Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Back on the 17 May, after ARA Asset Management <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> in <em><a href="https://skr.ma/TcDY5" target="_blank" rel="noopener">Straits Trading: ARA's Pre-IPO Funding From SMBC</a></em>.</p>
<p>Based on the <a href="https://ara.listedcompany.com/misc/circulars/ARA-Scheme_Document_FINAL.pdf" target="_blank" rel="noopener">Scheme</a> value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.</p>
<p>That was pretty close to the mark.</p>
<p>As discussed in <em><a href="https://skr.ma/fJECF" target="_blank" rel="noopener">ESR Cayman (1821 HK) Takes Out ARA Asset Management</a></em>, <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> has now all but sealed the takeover of ARA in a US$5.2bn deal.</p>
<p>For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.</p>
<p>STR's shares have gained 13% as I type. </p>
<p>More below the fold. </p>
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Back on the 17 May, after ARA Asset Management announced a $500mn round of equity financing from Sumitomo Mitsui Banking Corporation, I reiterated a BUY on Straits Trading (STRTR SP) in Straits Trading: ARA's Pre-IPO Funding From SMBC.
Based on the Scheme value of ARA in 2017 when it was taken private, and its then-AUM, ARA was potentially worth upwards of S$6bn. This in turn assigned a value of S$1.3bn for STR's stake in ARA, ~30% above its then-current market cap.
That was pretty close to the mark.
As discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management, ESR Cayman (1821 HK) has now all but sealed the takeover of ARA in a US$5.2bn deal.
For its part, STR will pocket US$845.3mn (S$1.14bn) - in cash &amp; ESR scrip - from the transaction.
STR's shares have gained 13% as I type. 
More below the fold. 


Straits Trading Cheap As ARA Asset Exposure Monetized

Equity Bottom-Up

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<p><a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. </p>
<p>Yesterday ARA <a href="https://ara.listedcompany.com/newsroom/ARAPress_Release_SMBC0Joins-ARAasStrategicShareholder_17052021.pdf" target="_blank" rel="noopener">announced</a> a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.</p>
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<p>STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. </p>
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<p>As always, more below the fold.</p>
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Straits Trading (STRTR SP) (STR) has a 22.06% stake in ARA Asset Management, after adding 1.1% in May of last year for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.  STR's stake in ARA, based on that stake increase, is worth ~60% of its current market cap. Yet that figure is likely conservative based on the increase in ARA's AUM. 
Yesterday ARA announced a $500mn round of equity financing from SMBC. With SMBC joining as a strategic shareholder, this has all the hallmarks of an imminent IPO.


STR is cheap. Either major shareholder Tecity takes the company private; or you buy the company as an indirect investment into an expected listing of ARA. 


As always, more below the fold.


Straits Trading: ARA's Pre-IPO Funding From SMBC

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

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<li>2021's vintage of my 5 High Convictions Ideas did extremely well</li>
<li>
<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> was up 543%, <a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> was up 80%, <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> was up almost 74% and Shougang Fushan just under 40%.</li>
<li>The underperformer award goes to HK restaurant operator <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet Group Ltd (8371 HK)</a> as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.</li>
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2021's vintage of my 5 High Convictions Ideas did extremely well

PC Partner (1263 HK) was up 543%, Rex International Holding (REXI SP) was up 80%, Straits Trading (STRTR SP) was up almost 74% and Shougang Fushan just under 40%.
The underperformer award goes to HK restaurant operator Taste Gourmet Group Ltd (8371 HK) as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.


Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

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<p>Back on the 6 January 2010, the SGX issued a <a href="https://api2.sgx.com/sites/default/files/2018-09/Consultation%2BPaper%2Bon%2BProposed%2BRevisions%2Bto%2BMainboard%2BAdmission%2BCriteria%2Band%2Bthe%2BIntroduction%2Bof%2BSPAC.pdf" target="_blank" rel="noopener">consultation paper</a> on the "<em>Proposed Revisions to Mainboard Admission Criteria and the Introduction of SPAC</em>", and following the feedback at that time, SGX determined the timing was not ideal to introduce special purpose acquisition company (SPACs).</p>
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<p>Following a flurry of SPAC listings in the US in 2020, my discussion with the SGX late last year indicated a white paper on SPACs was expected to be issued in the first half of this year. This was discussed in <em><a href="https://skr.ma/5UGLq" target="_blank" rel="noopener">Virtual IPOs/Direct Listings: Uninhibited Price Discovery</a>.</em></p>
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<p>The SGX <a href="https://api2.sgx.com/sites/default/files/2021-03/Consultation%20Paper%20on%20Proposed%20Listing%20Framework%20for%20Special%20Purpose%20Acquisition%20Companies.pdf" target="_blank" rel="noopener">announced</a> on the 31 March a regulatory framework for SPACs to list on the SGX and subsequent to the feedback phase ending on the 28 April, the framework may be finalised by the middle of this year. </p>
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<p>Media reports are now emerging that Temasek-backed Vertex Holdings is set to be Singapore's first SPAC.</p>
<p>With US$5bn of assets under management, 30-year old Vertex has the necessary pedigree to establish the country's first (successful) listing.</p>
<p>More below the fold.</p>
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Back on the 6 January 2010, the SGX issued a consultation paper on the "Proposed Revisions to Mainboard Admission Criteria and the Introduction of SPAC", and following the feedback at that time, SGX determined the timing was not ideal to introduce special purpose acquisition company (SPACs).


Following a flurry of SPAC listings in the US in 2020, my discussion with the SGX late last year indicated a white paper on SPACs was expected to be issued in the first half of this year. This was discussed in Virtual IPOs/Direct Listings: Uninhibited Price Discovery.


The SGX announced on the 31 March a regulatory framework for SPACs to list on the SGX and subsequent to the feedback phase ending on the 28 April, the framework may be finalised by the middle of this year. 


Media reports are now emerging that Temasek-backed Vertex Holdings is set to be Singapore's first SPAC.
With US$5bn of assets under management, 30-year old Vertex has the necessary pedigree to establish the country's first (successful) listing.
More below the fold.







Vertex Holdings: Singapore's Showcasing SPAC

Keisei Electric Railway Co / Event-Driven

<ul>
<li>The CSRC has announced five capital market cooperation measures for the<strong> Hong Kong Southbound Connect</strong> programs including  RMB dual counters and REITs. </li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener"><strong>Jardine Cycle &amp; Carriage (JCNC SP)</strong></a>'s current implied stub value and simple ratio are both highly elevated.</li>
<li>A simple <strong><a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a></strong>model says "this doesn't present me with enough upside to warrant it unless I am also really bullish <strong><a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a></strong>."</li>
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The CSRC has announced five capital market cooperation measures for the Hong Kong Southbound Connect programs including  RMB dual counters and REITs. 

Jardine Cycle &amp; Carriage (JCNC SP)'s current implied stub value and simple ratio are both highly elevated.
A simple Keisei Electric Railway Co (9009 JP)model says "this doesn't present me with enough upside to warrant it unless I am also really bullish Oriental Land (4661 JP)."


Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

Singapore

Straits Trading Company Limited operates as an investment holding company that positions its investments in real estate, hospitality, resources and other investments in the Asia Pacific region. The Company is also engaged in tin mining and smelting through its subsidiary.

Straits Trading (STRTR SP)

Straits Trading Cheap As ARA Asset Exposure Monetized

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Straits Trading: ARA's Pre-IPO Funding From SMBC

Based on the Scheme value of ARA,, ARA is potentially worth upwards of S$6bn. That backs out a value of S$1.3bn for STR's stake, ~30% above its...

David Blennerhassett

Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

2021's vintage of 5 High Conviction Ideas did extremely well led by star performer Pc Partner. Our new selection for 2022 will hopefully have some...

Nicolas Van Broekhoven

Vertex Holdings: Singapore's Showcasing SPAC

Vertex, Temasek's venture capital arm, appears to tick all the right boxes towards instilling a modicum of confidence in Singapore's initial foray...

David Blennerhassett

Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

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