4%) and are currently 76% adrift from its recent high. The reason? A viral clip from late pop diva Coco Lee discussing unfair treatment.
The music competition show, in which Coco appeared, pushed back on any impropriety; however, its broadcaster has temporarily suspended the program. This is no easy fix.


NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (9432 JP)</a> sees a US$1bn selldown of shares on 29 December, due to a weird quirk in the way TOPIX and JPX Nikkei 400 are constructed and managed.</li>
<li>China's State Administration for Market Supervision is reviewing <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer (1337 HK)</a>'s privatisation as a simple case. With the key regulatory pre-condition all but satisfied, the Scheme timeline will significantly shorten. </li>
<li>The trade is to be long the back end of <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a>'s Tender Offer. BUY Shinsei Bank shares - outright, and vs large Japanese banks with higher PBRs. </li>
</ul>



NTT (9432 JP) sees a US$1bn selldown of shares on 29 December, due to a weird quirk in the way TOPIX and JPX Nikkei 400 are constructed and managed.
China's State Administration for Market Supervision is reviewing Razer (1337 HK)'s privatisation as a simple case. With the key regulatory pre-condition all but satisfied, the Scheme timeline will significantly shorten. 
The trade is to be long the back end of Shinsei Bank (8303 JP)'s Tender Offer. BUY Shinsei Bank shares - outright, and vs large Japanese banks with higher PBRs. 


Last Week in Event SPACE: NTT, Razer, Shinsei Bank, Evergrande, Bank of Kyoto, Nippon Express

<div>
On the 17 January, property developer <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">HKC Holdings (190 HK)</a>  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700005.pdf" target="_blank" rel="noopener">announced</a> a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share was a 120.39% premium to last close and around an eight-year high. An interim dividend of HK$0.13/share was also declared and would NOT be deducted from the cancellation price. 
</div>
<div>
The Scheme Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0331/2021033101856.pdf" target="_blank" rel="noopener">despatched</a> on the 31 March. The IFA said "fair &amp; reasonable". At the Scheme Meeting on the 23 April, disinterested shareholders overwhelmingly approved (99.36%) the Scheme. Done &amp; dusted.
</div>
But wait .....
In the HKEx <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0423/2021042302469.pdf" target="_blank" rel="noopener">announcement</a> detailing the results of the Meeting, HKC also states:
<blockquote>
The directions Order of the Bermuda Court dated 25 March 2021 provided that the presence, in person or by proxy, of the holders of a majority of voting power in respect of the shares issued and entitled to vote at the Court Meeting shall constitute a quorum for the conduct of business at the Court Meeting (‘‘Quorum Requirement’’). Given the number of Disinterested Scheme Shareholders who voted in person or by proxy at the Court Meeting may not comply with the Quorum Requirement, the Company has asked its Bermuda legal advisers to forthwith seek directions from the Court with respect to the convention and the validity of the results of the Court Meeting.
</blockquote>
There is no mention of a quorum condition to the Scheme in the Scheme Document. 
HKC was supposed to trade yesterday, but shares were suspended ahead of the open.
Is this new information a deal-breaker?


On the 17 January, property developer HKC Holdings (190 HK)  announced a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share was a 120.39% premium to last close and around an eight-year high. An interim dividend of HK$0.13/share was also declared and would NOT be deducted from the cancellation price. 


The Scheme Document was despatched on the 31 March. The IFA said "fair &amp; reasonable". At the Scheme Meeting on the 23 April, disinterested shareholders overwhelmingly approved (99.36%) the Scheme. Done &amp; dusted.

But wait .....
In the HKEx announcement detailing the results of the Meeting, HKC also states:

The directions Order of the Bermuda Court dated 25 March 2021 provided that the presence, in person or by proxy, of the holders of a majority of voting power in respect of the shares issued and entitled to vote at the Court Meeting shall constitute a quorum for the conduct of business at the Court Meeting (‘‘Quorum Requirement’’). Given the number of Disinterested Scheme Shareholders who voted in person or by proxy at the Court Meeting may not comply with the Quorum Requirement, the Company has asked its Bermuda legal advisers to forthwith seek directions from the Court with respect to the convention and the validity of the results of the Court Meeting.

There is no mention of a quorum condition to the Scheme in the Scheme Document. 
HKC was supposed to trade yesterday, but shares were suspended ahead of the open.
Is this new information a deal-breaker?

Hong Kong

Li & Fung Limited, through its subsidiaries, operates an export trading business.  The Company exports consumer products such as garments, fashion accessories, toys, games, sporting goods, home furnishings, handicrafts, shoes, travel goods, and tableware.

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Li & Fung Ltd (494 HK)

Health & Happiness: On Deleveraging Path

Coverage initiated on H&H's new 9.125% 2028 bonds, offering diversification and a chance to invest in China post-property sector fallout....

Bondcritic

Two Big Changes to SHEIN's Business Model in Response to the End of US "De Minimis" Exemption

In recent weeks direct-to-consumer eComm platform SHEIN announced two dramatic changes to its business model. We believe the changes are in...

Tracking Traffic

STAR CM (6698 HK): Grave Accusations

For STAR CM, this is a material setback. One wonders what the company's spin will be to say everything is back on track. It will take some...

David Blennerhassett

Last Week in Event SPACE: NTT, Razer, Shinsei Bank, Evergrande, Bank of Kyoto, Nippon Express

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

HKC Holdings (190 HK): Quorum Quibbles

This order is not a statutory requirement but one imposed by the judge, arguably the directive smacks of "legislating from the bench". Presumably,...

David Blennerhassett

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52-week Range

Market Cap (USDm)

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Health & Happiness: On Deleveraging Path

​Coverage initiated on H&H's new 9.125% 2028 bonds, offering diversification and a chance to invest in China post-property sector fallout....

Bondcritic

Two Big Changes to SHEIN's Business Model in Response to the End of US "De Minimis" Exemption

In recent weeks direct-to-consumer eComm platform SHEIN announced two dramatic changes to its business model. We believe the changes are in...

Tracking Traffic

STAR CM (6698 HK): Grave Accusations

For STAR CM, this is a material setback. One wonders what the company's spin will be to say everything is back on track. It will take some...

David Blennerhassett

Last Week in Event SPACE: NTT, Razer, Shinsei Bank, Evergrande, Bank of Kyoto, Nippon Express

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

HKC Holdings (190 HK): Quorum Quibbles

This order is not a statutory requirement but one imposed by the judge, arguably the directive smacks of "legislating from the bench". Presumably,...

David Blennerhassett

Coverage initiated on H&H's new 9.125% 2028 bonds, offering diversification and a chance to invest in China post-property sector fallout....