Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Yorkey Optical International Cayman / Event-Driven

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<p>When <a href="https://www.smartkarma.com/entities/yorkey-optical-intl-cayman" target="_blank" data-smartkarma-citation="entities:12407:1" rel="noopener">Yorkey Optical Intl Cayman (2788 HK</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1015/2021101501288.pdf" target="_blank" rel="noopener">announced</a> an Offer on the 15 October, by way of a Scheme, from <a href="https://www.smartkarma.com/entities/asia-optical-co-inc" target="_blank" data-smartkarma-citation="entities:11214:1" rel="noopener">Asia Optical Co (3019 TT)</a> at $0.88/share (not declared final), I wrote in <em><a href="https://skr.ma/irBvc" target="_blank" rel="noopener">Yorkey Optical (2788 HK)'s Scheme: What Will Webb Do?</a></em> a bump in terms cannot be ruled out.</p>
<p>In <em><a href="https://skr.ma/EPj6W" target="_blank" rel="noopener">Yorkey Optical (2788 HK): Webb Bumps... Will Asia Optical?</a></em>, it became self-evident this required a bump from Asia Optical otherwise it was a non-starter. </p>
<p>And now we have new information which makes me even more confident this needs a bump. And still shares trade well below terms. Get involved.</p>
<p>More below the fold. </p>
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When Yorkey Optical Intl Cayman (2788 HK announced an Offer on the 15 October, by way of a Scheme, from Asia Optical Co (3019 TT) at $0.88/share (not declared final), I wrote in Yorkey Optical (2788 HK)'s Scheme: What Will Webb Do? a bump in terms cannot be ruled out.
In Yorkey Optical (2788 HK): Webb Bumps... Will Asia Optical?, it became self-evident this required a bump from Asia Optical otherwise it was a non-starter. 
And now we have new information which makes me even more confident this needs a bump. And still shares trade well below terms. Get involved.
More below the fold. 





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<p>After <a href="https://www.smartkarma.com/entities/yorkey-optical-intl-cayman" target="_blank" data-smartkarma-citation="entities:12407:1" rel="noopener">Yorkey Optical Intl Cayman (2788 HK)</a>, an optical and opto-electronic products manufacturer, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1015/2021101501288.pdf" target="_blank" rel="noopener">announced</a> an Offer, by way of a Scheme, from <a href="https://www.smartkarma.com/entities/asia-optical-co-inc" target="_blank" data-smartkarma-citation="entities:11214:1" rel="noopener">Asia Optical Co (3019 TT)</a> at $0.88/share - a price that had not been declared final - the salient question attached to this transaction was what would activist investor David Webb, holding at least <a href="https://di.hkex.com.hk/di/NSNoticeSSList.aspx?sa2=ns&amp;sid=9800&amp;corpn=Yorkey+Optical+International+(Cayman)+Ltd.&amp;sd=16/10/2016&amp;ed=16/10/2021&amp;cid=0&amp;sa1=cl&amp;scsd=16%2f10%2f2016&amp;sced=16%2f10%2f2021&amp;sc=2788&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">5.01%</a>, do?</p>
<p>He has been <a href="https://webb-site.com/dbpub/articles.asp?p=32013" target="_blank" rel="noopener">critical</a> in the past of Yorkey's large cash pile and its reluctance to distribute the surplus cash. Webb is also deputy chairman of Hong Kong's Takeovers and Mergers Panel <em>and</em> the Takeovers Appeal Committee, so he's aware of the games people can play.</p>
<p>So it should come as no surprise he lifted his holding <a href="https://www.sfc.hk/-/media/Dealing-disclosures/2021/Yorkey-Optical-International/e20211019--table2a--Yorkey-Optical--Webb-David-Michael-20211018-1.pdf" target="_blank" rel="noopener">above 6%</a> on the 18 October, effectively giving him a blocking stake at the Scheme Meeting.</p>
<p>Arguably he is long a put at A$0.88/share. I would argue this now needs a bump from Asia Optical otherwise it’s a non-starter. </p>
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After Yorkey Optical Intl Cayman (2788 HK), an optical and opto-electronic products manufacturer, announced an Offer, by way of a Scheme, from Asia Optical Co (3019 TT) at $0.88/share - a price that had not been declared final - the salient question attached to this transaction was what would activist investor David Webb, holding at least 5.01%, do?
He has been critical in the past of Yorkey's large cash pile and its reluctance to distribute the surplus cash. Webb is also deputy chairman of Hong Kong's Takeovers and Mergers Panel and the Takeovers Appeal Committee, so he's aware of the games people can play.
So it should come as no surprise he lifted his holding above 6% on the 18 October, effectively giving him a blocking stake at the Scheme Meeting.
Arguably he is long a put at A$0.88/share. I would argue this now needs a bump from Asia Optical otherwise it’s a non-starter. 


