Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Back on the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.</p>
<p>Below is a timeline of events that subsequently unfolded:</p>
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<h3>Date</h3>
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<td style="width: 606.141px;">
<h3>Data in the Date</h3>
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<td style="width: 139.871px;">30-Mar-21</td>
<td style="width: 606.141px;">The controlling shareholders of <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN), including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</td>
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<td style="width: 139.871px;">9-Apr-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
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<td style="width: 139.871px;">26-May-21</td>
<td style="width: 606.141px;">At an SGM, KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
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<td style="width: 139.871px;">7-Jun-21</td>
<td style="width: 606.141px;">The free float waiver has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a> from the HKEx.</td>
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<td style="width: 139.871px;">15-Jun-21</td>
<td style="width: 606.141px;">
<p>Approval by the shareholders of <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">obtained</a></p>
</td>
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<td style="width: 139.871px;">29-Jun-21</td>
<td style="width: 606.141px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>
</td>
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<td style="width: 139.871px;">20-Jul-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
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<td style="width: 139.871px;">2-Aug-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</td>
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<td style="width: 139.871px;">9-Aug-21</td>
<td style="width: 606.141px;">Exactly on the Long Stop date, KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. </td>
</tr>
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<td style="width: 139.871px;">12-Aug-21</td>
<td style="width: 606.141px;">Composite Doc <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0811/2021081101136.pdf" target="_blank" rel="noopener">dispatched</a>
</td>
</tr>
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<td style="width: 139.871px;">17-Aug-21</td>
<td style="width: 606.141px;">The Record Date for the Special Dividend is expected to be the 1 <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0817/2021081701332.pdf" target="_blank" rel="noopener">September</a>. The Special Dividend is expected to be paid on or about Friday, 17 September 2021</td>
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<td style="width: 139.871px;">18-Aug-21</td>
<td style="width: 606.141px;">Irrevocables <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800881.pdf" target="_blank" rel="noopener">received</a>. Thai MGO waiver received,. </td>
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<td colspan="2" style="width: 746.012px;"><em>Source: HKEx announcements</em></td>
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</tbody>
</table>
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<p>All appears to be going to plan.  The first close is the 2 September. </p>
<p>Then KLN announced on the 24 August a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0824/2021082401338.pdf" target="_blank" rel="noopener">delay</a> in the record date for the Special Dividend. KLN estimates:</p>
<blockquote>
<p>that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.</p>
</blockquote>
<p>With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?</p>
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<p>More below the fold. </p>
<p>Plus updated <em><strong>Ye Olde Arb Grids</strong></em>. </p>
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Back on the 9 February, Kerry Logistics Network (636 HK) (KLN) announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.
Below is a timeline of events that subsequently unfolded:





Date


Data in the Date



30-Mar-21
The controlling shareholders of Kerry Logistics Network (636 HK) (KLN), including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.


9-Apr-21
KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


26-May-21
At an SGM, KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver has been received from the HKEx.


15-Jun-21

Approval by the shareholders of Kerry Properties (683 HK) obtained



29-Jun-21
CFIUS approval received



20-Jul-21
KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21
KLN announced NDRC and MoC approval has been received as to the partial offer.


9-Aug-21
Exactly on the Long Stop date, KLN announced all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. 


12-Aug-21
Composite Doc dispatched



17-Aug-21
The Record Date for the Special Dividend is expected to be the 1 September. The Special Dividend is expected to be paid on or about Friday, 17 September 2021


18-Aug-21
Irrevocables received. Thai MGO waiver received,. 


Source: HKEx announcements





All appears to be going to plan.  The first close is the 2 September. 
Then KLN announced on the 24 August a delay in the record date for the Special Dividend. KLN estimates:

that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.

With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?


More below the fold. 
Plus updated Ye Olde Arb Grids. 





Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<p>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.<br><br>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 a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. <br><br>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.<br><br><br>In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), China Resources Power Holdings Company Limited (836 HK), as well as outflows from Wh Group Limited (288 HK), Meituan (3690 HK), and Li Ning Company Limited (2331 HK).</p>

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 a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively.   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), China Resources Power Holdings Company Limited (836 HK), as well as outflows from Wh Group Limited (288 HK), Meituan (3690 HK), and Li Ning Company Limited (2331 HK).

