Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<div>
<p>On the 28 February, e-commerce and payment solutions provider <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0228/2021022800069.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.</p>
<p>All in, the indicative Offer price was HK$2.3088/share, a 30.2% <em>discount</em> to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. </p>
<p>In <em><a href="https://skr.ma/qgiJ9" target="_blank" rel="noopener">China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech</a></em>, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. </p>
<p>On the 6  May, Disinterested Scheme Shareholders <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0506/2021050602278.pdf" target="_blank" rel="noopener">approved</a> at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. </p>
<p>Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. </p>
<p>This is <em>starting</em> to look more attractive.</p>
</div>


On the 28 February, e-commerce and payment solutions provider China Youzan Limited (8083 HK) announced a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.
All in, the indicative Offer price was HK$2.3088/share, a 30.2% discount to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. 
In China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. 
On the 6  May, Disinterested Scheme Shareholders approved at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. 
Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. 
This is starting to look more attractive.


China Youzan (8083 HK): Reality Check As Shares Rollover

Event-Driven

<p><a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a>, a provider of e-commerce and payment solutions for merchants, has <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0228/2021022800069.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard.</p>
<p>Shareholders are offered HK$0.1352/share in cash plus 0.05077265 Youzan Technology shares for every China Youzan share held. All in, the <em>indicative</em> Offer price is HK$2.3088/share, a 30.2% <em>discount</em> to last close. China Youzan is up 283% in the past year, and 44% YTD prior to the offer. </p>
<p>The Offeror - China Youzan's CEO Zhu Ning -  will not increase the Scheme Consideration and does not reserve the right to do so.</p>
<p>Pre-conditions include SEHK approving Youzan Tech's listing; together with a handful of ordinary resolutions to be voted on by Disinterested Scheme shareholders at an SGM, none of which are expected to be cause for concern.</p>
<p>The Scheme vote is standard: at least 75% of Disinterested Scheme Shares voting FOR the Scheme &amp; not more than 10% of ALL Disinterested Scheme Shares against. China Youzan is incorporated in the Caymans so the headcount test applies. No single shareholder holds a blocking stake.</p>
<p>The in-specie ratio distribution of Youzan Tech is equivalent to the control ratio. The pushback, if any, <em>may</em> come from the fair value assigned to China Youzan's rump. </p>
<p>More below the fold.</p>

China Youzan Limited (8083 HK), a provider of e-commerce and payment solutions for merchants, has announced a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard.
Shareholders are offered HK$0.1352/share in cash plus 0.05077265 Youzan Technology shares for every China Youzan share held. All in, the indicative Offer price is HK$2.3088/share, a 30.2% discount to last close. China Youzan is up 283% in the past year, and 44% YTD prior to the offer. 
The Offeror - China Youzan's CEO Zhu Ning -  will not increase the Scheme Consideration and does not reserve the right to do so.
Pre-conditions include SEHK approving Youzan Tech's listing; together with a handful of ordinary resolutions to be voted on by Disinterested Scheme shareholders at an SGM, none of which are expected to be cause for concern.
The Scheme vote is standard: at least 75% of Disinterested Scheme Shares voting FOR the Scheme &amp; not more than 10% of ALL Disinterested Scheme Shares against. China Youzan is incorporated in the Caymans so the headcount test applies. No single shareholder holds a blocking stake.
The in-specie ratio distribution of Youzan Tech is equivalent to the control ratio. The pushback, if any, may come from the fair value assigned to China Youzan's rump. 
More below the fold.

China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p>On 28 February, <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. </p><p>The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.</p><div class="content-highlight"><p>The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at <a href="https://www.smartkarma.com/entities/shopify-inc-de74469e-4678-489b-9b50-a80a5790c5ef" target="_blank" data-smartkarma-citation="entities:25906:1" rel="noopener">Shopify Inc (SHOP US)</a>’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  </p></div>

On 28 February, China Youzan Limited (8083 HK) disclosed a privatisation offer from Mr Zhu Ning, the CEO. Mr Ning is taking private China Youzan through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. China Youzan will distribute in-specie its equity holdings in Youzan Technology by offering 0.05077265 Youzan Technology share for every China Youzan share along with HK$0.1352 in cash per scheme share. Youzan Technology will be listed on the Main Board of the HKEx. The total privatisation price of HK$2.3088 per share is 30.2% and 28.3% discount to the last trading date price of HK$3.31 (25 February 2021) and the last close price of HK$3.23, respectively. The key pre-conditions are HKEx listing approval for Youzan Technology and shareholder approval at the first SGM. The key conditions precedents are the headcount test and the scheme approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). The offeror and concert parties represent 4,020.8 million shares or 23.31% of shares outstanding. Disinterested scheme shareholders represent 13,239.3 million shares or 76.69% of shares outstanding, which implies the 10% blocking stake is 1,323.9 million shares or 7.67% of shares outstanding.The privatisation offer is fair in both the distribution in-specie (distribution ratio in line with the control ratio) and the cash consideration (in line with the value of the payments business). The discrepancy between the privatisation bid and the current share price can be explained by Youzan Technology's potential standalone value as a listed entity. If Youzan Technology is valued at Shopify Inc (SHOP US)’s current trailing EV/Sales multiple of 53.5x (arguably the closest peer), it would imply a fair value of China Youzan of HK$3.54 per share. Overall, we believe that the privatisation bid will succeed due to the reasonable terms.  

