Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

China Resources Beer Holdings / Event-Driven

This piece is just a fork in support of Jon's <a href="http://www.smartkarma.com/insights/beer-is-cheap-but-is-it-cheap-enough" target="_blank">piece</a> on China Resources Enterprise.It makes no judgments about good deal, bad deal, etc. It assumes that the deal goes through as presented. This piece presents the arbitrage values of residual fair value of your holding on the assumption that you buy CRE shares at a price, if the shares are below the tender offer price after the dividend you tender them. If not, you don't. Your "purchase price" is your mark-to-market price on the left.Tables are presented for the values regarding your residual position in NEWBREWCO (or as Jon calls it, "CRE Brew-Co") post div and tender action, for Breakeven Price Per Share, Price/Earnings Ratio of that Breakeven Price, PBR of that B/E Price, and the EV/EBITDA Ratio of your B/E price. CONCLUSION:<ul><li>Buying CRE to get a position in NEWBREWCO is much more attractive at 22.00 than 24.00.</li><li>My early cocktail napkin calculations suggest a minimum fill ratio well above Jon's conservative 26%. Absolute minimum is 20.75%. I see a strong likelihood the number would not go below about 35-40%.</li></ul>

This piece is just a fork in support of Jon's piece on China Resources Enterprise.It makes no judgments about good deal, bad deal, etc. It assumes that the deal goes through as presented. This piece presents the arbitrage values of residual fair value of your holding on the assumption that you buy CRE shares at a price, if the shares are below the tender offer price after the dividend you tender them. If not, you don't. Your "purchase price" is your mark-to-market price on the left.Tables are presented for the values regarding your residual position in NEWBREWCO (or as Jon calls it, "CRE Brew-Co") post div and tender action, for Breakeven Price Per Share, Price/Earnings Ratio of that Breakeven Price, PBR of that B/E Price, and the EV/EBITDA Ratio of your B/E price. CONCLUSION:Buying CRE to get a position in NEWBREWCO is much more attractive at 22.00 than 24.00.My early cocktail napkin calculations suggest a minimum fill ratio well above Jon's conservative 26%. Absolute minimum is 20.75%. I see a strong likelihood the number would not go below about 35-40%.

Jon's Beer is Cheap - The Arb Calculations

Hong Kong

Sun Art Retail Group Ltd. operates hypermarkets.  The Company retails food and offers amenities such as restaurants, automated teller machines, pharmacies and dry cleaners.

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Sun Art Retail (6808 HK)

Jon's Beer is Cheap - The Arb Calculations

This piece is just a fork in support of Jon's piece on China Resources Enterprise.It makes no judgments about good deal, bad deal, etc. It assumes...

Travis Lundy

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