Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Under the requirements of the Amended Mongolian Banking Law (Feb 2021), <a href="https://www.smartkarma.com/entities/khan-bank-llc" target="_blank" data-smartkarma-citation="entities:36883:1" rel="noopener">Khan Bank (KHAN MO)</a> needed to IPO. It did, and <a href="https://www.smartkarma.com/entities/hs-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7311:1" rel="noopener">HS Holdings (8699 JP)</a>'s stake fell to 49.77%. </li>
<li>It was de-consolidated. They were locked up for 6mos. The look-through financials are easier now. The company has bought back stock and trades at &lt;0.5x book.</li>
<li>But the Mongolian Banking Law required one more thing. All D-SIBs had to get all shareholders below 20% by 31 December 2023. It's not clear that happened. </li>
</ul>


Under the requirements of the Amended Mongolian Banking Law (Feb 2021), Khan Bank (KHAN MO) needed to IPO. It did, and HS Holdings (8699 JP)'s stake fell to 49.77%. 
It was de-consolidated. They were locked up for 6mos. The look-through financials are easier now. The company has bought back stock and trades at &lt;0.5x book.
But the Mongolian Banking Law required one more thing. All D-SIBs had to get all shareholders below 20% by 31 December 2023. It's not clear that happened. 


HS Holdings (8699) - New Year, New Issues So Lots of Value But Buyer Beware!

<ul>
<li>Today, it was announced that <a href="https://www.smartkarma.com/entities/hs-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7311:1" rel="noopener">HS Holdings (8699 JP)</a> subsidiary Khan Bank LLC - Mongolia's largest bank - would IPO this month. </li>
<li>This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.</li>
<li>There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.</li>
</ul>


Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC - Mongolia's largest bank - would IPO this month. 
This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.


Khan Bank IPO Is Here - At IPO Price, the Stake Is Worth More than HS Holdings' Share Price

<ul>
<li>Thursday post-close, HS announced Q1 earnings, and Khan Bank Q2 earnings. Both magnificent. Book Value is up HUGE, and combined HS Q1-Khan Q2 is ¥7.7bn - 20% of mkt cap.</li>
<li>On Friday 29 July, HS Holdings (8699 JP) announced it had sold HS Debt Collection Agency - the last "earning asset" except for the 55% stake in Khan Bank. </li>
<li>This lifts shadow book value even higher... Deep value with a catalyst. BUT... in an otherwise unannounced postscript to Q1 earnings, HS announced it bought a stake in a... pawnshop?
</li>
</ul>


Thursday post-close, HS announced Q1 earnings, and Khan Bank Q2 earnings. Both magnificent. Book Value is up HUGE, and combined HS Q1-Khan Q2 is ¥7.7bn - 20% of mkt cap.
On Friday 29 July, HS Holdings (8699 JP) announced it had sold HS Debt Collection Agency - the last "earning asset" except for the 55% stake in Khan Bank. 
This lifts shadow book value even higher... Deep value with a catalyst. BUT... in an otherwise unannounced postscript to Q1 earnings, HS announced it bought a stake in a... pawnshop?



HS Holdings (8699 JP) - Huge Q1, Even Better Q2 Ahead, The 2nd To Last Asset Sale... And a Pawnshop?

The long saga of <a href="https://www.smartkarma.com/entities/sawada-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7311:1" rel="noopener">Sawada Holdings (8699 JP)</a> - the last decade where Real World Float was effectively 20%, the launch of a Tender Offer by a relatively unknown group with the namesake founder agreeing to sell well below book value, the ongoing tribulations of incompetence, misunderstanding, and what appears to be somewhat deliberate obfuscation, the change in the Mongolian Banking Law, the selldown by a shareholder to meet the strictures of those changes, the implications of the new regulations, and the ability of Sawada Holdings to comply with them - is now closer to an end than its beginning. Sawada Holdings has less time remaining to comply with the new rules than the current duration of the Upsilon tender offer so far (currently set to close on 25 May, after 305 business days).Last week, the once major Qualifying Shareholder or Designated Shareholder Tower Investment Management announced they had sold their stake down from just below 10% to just over 2%. That changes things. Sawada is a different stock now.<hr>The history of this event is in the insights below:<a href="https://www.smartkarma.com/insights/sawada-holdings-partial-offer-arb-grids-pro-ration" target="_blank" data-smartkarma-citation="insights:37141" rel="noopener"></a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-partial-tender-an-odd-duck" target="_blank" data-smartkarma-citation="insights:36802" rel="noopener">Sawada Holdings Partial Tender - An Odd Duck</a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-partial-offer-arb-grids-pro-ration" target="_blank" data-smartkarma-citation="insights:37141" rel="noopener">Sawada Holdings Partial Offer - Arb Grids &amp; Pro-Ration</a>   <a href="https://www.smartkarma.com/insights/sawada-withholds-opinion-on-tob-mongolia-deal-risk-may-exist" target="_blank" data-smartkarma-citation="insights:36959" rel="noopener">Sawada Withholds Opinion on TOB - Mongolia Deal Risk May Exist</a>   <a href="https://www.smartkarma.com/insights/sawada-holdings-tender-holding-pattern" target="_blank" data-smartkarma-citation="insights:37764" rel="noopener">Sawada Holdings Tender Holding Pattern</a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-partial-offer-update-it-s-a-buy-here" target="_blank" data-smartkarma-citation="insights:37345" rel="noopener">Sawada Holdings Partial Offer Update - It's a Buy Here</a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-8699-partial-tender-delayed-again-13th-time-a-charm" target="_blank" data-smartkarma-citation="insights:42124" rel="noopener">Sawada Holdings (8699) Partial Tender. Delayed Again. 13th Time a Charm?</a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-still-a-long-but" target="_blank" data-smartkarma-citation="insights:43548" rel="noopener">Sawada Holdings - Still A Long But...</a>    <a href="https://www.smartkarma.com/insights/sawada-holdings-change-of-paradigm-means-opportunity" target="_blank" data-smartkarma-citation="insights:47739" rel="noopener">Sawada Holdings - Change of Paradigm Means Opportunity</a>    <a href="https://www.smartkarma.com/insights/sawada-8699-jp-stuck-between-mongolian-central-bank-idealism-and-reality" target="_blank" data-smartkarma-citation="insights:48921" rel="noopener">Sawada (8699 JP) Stuck Between Mongolian Central Bank Idealism and Reality</a>    <a href="https://www.smartkarma.com/insights/sawada-gets-some-good-news-expect-a-selldown" target="_blank" data-smartkarma-citation="insights:50551" rel="noopener">Sawada Gets Some Good News - Expect a Selldown</a>    <a href="https://www.smartkarma.com/insights/sawada-selldown-may-be-done-now-on-to-earnings" target="_blank" data-smartkarma-citation="insights:50721" rel="noopener">Sawada Selldown May Be Done - Now On To Earnings</a>    <a href="https://www.smartkarma.com/insights/sawada-selldown-was-not-done-shareholder-structure-looks-different-now" target="_blank" data-smartkarma-citation="insights:51240" rel="noopener">Sawada Selldown Was NOT Done - Shareholder Structure Looks Different Now</a>

