Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<div class="content-highlight">
<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: [Under the section “On the Evergrande holding”], that (unrealised &amp; realised) loss on the investment in Evergrande (3333 HK) of HK$10.4bn almost certainly includes the HK$3.99bn loss on investment included in the 2021 interims.</strong></em></p>
<p><em><strong>Therefore the additional (unrealised &amp; realised) loss on investment, using the $2.95/share price for Evergrande as provided in the announcement, is ~HK$6.4bn, or HK$3.37/share, giving an adjusted NAV of HK$9.61/share (ignoring forward earnings), implying a P/B under the Offer of ~0.42x compared to a three-year average of 0.31x.</strong></em></p>
</div>
<p>After being <a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%2Fwww1.hkexnews.hk%2Flistedco%2Flistconews%2Fsehk%2F2021%2F0929%2F2021092900219.pdf&amp;clen=26125&amp;chunk=true" target="_blank" rel="noopener">suspended</a> on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a>, a leading property developer in Hong Kong, has now <a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%2Fwww1.hkexnews.hk%2Flistedco%2Flistconews%2Fsehk%2F2021%2F1006%2F2021100601285.pdf&amp;clen=203491&amp;chunk=true" target="_blank" rel="noopener">announced</a> an Offer, by way of a Scheme, from its founder, Joseph Lau, and his wife Chan Hoi Wan.</p>
</div>
<div>
<p>The consideration is $4.00/share, a 37.9% premium to last close, but an impressive 83.5% premium to the close on the last full trading day. The Offer price will NOT be increased.</p>
</div>
<div>
<p>Lau and Chan control <a href="https://di.hkex.com.hk/di/NSAllSSList.aspx?sa2=as&amp;sid=206&amp;corpn=Chinese+Estates+Holdings+Ltd.&amp;sd=29/09/2013&amp;ed=29/09/2021&amp;cid=0&amp;sa1=cl&amp;scsd=29%2f09%2f2013&amp;sced=29%2f09%2f2021&amp;sc=127&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">74.99%</a> of the company. Disinterested shareholders comprise 21.41% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 2.141% of shares out. </p>
<p>The headcount test applies.</p>
</div>
<div>
<p>In <em><a href="https://skr.ma/1HQM2" target="_blank" rel="noopener">Chinese Estates (127 HK): Potential Privatisation?</a></em>, I expected a punchy premium (to the "undisturbed price") upwards of up 75%, or $3.82/share, to get this over the line. This has been exceeded. </p>
<p>Optically, Lau and Chan appear to be getting Chinese Estates at a bargain. But the current realised plus unrealised losses on the <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> holding is HK$10.4bn, which dramatically alters what is deemed to be book value, and therefore the implied valuation metric under the Offer.</p>
<p>This looks like a done deal and should trade tight to terms.</p>
</div>
<div>
<div>
<p></p>
</div>
</div>



Corrigenda: There is an error in this Insight. Please note the correction.
Correction: [Under the section “On the Evergrande holding”], that (unrealised &amp; realised) loss on the investment in Evergrande (3333 HK) of HK$10.4bn almost certainly includes the HK$3.99bn loss on investment included in the 2021 interims.
Therefore the additional (unrealised &amp; realised) loss on investment, using the $2.95/share price for Evergrande as provided in the announcement, is ~HK$6.4bn, or HK$3.37/share, giving an adjusted NAV of HK$9.61/share (ignoring forward earnings), implying a P/B under the Offer of ~0.42x compared to a three-year average of 0.31x.

After being suspended on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Chinese Estates Holdings (127 HK), a leading property developer in Hong Kong, has now announced an Offer, by way of a Scheme, from its founder, Joseph Lau, and his wife Chan Hoi Wan.


The consideration is $4.00/share, a 37.9% premium to last close, but an impressive 83.5% premium to the close on the last full trading day. The Offer price will NOT be increased.


Lau and Chan control 74.99% of the company. Disinterested shareholders comprise 21.41% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 2.141% of shares out. 
The headcount test applies.


