Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Scheme Document for <a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. </li>
<li>
<a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. </li>
<li>The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.</li>
</ul>


The Scheme Document for Cp Pokphand (43 HK) (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. 

CP FOODS (CPF TB) and Itochu Corp (8001 JP) with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. 
The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.


C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

Travis Lundy

Equity Bottom-Up

Post WH Group Tender Offer buyback, there is a fair bit of good news. <ul>
<li>A month ago, <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> was near its cheapest vs peers in years on a forward earnings basis.</li>
<li>Lean hog prices are finally making a rebound in China after a multi-month cull and NDRC intervention</li>
<li>Hog prices in the US remain strong-ish. </li>
<li>Forward earnings estimates are up. </li>
</ul>But since the strength in WH Group shares immediately post-tender, when people sold the overhang, the stock has fallen sharply. HK and China-listed peers are up an average of 15% in the past month while global-listed peers are down 4%. WH Group resembles a mix of those two baskets but is down 12% in the same period vs +5% for an equal-weighted basket.The shares are now scraping on 4-year lows despite recent 15% accretion, and on an accretion-adjusted basis have underperformed by 30% in bit over a month. That is probably overdone.

Post WH Group Tender Offer buyback, there is a fair bit of good news. 
A month ago, WH Group (288 HK) was near its cheapest vs peers in years on a forward earnings basis.
Lean hog prices are finally making a rebound in China after a multi-month cull and NDRC intervention
Hog prices in the US remain strong-ish. 
Forward earnings estimates are up. 
But since the strength in WH Group shares immediately post-tender, when people sold the overhang, the stock has fallen sharply. HK and China-listed peers are up an average of 15% in the past month while global-listed peers are down 4%. WH Group resembles a mix of those two baskets but is down 12% in the same period vs +5% for an equal-weighted basket.The shares are now scraping on 4-year lows despite recent 15% accretion, and on an accretion-adjusted basis have underperformed by 30% in bit over a month. That is probably overdone.

WH Group (288 HK) Now Cheapest Vs Peers in Yonks

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

Hong Kong SFC reported aggregate short position as of Sep 10. The aggregate short value for equities increased by $423m (+0.6%) WoW and increased by $741m (+1.1%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,720m, -3.3% WoW), China Merchants Bank Co., Ltd./3968 HK($2,745m, +1.9% WoW), Zhongsheng Group Holdings Limited/881 HK($1,960m, +0.1% WoW), Meituan/3690 HK($1,759m, +6.5% WoW), Anta Sports Products Limited/2020 HK($1,647m, +5.7% WoW).<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/549/original/Hong_Kong_Market_Short_Position_Value_%28line%29_and_1W_Changes_%28bar%29_%28%24m%292021-09-18+12_47_11.png?1631948396" class="editor-image img-responsive" data-smartkarma-image-id="230549"></figure></section>

Hong Kong SFC reported aggregate short position as of Sep 10. The aggregate short value for equities increased by $423m (+0.6%) WoW and increased by $741m (+1.1%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,720m, -3.3% WoW), China Merchants Bank Co., Ltd./3968 HK($2,745m, +1.9% WoW), Zhongsheng Group Holdings Limited/881 HK($1,960m, +0.1% WoW), Meituan/3690 HK($1,759m, +6.5% WoW), Anta Sports Products Limited/2020 HK($1,647m, +5.7% WoW).

HK Short Interest: Short Cover for Dongyue, WH Group

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In 2020, Southbound trading accounted for 22% of the equity market ADT. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), Wh Group Limited (288 HK), Kuaishou Technology (1024 HK), as well as outflows from Hong Kong Exchanges And Clearing Limited (388 HK), Semiconductor Manufacturing International Corporation (981 HK), Anta Sports Products Limited (2020 HK).

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In 2020, Southbound trading accounted for 22% of the equity market ADT. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), Wh Group Limited (288 HK), Kuaishou Technology (1024 HK), as well as outflows from Hong Kong Exchanges And Clearing Limited (388 HK), Semiconductor Manufacturing International Corporation (981 HK), Anta Sports Products Limited (2020 HK).

Hong Kong Connect Flows: Tencent, WH Group, Kuaishou

The shares of <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in <a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud</a>. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

The shares of WH Group (288 HK) to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

Hong Kong

WH Group is the world's largest pork company, operating across China, the US, and Europe. It integrates hog production, slaughtering, and the processing and distribution of packaged meats and fresh pork. The company's core business includes a wide range of packaged meat products and fresh pork. Headquartered in Hong Kong, the company traces its origins back to 1958.

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WH Group (288 HK)

C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

This still looks a pretty clean deal. I'd be paying up to and around $1.12/share which is ~3.6%/15% gross/annualised spread.

David Blennerhassett

WH Group (288 HK) Now Cheapest Vs Peers in Yonks

WH Group has not fared well after the end of the 15% accretive buyback offer. Shares are down 30% since the day before the announcement and 40% on...

Travis Lundy

HK Short Interest: Short Cover for Dongyue, WH Group

We highlight week-on-week short covers for Dongyue (189 HK) and WH Group (288 HK) based on the latest HK SFC short aggregate position report.

Ke Yan, CFA, FRM

Hong Kong Connect Flows: Tencent, WH Group, Kuaishou

We highlight Hong Kong Connect Southbound inflows into Tencent (700 HK), WH Group (288 HK), Kuaishou (1024 HK), and outflows from HKEx (388 HK),...

Ke Yan, CFA, FRM

WH Group Post-Tender Outlook

Buyback Offer shares are returned. Now we look forward. Of course, we did before in assuming participation rates. The stock is cheap on accretion...

Travis Lundy

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