Yorkey Optical (2788 HK): Webb Bumps... Will Asia Optical?

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<p>After being <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1006/2021100600336.pdf" target="_blank" rel="noopener">suspended</a> on the 6 October pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/yorkey-optical-intl-cayman" target="_blank" data-smartkarma-citation="entities:12407:1" rel="noopener">Yorkey Optical Intl Cayman (2788 HK)</a>, an optical and opto-electronic products manufacturer, has now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1015/2021101501288.pdf" target="_blank" rel="noopener">announced</a> an Offer, by way of a Scheme, from <a href="https://www.smartkarma.com/entities/asia-optical-co-inc" target="_blank" data-smartkarma-citation="entities:11214:1" rel="noopener">Asia Optical Co (3019 TT)</a>, Yorkey's largest shareholder.</p>
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<p>The consideration is $0.88/share, a 54.4% premium to last close - and shares gained 14% on Friday.  <strong>The Offer Price has not been declared final</strong>. No dividends are expected to be declared during the Offer period. </p>
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<p>Asia Optical holds 27.79% (directly &amp; indirectly) of shares out, and with connected parties, 41.63%.  Disinterested shareholders comprise 58.37% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 5.837% of shares out. </p>
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<p>The headcount test applies.</p>
<p>Activist investor David Webb holding at least <a href="https://di.hkex.com.hk/di/NSNoticeSSList.aspx?sa2=ns&amp;sid=9800&amp;corpn=Yorkey+Optical+International+(Cayman)+Ltd.&amp;sd=16/10/2016&amp;ed=16/10/2021&amp;cid=0&amp;sa1=cl&amp;scsd=16%2f10%2f2016&amp;sced=16%2f10%2f2021&amp;sc=2788&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">5.01%</a>,  has been <a href="https://webb-site.com/dbpub/articles.asp?p=32013" target="_blank" rel="noopener">consistently vocal</a> about Yorkey's large net cash position, and demanding a distribution of the surplus cash.</p>
<p>Yorkey's net cash was US$81.8mn (HK$638mn) as at 30 June 2021, or HK$0.78/share. </p>
<p>Net profit in the 1H21 was US$0.794mn (HK$6.2mn) or HK$12.3mn if extrapolated out for the full year. Therefore Asia Optical is effectively taking out the company at ~6.6x PER FY21E, excluding the net cash position. </p>
<p>This will be a close-run thing. Plus Yorkey is illiquid and Hong Kong takeovers have had a torrid time of late. </p>
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<div>More below the fold.</div>
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<p></p>
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After being suspended on the 6 October pursuant to the Hong Kong Code on Takeovers and Mergers, Yorkey Optical Intl Cayman (2788 HK), an optical and opto-electronic products manufacturer, has now announced an Offer, by way of a Scheme, from Asia Optical Co (3019 TT), Yorkey's largest shareholder.


The consideration is $0.88/share, a 54.4% premium to last close - and shares gained 14% on Friday.  The Offer Price has not been declared final. No dividends are expected to be declared during the Offer period. 


Asia Optical holds 27.79% (directly &amp; indirectly) of shares out, and with connected parties, 41.63%.  Disinterested shareholders comprise 58.37% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 5.837% of shares out. 


The headcount test applies.
Activist investor David Webb holding at least 5.01%,  has been consistently vocal about Yorkey's large net cash position, and demanding a distribution of the surplus cash.
Yorkey's net cash was US$81.8mn (HK$638mn) as at 30 June 2021, or HK$0.78/share. 
Net profit in the 1H21 was US$0.794mn (HK$6.2mn) or HK$12.3mn if extrapolated out for the full year. Therefore Asia Optical is effectively taking out the company at ~6.6x PER FY21E, excluding the net cash position. 
This will be a close-run thing. Plus Yorkey is illiquid and Hong Kong takeovers have had a torrid time of late. 

More below the fold.




Yorkey Optical (2788 HK)'s Scheme: What Will Webb Do?

