Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Event-Driven

China Logistics Property Holdings / Event-Driven

China Logistics Property Holdings (1589 HK)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/424/original/BANNER-TTOtherDec20_GreyOrange.png?1609259067" class="editor-image img-responsive" data-smartkarma-image-id="180424"></figure></section><p>On Tuesday <a href="https://www.smartkarma.com/entities/china-logistics-property-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:22799:1" rel="noopener">China Logistics Property Holdings (1589 HK)</a> released a statement that confirmed chatter indicating two major shareholders are considering a sale of their stakes, which total 51.5%.</p><p>In this note we attempt to put the potential sale of controlling stakes in CLPH (or the entire company) into context by looking at the 2017 privatization of <a href="https://www.smartkarma.com/entities/global-logistic-properties-ltd" target="_blank" data-smartkarma-citation="entities:2894:1" rel="noopener">Global Logistic Properties (GLP SP)</a>, still the largest single owner of modern warehouse space in China. </p><p>We also provide a list of potential acquirers of the CLPH stakes, assuming a sale occurs eventually. In our view, there are at least seven companies that feature the financial might and the relationships needed to acquire CLPH's warehouse assets in China. </p><p>CLPH's shares are up about 35% YTD, but compared to GLP's EV/Portfolio and EV/Completed SQM multiples at the time of its privatization, valuations do not appear stretched. We believe suitors eager to add scarce Chinese warehouse assets could bid shares up above HK$5.0. </p>

On Tuesday China Logistics Property Holdings (1589 HK) released a statement that confirmed chatter indicating two major shareholders are considering a sale of their stakes, which total 51.5%.In this note we attempt to put the potential sale of controlling stakes in CLPH (or the entire company) into context by looking at the 2017 privatization of Global Logistic Properties (GLP SP), still the largest single owner of modern warehouse space in China. We also provide a list of potential acquirers of the CLPH stakes, assuming a sale occurs eventually. In our view, there are at least seven companies that feature the financial might and the relationships needed to acquire CLPH's warehouse assets in China. CLPH's shares are up about 35% YTD, but compared to GLP's EV/Portfolio and EV/Completed SQM multiples at the time of its privatization, valuations do not appear stretched. We believe suitors eager to add scarce Chinese warehouse assets could bid shares up above HK$5.0. 

Major Shareholders of CLPH (1589:HK) Selling! Revisiting Narrative & Valuations

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p><br/> The Asia HY Trade Book for the month of December includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative value charts and lists of the bonds in the Lucror Asia HY index.<br/></p>

  The Asia HY Trade Book for the month of December includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - December 2020 - Lucror Analytics

<p>Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.</p><ul><li><a href='#lucror-entity-28672'>Powerlong Commercial Management Holdings</a></li><li><a href='#lucror-entity-8898'>Sino Ocean Land</a></li><li><a href='#lucror-entity-22202'>Vedanta Resources</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Powerlong Commercial Management HoldingsSino Ocean LandVedanta Resources

Morning Views Asia: Powerlong Commercial Management Holdings, Sino Ocean Land, Vedanta Resources

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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<p><a href="https://www.smartkarma.com/entities/sino-ocean-land-holdings" target="_blank" data-smartkarma-citation="entities:8898:1" rel="noopener">Sino Ocean Land (3377 HK)</a>'s 90.1%-held property management services arm <a href="https://www.smartkarma.com/entities/sino-ocean-service" target="_blank" data-smartkarma-citation="entities:31037:1" rel="noopener">Sino-Ocean Service (6677 HK)</a> ("<strong>SOS</strong>") issued its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1207/2020120700092.pdf" target="_blank" rel="noopener">global offering doc</a> yesterday. </p>
<p>SOS expects to raise HK$1.8bn (US$0.23bn) if using HK$6.10/share, the mid-point of the indicative Offer Price range. Following the Offer, and before over-allotment, Sino Ocean's stake will decline to 67.57%.</p>
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<p>Sino Ocean is trading cheap to peers (as it has historically), and its implied stub P/B is the least expensive compared to other parents of property management spin-offs. </p>
<p>But the niggling issue is Sino Ocean's debt burden.</p>
<p>More below the fold.</p>
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Sino Ocean Land (3377 HK)'s 90.1%-held property management services arm Sino-Ocean Service (6677 HK) ("SOS") issued its global offering doc yesterday. 
SOS expects to raise HK$1.8bn (US$0.23bn) if using HK$6.10/share, the mid-point of the indicative Offer Price range. Following the Offer, and before over-allotment, Sino Ocean's stake will decline to 67.57%.


