Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p><a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1104/2020110400676.pdf" target="_blank" rel="noopener">announced</a> it is at an advanced stage of negotiations with <a href="https://www.smartkarma.com/entities/cellnex-telecom-sau" target="_blank" data-smartkarma-citation="entities:21258:1" rel="noopener">Cellnex Telecom Sau (CLNX SM)</a> for the disposals of its telecommunications infrastructure assets in Europe.</p>
<p>Subject to the finalisation of definitive documentation, total proceeds on completion of the transactions are ~€10.0bn, including minority partners’ share. The headline transaction price mirrors that rumoured a week ago in the media, and accounts for ~24% of CKH's NAV.</p>
<p>The announcement follows the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1026/2020102600071.pdf" target="_blank" rel="noopener">news</a> last week that CKH will reduce its exposure to <a href="https://www.smartkarma.com/entities/husky-energy" target="_blank" data-smartkarma-citation="entities:22923:1" rel="noopener">Husky Energy (HSE CN)</a> in a deal with <a href="https://www.smartkarma.com/entities/cenovus-energy-inc" target="_blank" data-smartkarma-citation="entities:24253:1" rel="noopener">Cenovus Energy Inc (CVE CN)</a>.</p>
<p>CKH is trading cheap at a 46% discount to NAV <em>after this morning's ~8.9% share price gain</em>. The implied stub, net of all listed holdings, remains near the -2STD level, based on share prices since the reorganisation of Cheung Kong in <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2015/0603/ltn20150603277.pdf" target="_blank" rel="noopener">June 2015</a>.</p>
<p>For those waiting for a catalyst to enhance/unlock shareholder value, this is it. </p>

CK Hutchison Holdings (1 HK) has announced it is at an advanced stage of negotiations with Cellnex Telecom Sau (CLNX SM) for the disposals of its telecommunications infrastructure assets in Europe.
Subject to the finalisation of definitive documentation, total proceeds on completion of the transactions are ~€10.0bn, including minority partners’ share. The headline transaction price mirrors that rumoured a week ago in the media, and accounts for ~24% of CKH's NAV.
The announcement follows the news last week that CKH will reduce its exposure to Husky Energy (HSE CN) in a deal with Cenovus Energy Inc (CVE CN).
CKH is trading cheap at a 46% discount to NAV after this morning's ~8.9% share price gain. The implied stub, net of all listed holdings, remains near the -2STD level, based on share prices since the reorganisation of Cheung Kong in June 2015.
For those waiting for a catalyst to enhance/unlock shareholder value, this is it. 

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<p>Bharti Telecom, the promoter of <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> plans to raise up US$1.1bn via selling a 2.7% stake in Bharti.</p><p>Given the rough few years that the stock has gone through, add to it that it's the promoter selling and the stock is trading at an all-time high, thus it's no surprise that the deal doesn't score very well on our framework. </p><p>Nonetheless, the telecom sector in India is shaping up to be a duoploy and recent competitive pressures have been easing. Add to it the fact that Bharti's recent results were strong and things don't look too bad from a long-term perspective.</p>

Bharti Telecom, the promoter of Bharti Airtel (BHARTI IN) plans to raise up US$1.1bn via selling a 2.7% stake in Bharti.Given the rough few years that the stock has gone through, add to it that it's the promoter selling and the stock is trading at an all-time high, thus it's no surprise that the deal doesn't score very well on our framework. Nonetheless, the telecom sector in India is shaping up to be a duoploy and recent competitive pressures have been easing. Add to it the fact that Bharti's recent results were strong and things don't look too bad from a long-term perspective.

Bharti Airtel - Promoter Selling so It's Not Going to Fly but It's a Good Long Term Bet

European Event-Driven Analyst

Patryk Basiewicz

PGB Research

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<a href="https://www.smartkarma.com/entities/telefonica-sa" target="_blank" data-smartkarma-citation="entities:21299:1" rel="noopener">Telefonica SA (TEF SM)</a> and <a href="https://www.smartkarma.com/entities/liberty-global-plc-a" target="_blank" data-smartkarma-citation="entities:15261:1" rel="noopener">Liberty Global Plc A (LBTYA US)</a> are in talks to merge their UK operations. We do not know what will happen to the Irish bit</li>
<li>The street, as do I, assume this will be a 50:50 JV, similar to the deal Liberty did with <a href="https://www.smartkarma.com/entities/vodafone-group-plc" target="_blank" data-smartkarma-citation="entities:22204:1" rel="noopener">Vodafone (VOD LN)</a> in the Netherlands. </li>
<li>
<p>This transaction will fundamentally, perhaps, permanently, and, perhaps, conclusively reshape the UK telco market. Clearly other market players are currently considering their options with regards to both O2 UK and Liberty as a whole, or the Virgin Media (VMed) part.</p>
</li>
<li>
<p>Ultimately, both Telefonica and Liberty Global want to sell those assets too. In my view, this transaction is made with a view to IPO the JV in 2-3 years. This view also informs how we should look at value creation in the deal.</p>
</li>
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Telefonica SA (TEF SM) and Liberty Global Plc A (LBTYA US) are in talks to merge their UK operations. We do not know what will happen to the Irish bit
The street, as do I, assume this will be a 50:50 JV, similar to the deal Liberty did with Vodafone (VOD LN) in the Netherlands. 