<p>Activist and value investor David Webb has the uncanny ability to move stocks.</p>
<p>So much so, after a decade of picking a Xmas stock he liked - and was suitably invested - he abandoned the practice in <a href="https://webb-site.com/articles/pick2009.asp" target="_blank" rel="noopener">December 2009</a>. But not before his stock picks had out-performed the index by 552.8% in the preceding 10 years.</p>
<p>Webb's endorsement of stock, via announcing a substantial interest under Hong Kong Stock Exchange guidelines - i.e. ≥  5% of shares out - still carries significant weight today.</p>
<p>Most recently, he cleared 5% in <a href="https://www.smartkarma.com/entities/analogue-holdings-ltd" target="_blank" data-smartkarma-citation="entities:28661:1" rel="noopener">Analogue Holdings Ltd (1977 HK)</a> on the <a href="https://di.hkex.com.hk/di/NSForm1.aspx?fn=IS20201023E00391&amp;sa2=ns&amp;sid=246673&amp;corpn=Analogue+Holdings+Ltd.&amp;sd=10%2f06%2f2020&amp;ed=10%2f06%2f2021&amp;cid=0&amp;sa1=cl&amp;scsd=10%2f06%2f2020&amp;sced=10%2f06%2f2021&amp;sc=1977&amp;src=MAIN&amp;lang=EN&amp;" target="_blank" rel="noopener">20 October 2020</a>, and currently holds 7.01% as at <a href="https://di.hkex.com.hk/di/NSForm1.aspx?fn=IS20210520E00305&amp;sa2=ns&amp;sid=246673&amp;corpn=Analogue+Holdings+Ltd.&amp;sd=10%2f06%2f2020&amp;ed=10%2f06%2f2021&amp;cid=0&amp;sa1=cl&amp;scsd=10%2f06%2f2020&amp;sced=10%2f06%2f2021&amp;sc=1977&amp;src=MAIN&amp;lang=EN&amp;" target="_blank" rel="noopener">14 May</a>. I looked at the company in <em><a href="https://skr.ma/7H7sE" target="_blank" rel="noopener">Analogue Holdings (1977 HK): Lift-Off!</a></em>. Despite the share price run-up (+88%), no doubt largely pivoting off Webb's interest, the stock still looks cheap. </p>
<p>According to the HKEx, Webb <a href="https://di.hkex.com.hk/di/NSSrchPersonList.aspx?sa1=pl&amp;scsd=21/06/2017&amp;sced=21/06/2021&amp;pn=webb&amp;src=MAIN&amp;lang=EN&amp;g_lang=en" target="_blank" rel="noopener">holds</a> another 21 stocks with a 5% interest or more. </p>
<p>This insight takes a look at those stocks and analyses how long the "Webb-halo of outperformance" persists. </p>

Activist and value investor David Webb has the uncanny ability to move stocks.
So much so, after a decade of picking a Xmas stock he liked - and was suitably invested - he abandoned the practice in December 2009. But not before his stock picks had out-performed the index by 552.8% in the preceding 10 years.
Webb's endorsement of stock, via announcing a substantial interest under Hong Kong Stock Exchange guidelines - i.e. ≥  5% of shares out - still carries significant weight today.
Most recently, he cleared 5% in Analogue Holdings Ltd (1977 HK) on the 20 October 2020, and currently holds 7.01% as at 14 May. I looked at the company in Analogue Holdings (1977 HK): Lift-Off!. Despite the share price run-up (+88%), no doubt largely pivoting off Webb's interest, the stock still looks cheap. 
According to the HKEx, Webb holds another 21 stocks with a 5% interest or more. 
This insight takes a look at those stocks and analyses how long the "Webb-halo of outperformance" persists. 

Hong Kong

Yorkey Optical International Cayman Ltd. manufactures plastic and metal parts and components of optical and optoelectronic products.  The Company produces parts for copiers, computer peripherals, handsets, film cameras, and other products.

Yorkey Optical International Cayman (2788 HK)

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Yorkey Optical International Cayman (2788 HK)

Yorkey Optical (2788 HK): Time To Buy

Shares trade at a 6% gross spread. Get involved. I don't expect a revised offer of ~HK$1.19/share, around Webb's adjusted NAV. But ~HK$1.00 is...

David Blennerhassett

Yorkey Optical (2788 HK): Webb Bumps... Will Asia Optical?

Get involved around here. I don't see Webb picking up pennies ahead of any deal completion. He is holding out for a bump. This may need a $1+ handle.

David Blennerhassett

Yorkey Optical (2788 HK)'s Scheme: What Will Webb Do?

With Webb close to holding a blocking stake, an illiquid arb situation, and the fact Hong Kong events have been somewhat of a disaster this year,...

David Blennerhassett

David Webb's Greatest Hits

The sweet spot, on a relative basis, is to remain invested up to around six months after Webb has declared his 5%+ holding. Beyond that, the...

David Blennerhassett

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