Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>RMB dual counter started trading. <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>'s A-shares trade at 3x the multiple. THAT is a big discount to harvest. </li>
<li>
<a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a>'s CFO exits an indirect stake of 6.38% around Feihe's all-time low. </li>
<li>
<a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">EcoPro Co Ltd (086520 KS)</a> has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high</li>
</ul>


RMB dual counter started trading. Great Wall Motor (2333 HK)'s A-shares trade at 3x the multiple. THAT is a big discount to harvest. 

China Feihe (6186 HK)'s CFO exits an indirect stake of 6.38% around Feihe's all-time low. 

EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high


Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW

Travis Lundy

<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

<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?

<ul>
<li>The saga that has been the Sawada now <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> effective control change and change in Mongolian Banking Law has been interesting but the end game is clear.</li>
<li>Last week, the Mongolian parliament extended the listing deadline for the top 5 Mongolian banks from June 2022 to June 2023. The IPO has been pushed back. Which is good.</li>
<li>The stock is not what people think it is, and the implied PBR and PER of Khan Bank exposure on a cash-adjusted basis is VERY low. </li>
</ul>


The saga that has been the Sawada now HS Holdings (8699 JP) effective control change and change in Mongolian Banking Law has been interesting but the end game is clear.
Last week, the Mongolian parliament extended the listing deadline for the top 5 Mongolian banks from June 2022 to June 2023. The IPO has been pushed back. Which is good.
The stock is not what people think it is, and the implied PBR and PER of Khan Bank exposure on a cash-adjusted basis is VERY low. 


HS Holdings (8699 JP): Khan Bank IPO Delayed but Path Clear

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.

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HS Holdings (8699 JP)

Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW

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