This transaction will fundamentally, perhaps, permanently, and, perhaps, conclusively reshape the UK telco market. Clearly other market players are currently considering their options with regards to both O2 UK and Liberty as a whole, or the Virgin Media (VMed) part.


Ultimately, both Telefonica and Liberty Global want to sell those assets too. In my view, this transaction is made with a view to IPO the JV in 2-3 years. This view also informs how we should look at value creation in the deal.



O2 UK / Telefonica (TEF SM) / Liberty (LBTYA): Can You Create Value from Assets that Nobody Wants?

Equity Bottom-Up

<p>I build my investment case on Vodafone’s dividend-paying power. I show that it is the most crucial factor in driving Vodafone’s equity value.</p>
<p>I believe that current sell-side consensus underestimates Vodafone’s dividend progression in the next three to four years, and even just a moderately higher dividend assumptions vis-à-vis the consensus will deliver my bullish thesis.</p>
<p>Note that this is a bit a ‘technical note’ in that it describes a method for valuing Vodafone and the resultant value. It does not address the fundamental aspects of the story. This I will address in future insights. </p>
<p>Results are out on Tuesday this week, I provide a list of items that are important for Vodafone as an investment.  </p>

I build my investment case on Vodafone’s dividend-paying power. I show that it is the most crucial factor in driving Vodafone’s equity value.
I believe that current sell-side consensus underestimates Vodafone’s dividend progression in the next three to four years, and even just a moderately higher dividend assumptions vis-à-vis the consensus will deliver my bullish thesis.
Note that this is a bit a ‘technical note’ in that it describes a method for valuing Vodafone and the resultant value. It does not address the fundamental aspects of the story. This I will address in future insights. 
Results are out on Tuesday this week, I provide a list of items that are important for Vodafone as an investment.  

Vodafone (VOD LN): If You Look at Vodafone a Bit Differently, It Is a Solid Long-Term Play.

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a> is back to levels last seen before political disruptions began in Hong Kong. CKH looks attractively priced here with the potential for incremental earnings via the restructuring of its telco ops, with a view to facilitating operating efficiency and reducing finance costs; and a possible prelude to spin-offs.</p>
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<p>Preceding my comments on CKH and <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> / <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> / <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...




CK Hutchison Holdings (1 HK) is back to levels last seen before political disruptions began in Hong Kong. CKH looks attractively priced here with the potential for incremental earnings via the restructuring of its telco ops, with a view to facilitating operating efficiency and reducing finance costs; and a possible prelude to spin-offs.




Preceding my comments on CKH and Prosus (PRX NA) / Naspers (NPN SJ) / Tencent Holdings (700 HK) are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: CK Hutchison Recovering. More To Come

United Kingdom

Vodafone is a British multinational telecommunications company that provides mobile and fixed services, including voice, messaging, data, and television. The company also offers Internet of Things (IoT) solutions, cloud services, and cybersecurity for businesses. Vodafone's global headquarters are in Newbury, Berkshire, England, and it was officially founded in 1991, evolving from Racal Telecom Limited.

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Vodafone (VOD LN)

CK Hutch: Here's Your Re-Rating Catalyst

CK Hutchison closes in on a Eur10bn tower sale to Spain's Cellnex, which would unlock 24% of NAV and 32% of the unlisted stub value.

David Blennerhassett

Bharti Airtel - Promoter Selling so It's Not Going to Fly but It's a Good Long Term Bet

Bharti Telecom, the promoter of Bharti Airtel (BHARTI IN) plans to raise up US$1.1bn via selling a 2.7% stake in Bharti.Given the rough few years...

Sumeet Singh

O2 UK / Telefonica (TEF SM) / Liberty (LBTYA): Can You Create Value from Assets that Nobody Wants?

Telefonica SA (TEF SM) and Liberty Global Plc A (LBTYA US) are in talks to merge their UK operations. We do not know what will happen to the...

Patryk Basiewicz

Vodafone (VOD LN): If You Look at Vodafone a Bit Differently, It Is a Solid Long-Term Play.

I build my investment case on Vodafone’s dividend-paying power. I show that it is the most crucial factor in driving Vodafone’s equity value. I...

Patryk Basiewicz

StubWorld: CK Hutchison Recovering. More To Come

This week in StubWorld ... CK Hutchison Holdings (1 HK) is back to levels last seen before political disruptions began in Hong Kong. CKH looks...

David Blennerhassett

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