Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) POTUS Executive Order: Updated List of Chinese Stocks to Be Deleted by Major Indices2) Kanzhun IPO3) Angelalign IPO 4) China: Allows Families to Have Three Children5) HYBE Rights Offering6) China Infrastructure REITs7) Aihuishou IPO8) Full Truck Alliance IPO9) Enjin IPO10) Xpeng: Positive Momentum Back11) Tesla China Losing Market Share12) CStone Pharma (2616.HK) - Time for a Revaluation13) JD Health Lock-Up Expiration14) Passive Money Tracking KOSPI15) SK IE Tech KOSPI 200 Fast-Entry16) DL Holdings with Recent Tender’s Increased Shares: Index Treatment 17) WH Group (288 HK)

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) POTUS Executive Order: Updated List of Chinese Stocks to Be Deleted by Major Indices2) Kanzhun IPO3) Angelalign IPO 4) China: Allows Families to Have Three Children5) HYBE Rights Offering6) China Infrastructure REITs7) Aihuishou IPO8) Full Truck Alliance IPO9) Enjin IPO10) Xpeng: Positive Momentum Back11) Tesla China Losing Market Share12) CStone Pharma (2616.HK) - Time for a Revaluation13) JD Health Lock-Up Expiration14) Passive Money Tracking KOSPI15) SK IE Tech KOSPI 200 Fast-Entry16) DL Holdings with Recent Tender’s Increased Shares: Index Treatment 17) WH Group (288 HK)

Smartkarma North Asia Weekly: POTUS Order, Kanzhun, Angelalign, & 3 Children Policy in China

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Alternate Title: Today's Pig is Tomorrow's Pig, Only Leaner.On 2 June at mid-day, <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> shares were halted "pending the release of an announcement which contains inside information of the Company pursuant to the Codes on Takeovers and Mergers and Share Buy-backs."<a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> covered the run-up to the situation and some comps in <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> while speculating on a fair price should an Offer eventuate. It wasn't a Takeover Offer. It turns out to be a Buyback Offer.Today (6 June 2021) the company <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0606/2021060600019.pdf" target="_blank" rel="noopener">announced</a> a Voluntary Offer through BoAML and Morgan Stanley to buy back 1,916,937,202 shares (13% of shares outstanding) at a price of HK$7.80/share. This is a 17.29% premium to the close on 1 June and a 12.6% premium to the last trade before the suspension (the stock was up 4.2% on the 2nd before being suspended).Because the Controlling Shareholders (Heroic Zone, Chang Yun, Sure Pass, High Zenith, Mr. Wan Long, Mr. Wan Hongwei, Mr. Guo Lijun and Mr. Ma Xiangjie) has irrevocably undertaken that shares under their control will not be tendered, and they own 34.14%, pursuant to Rule 32.1 of the Takeovers Code and Rule 6 of the Buybacks Code, the increase in voting rights would constitute an "acquisition" for purposes of the Code, so Heroic Zone, controlling 34.11%, will make an application to the Executive for a Whitewash Waiver which would require approval at an EGM by 75% of independent shareholders in attendance.Lots of details to consider. More below the fold.

Alternate Title: Today's Pig is Tomorrow's Pig, Only Leaner.On 2 June at mid-day, WH Group (288 HK) shares were halted "pending the release of an announcement which contains inside information of the Company pursuant to the Codes on Takeovers and Mergers and Share Buy-backs."David Blennerhassett covered the run-up to the situation and some comps in WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? while speculating on a fair price should an Offer eventuate. It wasn't a Takeover Offer. It turns out to be a Buyback Offer.Today (6 June 2021) the company announced a Voluntary Offer through BoAML and Morgan Stanley to buy back 1,916,937,202 shares (13% of shares outstanding) at a price of HK$7.80/share. This is a 17.29% premium to the close on 1 June and a 12.6% premium to the last trade before the suspension (the stock was up 4.2% on the 2nd before being suspended).Because the Controlling Shareholders (Heroic Zone, Chang Yun, Sure Pass, High Zenith, Mr. Wan Long, Mr. Wan Hongwei, Mr. Guo Lijun and Mr. Ma Xiangjie) has irrevocably undertaken that shares under their control will not be tendered, and they own 34.14%, pursuant to Rule 32.1 of the Takeovers Code and Rule 6 of the Buybacks Code, the increase in voting rights would constitute an "acquisition" for purposes of the Code, so Heroic Zone, controlling 34.11%, will make an application to the Executive for a Whitewash Waiver which would require approval at an EGM by 75% of independent shareholders in attendance.Lots of details to consider. More below the fold. 

WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk

David Blennerhassett

Equity Bottom-Up

The world's biggest meat suppliers are in the news over the last 24 hours. 
The big news overnight was the hacking of <a href="https://www.smartkarma.com/entities/jbs-sa-ef8d7651-aaae-4c5f-96b8-d5ec11a8018a" target="_blank" data-smartkarma-citation="entities:28580:1" rel="noopener">JBS SA (JBSAY US)</a>, the largest meat producer globally, resulting in the shuttering of around a fifth of its America’s meat production, and impacting JBS plants in Australia and Canada. 
Closer to "home", 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>, parent of Smithfield Foods, the world’s largest pork producer, was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0602/2021060200549.pdf" target="_blank" rel="noopener">halted</a> at 1pm today "pending the release of an announcement which contains inside information of the Company pursuant to the Codes on Takeovers and Mergers and Share Buy-backs."
There is, as yet, no further details forthcoming. Shares gained 4% on decent volume prior to the halt.
For now, this insight provides some background information on WH Group, and also speculates  on a fair price should a firm Offer unfold. 
<hr>
There is some conjecture as to the meaning of "Pearls Before Swine". I'm leaning towards it means something like "to offer something valuable to someone who does not know its value".

The world's biggest meat suppliers are in the news over the last 24 hours. 
The big news overnight was the hacking of JBS SA (JBSAY US), the largest meat producer globally, resulting in the shuttering of around a fifth of its America’s meat production, and impacting JBS plants in Australia and Canada. 
Closer to "home", shares of WH Group (288 HK), parent of Smithfield Foods, the world’s largest pork producer, was halted at 1pm today "pending the release of an announcement which contains inside information of the Company pursuant to the Codes on Takeovers and Mergers and Share Buy-backs."
There is, as yet, no further details forthcoming. Shares gained 4% on decent volume prior to the halt.
For now, this insight provides some background information on WH Group, and also speculates  on a fair price should a firm Offer unfold. 

There is some conjecture as to the meaning of "Pearls Before Swine". I'm leaning towards it means something like "to offer something valuable to someone who does not know its value". 

WH Group (288 HK): Today's Pig Is Tomorrow's Bacon?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:<ul>
<li>Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>To have a more balanced representation of the Hong Kong stock market, the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.</li>
<li>To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.</li>
<li>There will be 20-25 'Hong Kong companies' in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and this number will be evaluated at least every 2 years.</li>
<li>All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as well.</li>
</ul>There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:
Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the Hong Kong Hang Seng Index (HSI INDEX). 
To have a more balanced representation of the Hong Kong stock market, the Hong Kong Hang Seng Index (HSI INDEX) constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.
To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.
There will be 20-25 'Hong Kong companies' in the Hong Kong Hang Seng Index (HSI INDEX) and this number will be evaluated at least every 2 years.
All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as well.
There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

HSI Market Consultation: BIG Changes Coming

Index Rebalance

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>, there are 3 inclusions - <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>. This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> while the impact on <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> is lower, though still substantial.There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hong Kong Hang Seng Index (HSI INDEX), there are 3 inclusions - Alibaba Health Information Technology (241 HK), Longfor Properties (960 HK) and Haidilao (6862 HK). This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on Longfor Properties (960 HK) while the impact on Alibaba Health Information Technology (241 HK) and Haidilao (6862 HK) is lower, though still substantial.There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

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)

Smartkarma North Asia Weekly: POTUS Order, Kanzhun, Angelalign, & 3 Children Policy in China

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK...

Douglas Kim

WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk

WH Group announced a Voluntary Offer Buyback. It is a slightly complicated process because of the Whitewash waiver and the accretion. There is so...

Travis Lundy

WH Group (288 HK): Today's Pig Is Tomorrow's Bacon?

There is, as yet, no further details forthcoming. For now, this insight provides some background information on WH Group, and also speculates on a...

David Blennerhassett

HSI Market Consultation: BIG Changes Coming

Hang Seng Indexes has announced the conclusions of the market consultation and the HSI is going to look different in a years time. Financials see a...

Brian Freitas

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

There are 3 inclusions to the HSI - Ali Health, Longfor Prop and Haidilao. With 10 days to implementation, the stocks should outperform....

Brian Freitas

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