IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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

<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

<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>On 21 February, <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> announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.</li>
<li>The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. </li>
<li>The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   </li>
</ul>


On 21 February, China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. 
The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   


China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

<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> announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.</li>
<li>The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. </li>
<li>
<a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. </li>
</ul>



China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 

Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 


China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

<ul>
<li>Bloomberg reports that Sinopharm is reviving its interest in privatising <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>/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.</li>
<li>Sinopharm’s best bet is to partner with <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-c2975d60-47cd-4246-a7a6-25297586242b" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group of (601318 CH)</a> and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.</li>
<li>Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.</li>
</ul>


Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.


China Traditional Chinese Med (570 HK): Third Time's the Charm as Sinopharm Revives Its Interest?

China

Tong Ren Tang Technologies Company Limited manufactures, distributes, and researches, and develops Chinese patent medicine.

Tong Ren Tang Technologies Co, Ltd. (1666 HK)

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Tong Ren Tang Technologies Co, Ltd. (1666 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

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

China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable...

Arun George

China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

The offer is attractive to historical trading ranges and peer multiples. Ping An, which holds a blocking stake, will be supportive. This looks like...

Arun George

China Traditional Chinese Med (570 HK): Third Time's the Charm as Sinopharm Revives Its Interest?

Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding...

Arun George

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Market Cap (USDm)

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