The long saga of Sawada Holdings (8699 JP) - the last decade where Real World Float was effectively 20%, the launch of a Tender Offer by a relatively unknown group with the namesake founder agreeing to sell well below book value, the ongoing tribulations of incompetence, misunderstanding, and what appears to be somewhat deliberate obfuscation, the change in the Mongolian Banking Law, the selldown by a shareholder to meet the strictures of those changes, the implications of the new regulations, and the ability of Sawada Holdings to comply with them - is now closer to an end than its beginning. Sawada Holdings has less time remaining to comply with the new rules than the current duration of the Upsilon tender offer so far (currently set to close on 25 May, after 305 business days).Last week, the once major Qualifying Shareholder or Designated Shareholder Tower Investment Management announced they had sold their stake down from just below 10% to just over 2%. That changes things. Sawada is a different stock now.The history of this event is in the insights below:    Sawada Holdings Partial Tender - An Odd Duck    Sawada Holdings Partial Offer - Arb Grids &amp; Pro-Ration   Sawada Withholds Opinion on TOB - Mongolia Deal Risk May Exist   Sawada Holdings Tender Holding Pattern    Sawada Holdings Partial Offer Update - It's a Buy Here    Sawada Holdings (8699) Partial Tender. Delayed Again. 13th Time a Charm?    Sawada Holdings - Still A Long But...    Sawada Holdings - Change of Paradigm Means Opportunity    Sawada (8699 JP) Stuck Between Mongolian Central Bank Idealism and Reality    Sawada Gets Some Good News - Expect a Selldown    Sawada Selldown May Be Done - Now On To Earnings    Sawada Selldown Was NOT Done - Shareholder Structure Looks Different Now 

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hs-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7311:1" rel="noopener">HS Holdings (8699 JP)</a> remains an interesting hodgepodge of assets. It owns just under 50% of Mongolia's biggest bank, recently IPOed  <a href="https://www.smartkarma.com/entities/khan-bank-llc" target="_blank" data-smartkarma-citation="entities:36883:1" rel="noopener">Khan Bank (KHAN MO)</a>. </li>
<li>It has a pile of cash. And it has a glorified pawn shop business in Japan. The bank shares must be sold, to a significant degree, by end of year. </li>
<li>Today it announced a buyback tomorrow of 6.4% of shares out. I expect it is one of two large individual holders. We'll probably know more within a week.</li>
</ul>



HS Holdings (8699 JP) remains an interesting hodgepodge of assets. It owns just under 50% of Mongolia's biggest bank, recently IPOed  Khan Bank (KHAN MO). 
It has a pile of cash. And it has a glorified pawn shop business in Japan. The bank shares must be sold, to a significant degree, by end of year. 
Today it announced a buyback tomorrow of 6.4% of shares out. I expect it is one of two large individual holders. We'll probably know more within a week.


HS Holdings (8699 JP) Buyback - Adds More to BVPS

Japan

HS Holdings Co., Ltd. offers banking services. The Company provides deposits, loans, domestic settlement, fund management, and other services. HS Holdings also offers securities dealing, securities brokerage, securities underwriting, and other services.

HS Holdings (8699 JP)

HS Holdings (8699) - New Year, New Issues So Lots of Value But Buyer Beware!

HS Holdings trades below 0.5x book where its major asset, comprising 60+% of book, trades with high growth, and at 4x PER. But it has to sell that...

Travis Lundy