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

China Traditional Chinese Medicine / Event-Driven

China Traditional Chinese Medicine (570 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. </li>
<li>The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. </li>
<li>Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. </li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. 
The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. 
Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. 


China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>Post market close on Friday, Hang Seng Indexes will announce the changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> that will be implemented at the close on 6 September.</li>
<li>With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.</li>
<li>Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.</li>
</ul>


Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 September.
With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.
Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai Pharmaceuticals / Equity Bottom-Up

<ul>
<li>Due to the low base in 2023, net profit in 2024 would show restorative growth, with net profit attributable to owners of the company reaching RMB5+ billion, up 33% YoY.</li>
<li>Different from Sinopharm/CRP whose assets are scattered in different listed companies, pharmaceutical assets/resources of SH Pharma are integrated within the Company, so the intrinsic value of this model is greater.</li>
<li>SH Pharma is undervalued. Interim dividend will be added in 2024.Future dividend ratio would remain 30+%.SH Pharma as a SOE takes the lead in responding to policies to increase dividends.</li>
</ul>


Due to the low base in 2023, net profit in 2024 would show restorative growth, with net profit attributable to owners of the company reaching RMB5+ billion, up 33% YoY.
Different from Sinopharm/CRP whose assets are scattered in different listed companies, pharmaceutical assets/resources of SH Pharma are integrated within the Company, so the intrinsic value of this model is greater.
SH Pharma is undervalued. Interim dividend will be added in 2024.Future dividend ratio would remain 30+%.SH Pharma as a SOE takes the lead in responding to policies to increase dividends.


Shanghai Pharmaceuticals (2607.HK/601607.CH) - Profit Will Resume High Growth in 2024

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. </li>
<li>The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. </li>
<li>The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.</li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.


China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments: <a href="https://www.smartkarma.com/entities/mmg-ltd" target="_blank" data-smartkarma-citation="entities:13961:1" rel="noopener">MMG (1208 HK)</a> rights issue, <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> placement, <a href="https://www.smartkarma.com/entities/sanil-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:43687:1" rel="noopener">Sanil Electric (062040 KS)</a> IPO, and <a href="https://www.smartkarma.com/entities/shift-up-corp" target="_blank" data-smartkarma-citation="entities:36232:1" rel="noopener">Shift Up (462870 KS)</a> IPO.</li>
<li>Event-Driven developments: <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>, <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>, <a href="https://www.smartkarma.com/entities/midea-real-estate-holding-ltd" target="_blank" data-smartkarma-citation="entities:27450:1" rel="noopener">Midea Real Estate Holding (3990 HK)</a>, <a href="https://www.smartkarma.com/entities/best-world-international-ltd" target="_blank" data-smartkarma-citation="entities:4600:1" rel="noopener">Best World International (BEST SP)</a>.  </li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: MMG (1208 HK) rights issue, Aisin (7259 JP) placement, Sanil Electric (062040 KS) IPO, and Shift Up (462870 KS) IPO.
Event-Driven developments: China Traditional Chinese Medicine (570 HK), Shanghai Henlius Biotech (2696 HK), Midea Real Estate Holding (3990 HK), Best World International (BEST SP).  


Weekly Deals Digest (30 Jun) - China TCM, Henlius, Midea RE, MMG, Aisin, Sanil, Shift Up

China

Sinopharm Group is a leading Chinese distributor and retailer of pharmaceutical and healthcare products, medical devices, and a supply chain service provider. The company also engages in the production and sale of pharmaceutical products, chemical reagents, and laboratory supplies. It was incorporated in January 2003 and is headquartered in Shanghai, China.

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Sinopharm Group (1099 HK)

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

The monthly update will relieve the bulls, but there remain potential stumbling blocks. Nevertheless, the risk vs. reward remains attractive.

Arun George

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

Announcement on Friday post market close. Health Care industry still underweight. Index committee has a lot of discretion in stock selection. We...

Brian Freitas

Shanghai Pharmaceuticals (2607.HK/601607.CH) - Profit Will Resume High Growth in 2024

In 2024, SH Pharma's net profit will resume high growth due to 2023 low base. Interim dividend will be added in 2024. SH Pharma is undervalued and...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

Weekly Deals Digest (30 Jun) - China TCM, Henlius, Midea RE, MMG, Aisin, Sanil, Shift Up

Last week, notable developments occurred in Event-Driven (China TCM, Henlius, Midea Real Estate, Best World) and ECM (Sanil, Shift Up, Aisin, MMG).

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

The monthly update will relieve the bulls, but there remain potential stumbling blocks. Nevertheless, the risk vs. reward remains attractive.

Arun George

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

Announcement on Friday post market close. Health Care industry still underweight. Index committee has a lot of discretion in stock selection. We...

Brian Freitas

Shanghai Pharmaceuticals (2607.HK/601607.CH) - Profit Will Resume High Growth in 2024

​In 2024, SH Pharma's net profit will resume high growth due to 2023 low base. Interim dividend will be added in 2024. SH Pharma is undervalued and...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

Weekly Deals Digest (30 Jun) - China TCM, Henlius, Midea RE, MMG, Aisin, Sanil, Shift Up

Last week, notable developments occurred in Event-Driven (China TCM, Henlius, Midea Real Estate, Best World) and ECM (Sanil, Shift Up, Aisin, MMG).

Arun George

In 2024, SH Pharma's net profit will resume high growth due to 2023 low base. Interim dividend will be added in 2024. SH Pharma is undervalued and...