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

<ul>
<li>On 12 September, Shenyang SASAC increased its <a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> offer by 21.2% from HK$1.32 to HK$1.60. The IFA opines it is fair and reasonable.</li>
<li>The revised terms should ensure the support of key shareholders. However, the IFA analysis is flawed, and the revised offer is light.</li>
<li>While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares) poses a challenge. </li>
</ul>


On 12 September, Shenyang SASAC increased its Shengjing Bank Co Ltd H (2066 HK) offer by 21.2% from HK$1.32 to HK$1.60. The IFA opines it is fair and reasonable.
The revised terms should ensure the support of key shareholders. However, the IFA analysis is flawed, and the revised offer is light.
While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares) poses a challenge. 


Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Chongqing Rural Commercial Bank / Event-Driven

<ul>
<li>Last week, CICC Hong Kong and SOE Jilin Financial Holding Group tabled a rescue offer for <a href="https://www.smartkarma.com/entities/jilin-jiutai-rural-comm-bank" target="_blank" data-smartkarma-citation="entities:23735:1" rel="noopener">Jilin Bank (6122 HK)</a>, as discussed in<a href="https://skr.ma/UL5z1" target="_blank" rel="noopener"> Jilin Bank (6122 HK): Another Hobson's Choice</a>
</li>
<li>This follows a similar bailout of <a href="https://www.smartkarma.com/entities/bank-of-jinzhou-co-ltd" target="_blank" data-smartkarma-citation="entities:21014:1" rel="noopener">Bank Of Jinzhou (416 HK)</a> in early 2024, as detailed in <a href="https://skr.ma/N19a2" target="_blank" rel="noopener">Bank of Jinzhou (416 HK) To Be Taken Private.</a>
</li>
<li>Tarring the sector with same brush is potentially oversimplifying the situation. But the issues faced by Jilin Bank and BoJ are unlikely to be isolated. Below I dig deeper.  </li>
</ul>


Last week, CICC Hong Kong and SOE Jilin Financial Holding Group tabled a rescue offer for Jilin Bank (6122 HK), as discussed in Jilin Bank (6122 HK): Another Hobson's Choice

This follows a similar bailout of Bank Of Jinzhou (416 HK) in early 2024, as detailed in Bank of Jinzhou (416 HK) To Be Taken Private.

Tarring the sector with same brush is potentially oversimplifying the situation. But the issues faced by Jilin Bank and BoJ are unlikely to be isolated. Below I dig deeper.  


Chinese RCBs: Two Bailouts. How Many More At Risk?

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. </li>
<li>Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.</li>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a> shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans</li>
</ul>


With many real estate developers in China reporting losses, and with greater clarity of their woes, there should be flow through to banks. 
Generally, at the top line and in head line bad loans, this is simply not visible, so that one must look to notes to financial statements, other granular data.

Bank Of Communications Co H (3328 HK) shows restructured loans up from RMB41bn to RMB61bn in just six months, with many China banks showing far higher loss loans


China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

Equity Bottom-Up

Postal Savings Bank of China C / Equity Bottom-Up

If one presumes the backdrop is improving, than de-risking would not be the best path during FY20. This large China bank not only shows some of the most robust credit growth, but also robust growth in loan loss reserves.

If one presumes the backdrop is improving, than de-risking would not be the best path during FY20. This large China bank not only shows some of the most robust credit growth, but also robust growth in loan loss reserves. 

Postal Savings Bank of China – Growing Into Recovery

APAC IPOs & Placements

Zhen Zhou, Toh

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.

Equity Capital Markets

Luzhou Commercial Bank Co Ltd / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27817" target="_blank" data-smartkarma-citation="entities:27817:1">Luzhou Commercial Bank Co Ltd (1983 HK)</a> IPO raised about US$222m at HKD3.18 per share, close to the bottom end of its price range. We have covered the IPO in our previous insight, <a href="https://www.smartkarma.com/insights/luzhou-city-commercial-bank-ipo-earnings-lagging-asset-growth-owing-to-tightening-spread" target="_blank" data-smartkarma-citation="insights:26468">Luzhou City Commercial Bank IPO (泸州市商业银行) - Earnings Lagging Asset Growth Owing to Tightening Spread</a>.
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

Luzhou Commercial Bank Co Ltd (1983 HK) IPO raised about US$222m at HKD3.18 per share, close to the bottom end of its price range. We have covered the IPO in our previous insight, Luzhou City Commercial Bank IPO (泸州市商业银行) - Earnings Lagging Asset Growth Owing to Tightening Spread.
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

Luzhou City Commercial Bank IPO (泸州市商业银行) Trading Update - Low Liquidity, as Expected

China

Luzhou Bank Co. Ltd. provides banking services. The Company offers deposits, loans, domestic settlement, bill discounting, wealth management, and other banking services. Luzhou Bank provides its services to individuals, companies, and other groups.

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Luzhou Commercial Bank Co Ltd (1983 HK)

Shengjing Bank (2066 HK): Minimum Acceptance Condition in Focus as Offer Opens

While the 21 October vote on the delisting proposal should pass, the satisfaction of the minimum acceptance condition (90% of independent H shares)...

Arun George

Chinese RCBs: Two Bailouts. How Many More At Risk?

This is largely an objective insight. There can be no guarantee/certainty why one bank may need to hoist the white flag, while another does not....

David Blennerhassett

China Banks - Losses at Developers, Notes to Financials at Some Banks, More Clear than Headlines

There are losses at China developers and some of this is new or losses are much higher. This is not fully reflected in headline figures at China...

Daniel Tabbush

Postal Savings Bank of China – Growing Into Recovery

If the backdrop is improving, than de-risking is not the way to go. This large China bank not only shows some of the most robust credit growth, but...

Daniel Tabbush

Luzhou City Commercial Bank IPO (泸州市商业银行) Trading Update - Low Liquidity, as Expected

Luzhou Commercial Bank Co Ltd (1983 HK) IPO raised about US$222m at HKD3.18 per share, close to the bottom end of its price range. We have covered...

Zhen Zhou, Toh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)