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

<a href="https://www.smartkarma.com/entities/suchuang-gas-corp-ltd" target="_blank" data-smartkarma-citation="entities:304:1" rel="noopener">Suchuang Gas Corp (1430 HK)</a> is the dominant piped natural gas operator in Taicang, Jiangsu Province. After market close on Wednesday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/china-resources-gas-group-ltd" target="_blank" data-smartkarma-citation="entities:20525:1" rel="noopener">CR Gas (1193 HK)</a>. The offeror will offer either a cash alternative (HK$2.50 in cash for each scheme share) or a share alternative (1 new share in HoldCo for every scheme share).The bid represents a premium of 27.6% over the closing price of HK$1.96 per share on the undisturbed date (10 August 2021 prior to irregular price movements) and a premium of 2.9% over the closing price of HK$2.43 per share on the last trading date (13 August 2021 prior to the trading halt). The completion conditions include regulatory approvals from the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and State Administration for Market Regulation (SAMR). As CR Gas is a subsidiary of China Resources (Holdings) Company Limited, an SOE, regulatory approval should be forthcoming. <div class="content-highlight">The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 565.4 million shares or 62.61% of shares outstanding, the 10% blocking stake is 56.5 million shares or 6.26% of shares outstanding. Excluding the irrecovables, no disinterested shareholder holds a blocking stake. Overall, we think the offer price is ok and that the privatisation bid will be successful. </div>

Suchuang Gas Corp (1430 HK) is the dominant piped natural gas operator in Taicang, Jiangsu Province. After market close on Wednesday, it announced a privatisation offer by way of a scheme of arrangement from CR Gas (1193 HK). The offeror will offer either a cash alternative (HK$2.50 in cash for each scheme share) or a share alternative (1 new share in HoldCo for every scheme share).The bid represents a premium of 27.6% over the closing price of HK$1.96 per share on the undisturbed date (10 August 2021 prior to irregular price movements) and a premium of 2.9% over the closing price of HK$2.43 per share on the last trading date (13 August 2021 prior to the trading halt). The completion conditions include regulatory approvals from the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and State Administration for Market Regulation (SAMR). As CR Gas is a subsidiary of China Resources (Holdings) Company Limited, an SOE, regulatory approval should be forthcoming. The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 565.4 million shares or 62.61% of shares outstanding, the 10% blocking stake is 56.5 million shares or 6.26% of shares outstanding. Excluding the irrecovables, no disinterested shareholder holds a blocking stake. Overall, we think the offer price is ok and that the privatisation bid will be successful. 

Suchuang Gas’ Privatisation Bid from CR Gas

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

A Reporter of Deals flagged the possibility of <a href="https://www.smartkarma.com/entities/hong-kong-china-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:375:1" rel="noopener">Hong Kong &amp; China Gas (3 HK)</a> taking gas distributor  <a href="https://www.smartkarma.com/entities/towngas-china-co-ltd" target="_blank" data-smartkarma-citation="entities:10771:1" rel="noopener">Towngas China (1083 HK)</a>, currently 67.76%-held, private. 
Towngas is not terribly liquid with respect to its market cap, and the recommendation in the past, from some corners, was that HKCG should sell down its interest to improve liquidity. Instead, HKCG has continued to chip away at Towngas over the years via scrip dividends.
Towngas is trading at a multi-year low for what is a relatively stable business. However, as noted in <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0414/2020041400724.pdf" target="_blank" rel="noopener">2019 annual report</a>, consumer spending and production have declined significantly in China since COVID-19, leading to a material fall in demand for gas and water in commercial and industrial sectors, and in turn impacting the results of Towngas. 
A privatisation? Perhaps. The benefits to HKCG are apparent.
A clutch of thoughts and musings before the line.

A Reporter of Deals flagged the possibility of Hong Kong &amp; China Gas (3 HK) taking gas distributor  Towngas China (1083 HK), currently 67.76%-held, private. 
Towngas is not terribly liquid with respect to its market cap, and the recommendation in the past, from some corners, was that HKCG should sell down its interest to improve liquidity. Instead, HKCG has continued to chip away at Towngas over the years via scrip dividends.
Towngas is trading at a multi-year low for what is a relatively stable business. However, as noted in 2019 annual report, consumer spending and production have declined significantly in China since COVID-19, leading to a material fall in demand for gas and water in commercial and industrial sectors, and in turn impacting the results of Towngas. 
A privatisation? Perhaps. The benefits to HKCG are apparent.
A clutch of thoughts and musings before the line.

Hong Kong

Towngas Smart Energy Company Limited is primarily engaged in the sales and distribution of piped gas, the construction of gas pipelines, and the operation of city gas pipeline networks in mainland China. The company is actively expanding its smart energy businesses, including renewable energy generation, digitalized energy management, and carbon management services. It is headquartered in North Point, Hong Kong, and was founded in 1998.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Towngas Smart Energy (1083 HK)

Suchuang Gas’ Privatisation Bid from CR Gas

Suchuang Gas received a privatisation offer from CR Gas for a cash alternative (HK$2.50) or a share alternative. We think the offer price is ok and...

Arun George

Towngas (1083 HK): A HKCG Privatisation?

A Reporter of Deals flagged the possibility of Hong Kong & China Gas (3 HK) taking gas distributor Towngas China (1083 HK), currently...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)