Hong Kong Connect Flows: WH Group, Meituan, Li Ling Led the Outflows

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<p>China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. </p><p>This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.</p><p>The most widely held stocks are <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US), </a><a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, with the trio accounting for 40.6% of total China allocations.  </p><p>If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight <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> , <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> as stocks lightly held by Global managers but well invested by EM active funds.</p>

China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.The most widely held stocks are Alibaba Group (BABA US), AIA Group Ltd (1299 HK) and Tencent (700 HK), with the trio accounting for 40.6% of total China allocations.  If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight Ping An Insurance (H) (2318 HK) , Meituan (3690 HK) and JD.com Inc (ADR) (JD US) as stocks lightly held by Global managers but well invested by EM active funds.

Global Funds China Fall:  Gap to US Largest in History

Travis Lundy

<p><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> will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. </p><p>Then we wait. </p><p>And things get a little weird and possibly a little bumpy this week. </p><p>And into the week after...</p><p>But we wait anyway. </p><p>More below the fold. </p><hr><table class="table table-striped">
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<tr><td colspan="3" style="text-align: left; width: 535pt;"><h3>Insights on This WH Group Event To Date</h3></td></tr>
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<td style="text-align: center;"><strong>Date</strong></td>
<td style="text-align: center;"><strong>Author</strong></td>
<td><strong>Title</strong></td>
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<td style="text-align: center;">02-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" rel="noopener">David B</a></td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-288-hk-today-s-pig-is-tomorrow-s-bacon" target="_blank" data-smartkarma-citation="insights:52429" rel="noopener">WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? </a></em></td>
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<td style="text-align: center;">06-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/travis-lundy/insights" target="_blank" rel="noopener">myself</a></td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-buyback-offer-announced-strong-accretion-creates-accretion-risk" target="_blank" data-smartkarma-citation="insights:52613" rel="noopener">WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk </a></em></td>
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<td style="text-align: center;">20-Jun-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-vs-peers-too-many-piggies-going-to-market" target="_blank" data-smartkarma-citation="insights:53217" rel="noopener">WH Group Vs Peers - Too Many Piggies Going to Market? </a></em></td>
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<td style="text-align: center;">05-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-trading-opportunities-abound" target="_blank" data-smartkarma-citation="insights:54016" rel="noopener">WH Group - Trading Opportunities Abound </a></em></td>
</tr>
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<td style="text-align: center;">10-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-long-only-fundamental-investors-can-take-advantage-too" target="_blank" data-smartkarma-citation="insights:54223" rel="noopener">WH Group - Long-Only Fundamental Investors Can Take Advantage Too </a></em></td>
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<td style="text-align: center;">30-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-offer-doc-out-this-little-piggy-went-to-market" target="_blank" data-smartkarma-citation="insights:55210" rel="noopener">WH Group Offer Doc Out - This Little Piggy Went To Market </a></em></td>
</tr>
<tr>
<td style="text-align: center;">17-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-partial-buyback-offer-now-unconditional" target="_blank" data-smartkarma-citation="insights:56210" rel="noopener">WH Group Partial Buyback Offer Now Unconditional </a></em></td>
</tr>
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<td style="text-align: center;">18-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><em><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></em></td>
</tr>
</tbody>
</table>

WH Group (288 HK) will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. Then we wait. And things get a little weird and possibly a little bumpy this week. And into the week after...But we wait anyway. More below the fold. 






Insights on This WH Group Event To Date

Date
Author
Title


02-Jun-21
David B
WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? 


06-Jun-21
myself
WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk 


20-Jun-21
myself
WH Group Vs Peers - Too Many Piggies Going to Market? 


05-Jul-21
myself
WH Group - Trading Opportunities Abound 


10-Jul-21
myself
WH Group - Long-Only Fundamental Investors Can Take Advantage Too 


30-Jul-21
myself
WH Group Offer Doc Out - This Little Piggy Went To Market 


17-Aug-21
myself
WH Group Partial Buyback Offer Now Unconditional 


18-Aug-21
myself
WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud 




WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

Hong Kong

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

Price Gauge
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WH Group (288 HK)

Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

Assuming that the Irrevocable Agreement signors intend to tender only what they put in their Irrevocable Agreement, then owning the stock around...

David Blennerhassett

Hong Kong Connect Flows: WH Group, Meituan, Li Ling Led the Outflows

We highlight Hong Kong connect inflows into Tencent, China Resources Power, and outflows from WH Group, Meituan, and Li Ning.

Ke Yan, CFA, FRM

Global Funds China Fall: Gap to US Largest in History

China allocations among Global active funds have fallen to below pre 2017 levels. Average holding weights among the 381 funds in our analysis...

Steven Holden

WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations

WH Group Partial Buy Back Offer Closes 30 Aug. Results will be out 30 August. The returned shares will not come back until NEXT week but indices...

Travis Lundy

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Price Gauge

52-week Range

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