In Chinese Estates (127 HK): Potential Privatisation?, I expected a punchy premium (to the "undisturbed price") upwards of up 75%, or $3.82/share, to get this over the line. This has been exceeded. 
Optically, Lau and Chan appear to be getting Chinese Estates at a bargain. But the current realised plus unrealised losses on the Evergrande (3333 HK) holding is HK$10.4bn, which dramatically alters what is deemed to be book value, and therefore the implied valuation metric under the Offer.
This looks like a done deal and should trade tight to terms.







Chinese Estates (127 HK): $4.00/Share Offer

<div>
<p><a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a>,  a leading property developer in Hong Kong - and avid securities investor - is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0929/2021092900219.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Hong Kong Code on Takeovers and Mergers. There are, as yet, no further details, although shares did gain 33% before being halted at 11.10am today. </p>
</div>
<div>
<p><a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener"></a>Joseph Lau and his wife Chan Hoi Wan control <a href="https://di.hkex.com.hk/di/NSAllSSList.aspx?sa2=as&amp;sid=206&amp;corpn=Chinese+Estates+Holdings+Ltd.&amp;sd=29/09/2013&amp;ed=29/09/2021&amp;cid=0&amp;sa1=cl&amp;scsd=29%2f09%2f2013&amp;sced=29%2f09%2f2021&amp;sc=127&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">74.99%</a> of the company.</p>
</div>
<div>
<p>This insight provides some brief background on Chinese Estates, plus speculates on a fair price should a firm Offer unfold. </p>
</div>


Chinese Estates Holdings (127 HK),  a leading property developer in Hong Kong - and avid securities investor - is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers. There are, as yet, no further details, although shares did gain 33% before being halted at 11.10am today. 


Joseph Lau and his wife Chan Hoi Wan control 74.99% of the company.


This insight provides some brief background on Chinese Estates, plus speculates on a fair price should a firm Offer unfold. 


Chinese Estates (127 HK): Potential Privatisation?

Last Week in Event SPACE: Toshiba, MMC Corp, Japan Post, China Logistics, Pershing Square, Hang Lung

<div>
<p>A double-dose of StubWorld this week ...</p>
</div>
<div>
<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/hang-lung-group-ltd" target="_blank" data-smartkarma-citation="entities:50:1" rel="noopener">Hang Lung (10 HK)</a>'s is coming up expensive on my monitor,  yet at 0.3x P/B, against 0.47x for a basket of peers, HLG is one of the cheapest property plays in Hong Kong.</p>
</div>
<p>Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<div>
<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>
</div>
</div>


A double-dose of StubWorld this week ...



Hang Lung (10 HK)'s is coming up expensive on my monitor,  yet at 0.3x P/B, against 0.47x for a basket of peers, HLG is one of the cheapest property plays in Hong Kong.

Preceding my comments on Hang Lung 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: Hang Lung Group Is Still Cheap

Travis Lundy

<p>In January 2019, <a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55:1" rel="noopener">Capitaland (CAPL SP)</a> and Ascendas-Singbridge <a href="https://investor.capitaland.com/newsroom/20190114_080328_C31_NG341OU6TBGTR31P.1.pdf" target="_blank" rel="noopener">announced</a> a deal for Capitaland to purchase Ascendas-Singbridge in a 50/50 cash/scrip deal, and recently-promoted CEO Mr. Lee Choo Koon and his executive team put forth the idea of Capitaland 3.0, which among other things meant "Creating Asia's Largest Diversified Real Estate Group."</p><p>The plan was...</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/145/original/Screenshot+2021-03-22+at+11.44.22+AM.png?1616384726" class="editor-image img-responsive" data-smartkarma-image-id="196145"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/146/original/Screenshot+2021-03-22+at+11.44.36+AM.png?1616384736" class="editor-image img-responsive" data-smartkarma-image-id="196146"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/147/original/Screenshot+2021-03-22+at+11.45.06+AM.png?1616384749" class="editor-image img-responsive" data-smartkarma-image-id="196147"></figure></section><p></p><p>It got to that position, but two years later (one of those years admittedly with covid-19), in an announcement of a NEW deal, the proposed real estate investment manager has dropped down to 12th largest real estate investment manager. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/148/original/Screenshot+2021-03-22+at+12.03.41+PM.png?1616385866" class="editor-image img-responsive" data-smartkarma-image-id="196148"></figure></section><hr><h2>The NEW News</h2><p>Today, after seeing all the Capitaland names halted early, Capitaland has <a href="https://links.sgx.com/FileOpen/20210322_CL_Announcement%20Presentation_Restructuring.ashx?App=Announcement&amp;FileID=652735" target="_blank" rel="noopener">announced</a> a restructuring whereby Capitaland will split itself into three pillars - Fund Management, Lodging, and Development. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/149/original/Screenshot+2021-03-22+at+12.07.03+PM.png?1616386071" class="editor-image img-responsive" data-smartkarma-image-id="196149"></figure></section><p>If this deal gets approved, Capitaland shareholders will receive cash, shares in <a href="https://www.smartkarma.com/entities/capitaland-integrated-commercial-trust" target="_blank" data-smartkarma-citation="entities:105:1" rel="noopener">Capitaland Integrated Commercial Trust (CICT SP)</a>, and shares in a newly-listed Capitaland Investment Management spun out of Capitaland. </p><div class="content-highlight"><p>The question investors will need to ask themselves is whether this is a good thing for them.  </p></div>

