Leading Independent Investment Research, Morningstar, Inc.

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Morningstar, Inc.

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Thematic (Sector/Industry)

<p>The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.</p><p>We believe <a href="https://www.smartkarma.com/entities/111" target="_blank" data-smartkarma-citation="entities:111:1">Sun Hung Kai Properties (16 HK)</a>, or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe <a href="https://www.smartkarma.com/entities/22650" target="_blank" data-smartkarma-citation="entities:22650:1">Cheung Kong Property Holding (1113 HK)</a>, or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both <a href="https://www.smartkarma.com/entities/376" target="_blank" data-smartkarma-citation="entities:376:1">Henderson Land Development (12 HK)</a> and <a href="https://www.smartkarma.com/entities/3320" target="_blank" data-smartkarma-citation="entities:3320:1">Kerry Properties Ltd (683 HK)</a>, the impact on our fair value estimates is expected to be minor.</p><p><em>Analyst: Phillip Zhong</em></p>

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.We believe Sun Hung Kai Properties (16 HK), or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe Cheung Kong Property Holding (1113 HK), or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both Henderson Land Development (12 HK) and Kerry Properties Ltd (683 HK), the impact on our fair value estimates is expected to be minor.Analyst: Phillip Zhong

New Stamp Duty Negative on Transaction Volume in the NearTerm

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>At 0.3x price to book, PRC property play <a href="https://www.smartkarma.com/entities/tomson-group-ltd" target="_blank" data-smartkarma-citation="entities:19447:1" rel="noopener">Tomson (258 HK)</a> is cheap. </li>
<li>It is even cheaper when factoring in its net cash worth 90% of the market cap.</li>
<li>And it might continue to trade cheaply if not for the fact the controlling family recently privatised a connected company of Tomson's.</li>
</ul>


At 0.3x price to book, PRC property play Tomson (258 HK) is cheap. 
It is even cheaper when factoring in its net cash worth 90% of the market cap.
And it might continue to trade cheaply if not for the fact the controlling family recently privatised a connected company of Tomson's.


<div>
<p>Back on the 18 January, sometimes property developer <a href="https://www.smartkarma.com/entities/rivera-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16102:1" rel="noopener">Rivera Holdings (281 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0118/2021011801106.pdf" target="_blank" rel="noopener">announced</a> a proposed privatisation by way of a Scheme. Scheme shares will be cancelled in exchange for $0.65/share cash, a 62.5% premium to last close. The Offer Price will not be increased.</p>
</div>
<p>The big twist here is that the Hong Kong Stock Exchange <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0118/2021011801108.pdf" target="_blank" rel="noopener">reached a decision</a> the same day as the proposal that Rivera has "<em>failed to carry out a business with a sufficient level of operations and assets of sufficient value</em>". </p>
<p>In a nutshell, if the Scheme does not carry, then shares will be suspended. </p>
<p>So, there's that. Plus it's a low-ball Offer. But really, what are your alternatives?</p>
<p>The Scheme Doc is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062901040.pdf" target="_blank" rel="noopener">out</a>. The Scheme Meeting is the 23 July. Payment is expected on the 30 August.</p>
<p>More below the fold. </p>


Back on the 18 January, sometimes property developer Rivera Holdings (281 HK) announced a proposed privatisation by way of a Scheme. Scheme shares will be cancelled in exchange for $0.65/share cash, a 62.5% premium to last close. The Offer Price will not be increased.

The big twist here is that the Hong Kong Stock Exchange reached a decision the same day as the proposal that Rivera has "failed to carry out a business with a sufficient level of operations and assets of sufficient value". 
In a nutshell, if the Scheme does not carry, then shares will be suspended. 
So, there's that. Plus it's a low-ball Offer. But really, what are your alternatives?
The Scheme Doc is now out. The Scheme Meeting is the 23 July. Payment is expected on the 30 August.
More below the fold. 