Sino Ocean is trading cheap to peers (as it has historically), and its implied stub P/B is the least expensive compared to other parents of property management spin-offs. 
But the niggling issue is Sino Ocean's debt burden.
More below the fold.


Sino Ocean (3377 HK): (Still) Trading Cheap Ahead Of Property Management Co Spin-Off

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<p><a href="https://www.smartkarma.com/entities/sino-ocean-service" target="_blank" data-smartkarma-citation="entities:31037:1" rel="noopener">Sino-Ocean Service (6677 HK)</a> ("SOS") joins the ever-expanding ranks of property management service companies seeking a listing. The Offer Price is expected to be announced on the 16 December, with the commencement of trading in the shares on the 17 December.</p>
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<p>SOS is the spin-off of <a href="https://www.smartkarma.com/entities/sino-ocean-land-holdings" target="_blank" data-smartkarma-citation="entities:8898:1" rel="noopener">Sino Ocean Land (3377 HK)</a>, which will own 67.57% in <strong>SOS</strong> after the IPO, down from 90.1% currently, before over-allotment.</p>
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<p>SOS intends to raise HK$1.8bn (US$0.23bn) if using HK$6.10/share, the mid-point of the indicative Offer Price range.</p>
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<p>On an FY20E PER metric, SOS is pitched in line with its peer basket. </p>
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<p>More below the fold. </p>
</div>


Sino-Ocean Service (6677 HK) ("SOS") joins the ever-expanding ranks of property management service companies seeking a listing. The Offer Price is expected to be announced on the 16 December, with the commencement of trading in the shares on the 17 December.


SOS is the spin-off of Sino Ocean Land (3377 HK), which will own 67.57% in SOS after the IPO, down from 90.1% currently, before over-allotment.


SOS intends to raise HK$1.8bn (US$0.23bn) if using HK$6.10/share, the mid-point of the indicative Offer Price range.


On an FY20E PER metric, SOS is pitched in line with its peer basket. 


More below the fold. 


Sino Ocean Services (6677 HK): Bang In Line

China

Sino-Ocean Group is an investment holding company primarily engaged in property investment and development, including residential, commercial, and logistics projects. The company also offers property management, senior living, and environmental technology services. It was founded in 1993 and is headquartered in Beijing, China.

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Sino-Ocean Group (3377 HK)

Major Shareholders of CLPH (1589:HK) Selling! Revisiting Narrative & Valuations

China Logistics Property Holdings isn't cheap, but the potential sale of controlling stakes in the company could draw strong interest from JD.com...

Tracking Traffic

Asia HY Trade Book - December 2020 - Lucror Analytics

The Asia HY Trade Book for the month of December includes a summary of our recommendations, as well as our high-conviction ideas. The report also...

Lucror Analytics

Morning Views Asia: Powerlong Commercial Management Holdings, Sino Ocean Land, Vedanta Resources

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Sino Ocean (3377 HK): (Still) Trading Cheap Ahead Of Property Management Co Spin-Off

At 0.2x P/B, Sino Ocean is "cheap". But it has perennially been so. I don't see the Sino Ocean Services spin-off helping to narrow the trading gap...

David Blennerhassett

Sino Ocean Services (6677 HK): Bang In Line

Sino Ocean Services is priced with some semblance of reality yet ~26x FY20E remains a punchy valuation for a company with as yet unproven growth...

David Blennerhassett

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