IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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.

Event-Driven

<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.  

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<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>
</div>
<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>
</div>
<div>
<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.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<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)

<p><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> is a leading Chinese independent third-party payment service provider which listed on 15 June 2018 to raise net proceeds of HK$1,592.5 million ($205 million) at a market cap of HK$9,386 ($1.2 billion). However, the IPO proved to be disastrous with the shares never trading above the IPO price. </p><p>On Wednesday, Huifu announced a management-led privatisation offer. The offer includes a cash alternative (HK$3.50 cash per scheme share) and a share alternative (2.709677 new shares in the offeror per scheme share). The cash offer price of HK$3.50 per share is a 26.81% premium to the last trading price of HK$2.76 per share (17 December prior to the trading halt). However, the cash offer price is 53% below the IPO price of HK$7.50 per share. </p><div class="content-highlight"><p>The key conditions precedent 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 229.6 million shares or 17.61% of shares outstanding. Disinterested scheme shareholders represent 1,073.6 million shares or 82.39% of shares outstanding which implies the 10% blocking stake is 107.4 million shares or 8.24% of shares outstanding. Due to the combination of the irrecovables and the opportunity for shareholders to exit a poorly performing IPO investment, we believe that the privatisation bid will succeed.  </p></div>

Huifu Payment Limited (1806 HK) is a leading Chinese independent third-party payment service provider which listed on 15 June 2018 to raise net proceeds of HK$1,592.5 million ($205 million) at a market cap of HK$9,386 ($1.2 billion). However, the IPO proved to be disastrous with the shares never trading above the IPO price. On Wednesday, Huifu announced a management-led privatisation offer. The offer includes a cash alternative (HK$3.50 cash per scheme share) and a share alternative (2.709677 new shares in the offeror per scheme share). The cash offer price of HK$3.50 per share is a 26.81% premium to the last trading price of HK$2.76 per share (17 December prior to the trading halt). However, the cash offer price is 53% below the IPO price of HK$7.50 per share. The key conditions precedent 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 229.6 million shares or 17.61% of shares outstanding. Disinterested scheme shareholders represent 1,073.6 million shares or 82.39% of shares outstanding which implies the 10% blocking stake is 107.4 million shares or 8.24% of shares outstanding. Due to the combination of the irrecovables and the opportunity for shareholders to exit a poorly performing IPO investment, we believe that the privatisation bid will succeed.  

Huifu Payments’ Management Led Privatisation Bid

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p>Many investors worried about a few things on <a href="https://www.smartkarma.com/entities/my-eg-services-bhd" target="_blank" data-smartkarma-citation="entities:19765:1" rel="noopener">My E.G. Services (MYEG MK)</a> including ties with the previous administration that will potentially cause loss of concession (corporate governance), and whether earnings stability is sustainable. </p>
<p>The company's valuation is still undervalued compared to its peers when the management has taken a dynamic and active approach to launch new initiatives such as online groceries and health screening services for COVID-19. </p>
<p>Investors should book some profit on the recent share price strengthening but I will suggest <strong>selling </strong><strong>a part or 50%</strong> of the current position as the company and management offers an excellent long-term prospect across the market cycle and when the hype is done and stock will weaken a little, take that opportunity for a better entry point. </p>
<p><em>This insight is labeled as bearish to reflect the action that investors should take given the share price increase. The insight provider is still bullish on the long-term's company's prospect.</em></p>

Many investors worried about a few things on My E.G. Services (MYEG MK) including ties with the previous administration that will potentially cause loss of concession (corporate governance), and whether earnings stability is sustainable. 
The company's valuation is still undervalued compared to its peers when the management has taken a dynamic and active approach to launch new initiatives such as online groceries and health screening services for COVID-19. 
Investors should book some profit on the recent share price strengthening but I will suggest selling a part or 50% of the current position as the company and management offers an excellent long-term prospect across the market cycle and when the hype is done and stock will weaken a little, take that opportunity for a better entry point. 
This insight is labeled as bearish to reflect the action that investors should take given the share price increase. The insight provider is still bullish on the long-term's company's prospect.

MYEG: Vaccine and Concession - Worries Unfounded

China

Yeahka Technology Co., Ltd. operates as a payment-based technology platform. The Company offers products for POS payment and QR code aggregation, as well as provides merchant, financial, and artificial intelligence services. Yeahka Technology serves merchants and consumers in China. 

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Yeahka Limited (9923 HK)

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

Huifu Payments’ Management Led Privatisation Bid

Huifu announced a privatisation offer which includes a cash alternative (HK$3.50 cash per scheme share) and a share alternative. We believe that...

Arun George

MYEG: Vaccine and Concession - Worries Unfounded

Many investors worried about a few things on My E.G. including ties with the previous government that will cause loss of concession (corporate...

Henry Soediarko

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