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<p>On the 22 December, third-party service provider <a href="https://www.smartkarma.com/entities/huifu-payment-ltd" target="_blank" data-smartkarma-citation="entities:27145:1" rel="noopener">Huifu Payment Limited (1806 HK)</a>  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1223/2020122300031.pdf" target="_blank" rel="noopener">announced</a> an Offer, by way of a Scheme, whereby shares will be cancelled in exchange for either:</p>
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<div>
<ol style="list-style-type: lower-alpha;">
<li>$3.50/share cash, a 26.8% premium to last close; or</li>
<li>2.709677 new shares in the Offeror.</li>
</ol>
<p style="padding-left: 25px;">The Offeror is an unlisted vehicle owned as to 70.7030%, 24.6620%, and 4.6350% by Zhou Ye, Mu Haijie, and Jin Yuan, who are directors of Huifu. </p>
</div>
<div>
<p>Neither the cash nor the scrip consideration would be increased.</p>
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<p>The Scheme Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0126/2021012601249.pdf" target="_blank" rel="noopener">despatche</a>d last night. The Court Meeting is scheduled for the 19 February, with payment - assuming shareholders approve the Scheme - on or before the 8 April 2021.</p>
<p>The IFA (Somerley) considers the Offer to be fair and reasonable. </p>
</div>
<div>
<p>This looks done. As always, more below the fold.</p>
</div>


On the 22 December, third-party service provider Huifu Payment Limited (1806 HK)  announced an Offer, by way of a Scheme, whereby shares will be cancelled in exchange for either:



$3.50/share cash, a 26.8% premium to last close; or
2.709677 new shares in the Offeror.

The Offeror is an unlisted vehicle owned as to 70.7030%, 24.6620%, and 4.6350% by Zhou Ye, Mu Haijie, and Jin Yuan, who are directors of Huifu. 


Neither the cash nor the scrip consideration would be increased.


The Scheme Document was despatched last night. The Court Meeting is scheduled for the 19 February, with payment - assuming shareholders approve the Scheme - on or before the 8 April 2021.
The IFA (Somerley) considers the Offer to be fair and reasonable. 


This looks done. As always, more below the fold.


Huifu Payment (1806 HK): Scheme Doc Out. IFA Says Fair

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

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<p><a href="https://www.smartkarma.com/entities/ifast-corp-ltd" target="_blank" data-smartkarma-citation="entities:17798:1" rel="noopener">iFast Corp Ltd (IFAST SP)</a>  offers investment products and services in Singapore, Hong Kong, Malaysia and China. The company’s platform offers fintech and wealth management services to a large client base and is the first fintech company to be listed on the Singapore Stock Exchange.</p><p>On 6<sup>th</sup> January 2021, iFast reported that its assets under administration (AUA) grew by 44.5% YoY to reach S$14.45bn as at 31<sup>st</sup> December 2020 from S$10bn in the previous year. This indicates a 14.8% QoQ increase from S$12.59bn as at the end of 3Q2020.</p>

iFast Corp Ltd (IFAST SP)  offers investment products and services in Singapore, Hong Kong, Malaysia and China. The company’s platform offers fintech and wealth management services to a large client base and is the first fintech company to be listed on the Singapore Stock Exchange.On 6th January 2021, iFast reported that its assets under administration (AUA) grew by 44.5% YoY to reach S$14.45bn as at 31st December 2020 from S$10bn in the previous year. This indicates a 14.8% QoQ increase from S$12.59bn as at the end of 3Q2020.

IFast Corp: Higher AUA Growth Points Toward Significant Growth in 4Q Earnings (Quantamental)

China

Yeahka is a leading payment-based technology platform that provides one-stop payment services and technology-enabled business services to merchants and consumers. Its offerings include aggregated QR code payment solutions, merchant Software-as-a-Service (SaaS) products for digital operations, precision marketing, and in-store e-commerce services. The company was founded in Shenzhen, China, in 2011.

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Yeahka (9923 HK)

China Youzan (8083 HK): Reality Check As Shares Rollover

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David Blennerhassett

China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech

I would avoid the stock. Valuations exceed what the independent valuer considers is fair. I'd look to re-enter if this closes in on the implied...

David Blennerhassett

China Youzan’s Privatisation Proposal

China Youzan disclosed a privatisation offer through the distribution in-specie of Youzan Technology and a cash buyout of the payment business. The...

Arun George

Huifu Payment (1806 HK): Scheme Doc Out. IFA Says Fair

This transaction looks done. I'd buy here - $3.43 - around a 2.0%/10.9% gross/annualised spread, assuming completion on the 8 April

David Blennerhassett

IFast Corp: Higher AUA Growth Points Toward Significant Growth in 4Q Earnings (Quantamental)

iFast reported that its assets under administration (AUA) grew by 44.5% YoY to reach S$14.45bn as at 31st December 2020 from S$10bn in the previous...

Shifara Samsudeen, FCMA, CGMA

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