Rivera (281 HK): Limited Options As Scheme Meeting Firmed

<p>Last night, <a href="https://www.smartkarma.com/entities/rivera-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16102:1" rel="noopener">Rivera Holdings (281 HK)</a>, an investment holding company, which <em>occasionally</em> dabbles in property development and investment in Hong Kong, Macau, and China, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0118/2021011801106.pdf" target="_blank" rel="noopener">announced</a> a proposed privatisation by way of a Scheme.</p>
<div>Scheme shares will be cancelled in exchange for $0.65/share cash, a 62.5% premium to last close. The Offer Price will not be increased.</div>
<div></div>
<div>
<p>The Offeror is an unlisted vehicle owned as to 66% by Hsu Feng, 17% by Albert Tong, and 17% by Charles Tong, all of whom are directors. </p>
</div>
<div>
<p>These directors, along with concert parties and rollover shareholders hold 74.99% of shares out, and will be required to abstain from voting at the Scheme Meeting. </p>
</div>
<div>
<p>Key Scheme conditions include at least 75% of Independent Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Independent Shares AGAINST.</p>
</div>
<div>
<p>The headcount test does <strong>not</strong> apply as Rivera is Hong Kong incorporated. </p>
</div>
<div>
<p>Of interest is Rivera's follow-up <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0118/2021011801108.pdf" target="_blank" rel="noopener">announcemen</a>t in which the Stock Exchange has reached a decision that Rivera has "<em>failed to carry out a business with a sufficient level of operations and assets of sufficient value</em>". </p>
<p>The takeaway is that if the Scheme fails, the Stock Exchange will consider an immediate application of the trading suspension in Rivera.</p>
</div>
<div>
<p>More below the fold.</p>
</div>

Last night, Rivera Holdings (281 HK), an investment holding company, which occasionally dabbles in property development and investment in Hong Kong, Macau, and China, announced a proposed privatisation by way of a Scheme.
Scheme shares will be cancelled in exchange for $0.65/share cash, a 62.5% premium to last close. The Offer Price will not be increased.


The Offeror is an unlisted vehicle owned as to 66% by Hsu Feng, 17% by Albert Tong, and 17% by Charles Tong, all of whom are directors. 


These directors, along with concert parties and rollover shareholders hold 74.99% of shares out, and will be required to abstain from voting at the Scheme Meeting. 


Key Scheme conditions include at least 75% of Independent Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Independent Shares AGAINST.


The headcount test does not apply as Rivera is Hong Kong incorporated. 


Of interest is Rivera's follow-up announcement in which the Stock Exchange has reached a decision that Rivera has "failed to carry out a business with a sufficient level of operations and assets of sufficient value". 
The takeaway is that if the Scheme fails, the Stock Exchange will consider an immediate application of the trading suspension in Rivera.


More below the fold.


Rivera (281 HK): Scheme Or Face Delisting

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

Equity Bottom-Up

China Overseas Land & Investment / Equity Bottom-Up

China Overseas Land & Investment (688 HK)

<p>Carrie Lam has announced that the government will withdraw the extradition bill, a move that is expected to cheer the stock market. In this report, we have identified a couple of beaten-down value names that could participate in the short term rally especially those in the real estate and tourism-related sector. Some of the names mentioned also pay decent yield ranging from 2-7%. </p>

Carrie Lam has announced that the government will withdraw the extradition bill, a move that is expected to cheer the stock market. In this report, we have identified a couple of beaten-down value names that could participate in the short term rally especially those in the real estate and tourism-related sector. Some of the names mentioned also pay decent yield ranging from 2-7%. 

Hong Kong

Tomson Group is an investment holding company primarily engaged in property development and investment, with a focus on high-end residential projects in Shanghai, China. The company also operates in hospitality and leisure, including golf clubs and hotels, as well as securities trading and media and entertainment businesses. Established in Hong Kong in the late 1980s, its main operational base is in Shanghai.

Price Gauge
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Tomson Group (258 HK)

New Stamp Duty Negative on Transaction Volume in the NearTerm

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are...

Morningstar, Inc.