In January 2019, Capitaland (CAPL SP) and Ascendas-Singbridge announced a deal for Capitaland to purchase Ascendas-Singbridge in a 50/50 cash/scrip deal, and recently-promoted CEO Mr. Lee Choo Koon and his executive team put forth the idea of Capitaland 3.0, which among other things meant "Creating Asia's Largest Diversified Real Estate Group."The plan was...It got to that position, but two years later (one of those years admittedly with covid-19), in an announcement of a NEW deal, the proposed real estate investment manager has dropped down to 12th largest real estate investment manager. The NEW NewsToday, after seeing all the Capitaland names halted early, Capitaland has announced a restructuring whereby Capitaland will split itself into three pillars - Fund Management, Lodging, and Development. If this deal gets approved, Capitaland shareholders will receive cash, shares in Capitaland Integrated Commercial Trust (CICT SP), and shares in a newly-listed Capitaland Investment Management spun out of Capitaland. The question investors will need to ask themselves is whether this is a good thing for them.  

Capitaland (CAPL SP) Restructuring Is Big But Still Vague. Lots of Fine Print to Read.

Hong Kong

Wheelock And Company Limited, through its subsidiaries, develops and invests in properties, operates retail and distribution business, provides treasury management, and renders financial and commercial services.

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

Wheelock (1947529D HK)

Chinese Estates (127 HK): Potential Privatisation?

To get this Offer the line, I reckon Lau would have to pay a significant premium to the undisturbed price. Potentially upwards of 75% or $3.82...

David Blennerhassett

Last Week in Event SPACE: Toshiba, MMC Corp, Japan Post, China Logistics, Pershing Square, Hang Lung

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

StubWorld: Hang Lung Group Is Still Cheap

I cannot envisage HLG privatising HLP given the pricing (P/B) disparity. I think Ronnie Chan should follow the Woo/Wheelock (20 HK) template, and...

David Blennerhassett

Capitaland (CAPL SP) Restructuring Is Big But Still Vague. Lots of Fine Print to Read.

Capitaland today announced a restructuring where the parent gets the Developer, minorities get cash plus shares in a new asset-lighter Real Estate...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Chinese Estates (127 HK): $4.00/Share Offer

There may be some pushback on pricing, but factoring in the Evergrande loss (real & unrealised), the Offer Price appears fair.

David Blennerhassett

Chinese Estates (127 HK): Potential Privatisation?

To get this Offer the line, I reckon Lau would have to pay a significant premium to the undisturbed price. Potentially upwards of 75% or $3.82...

David Blennerhassett

Last Week in Event SPACE: Toshiba, MMC Corp, Japan Post, China Logistics, Pershing Square, Hang Lung

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

StubWorld: Hang Lung Group Is Still Cheap

I cannot envisage HLG privatising HLP given the pricing (P/B) disparity. I think Ronnie Chan should follow the Woo/Wheelock (20 HK) template, and...

David Blennerhassett

Capitaland (CAPL SP) Restructuring Is Big But Still Vague. Lots of Fine Print to Read.

Capitaland today announced a restructuring where the parent gets the Developer, minorities get cash plus shares in a new asset-lighter Real Estate...

Travis Lundy