Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On Thursday morning, <a href="https://www.smartkarma.com/entities/yuexiu-property-co-ltd" target="_blank" data-smartkarma-citation="entities:18097:1" rel="noopener">Yuexiu Property (123 HK)</a> halted trading in its shares and then later in the day announced a rights offering. Shares fell hard but gained back a little.</li>
<li>The rights offering lowers BVPS by about 11.3% so the current price is "about right" for the fundamentals if the price the day before the news was right.</li>
<li>There are, however, flow dynamics which are of interest. There almost always are.</li>
</ul>


On Thursday morning, Yuexiu Property (123 HK) halted trading in its shares and then later in the day announced a rights offering. Shares fell hard but gained back a little.
The rights offering lowers BVPS by about 11.3% so the current price is "about right" for the fundamentals if the price the day before the news was right.
There are, however, flow dynamics which are of interest. There almost always are.


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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yuexiu-property-co-ltd" target="_blank" data-smartkarma-citation="entities:18097:1" rel="noopener">Yuexiu Property (123 HK)</a> will raise US$1.1bn through a rights offering - 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.</li>
<li>As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.</li>
<li>Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.</li>
</ul>



Yuexiu Property (123 HK) will raise US$1.1bn through a rights offering - 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.
As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.
Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.


Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Yuexiu Real Estate Investment Trust / Equity Bottom-Up

Yuexiu Real Estate Investment Trust (405 HK)

<div><div><div><div><ul><li>Its share price fell 35% (HSI -10%) since 1H22 results due to weak fundamental caused by pandemic (DPS -30% YoY) and US rate hike.</li><li>The pressure could sustain in ST on Guangzhou’s weak recovery and further rate increase.</li><li>LT opportunity could open up if it is expanding in a more market-oriented way.</li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Its share price fell 35% (HSI -10%) since 1H22 results due to weak fundamental caused by pandemic (DPS -30% YoY) and US rate hike.The pressure could sustain in ST on Guangzhou’s weak recovery and further rate increase.LT opportunity could open up if it is expanding in a more market-oriented way.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yue Xiu REITs (405 HK) – Market-Oriented Expansion Is the Key

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.</li>
<li>SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.</li>
<li>Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.</li>
</ul>


The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.


HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included

Yuexiu Real Estate Investment Trust / Event-Driven

<p>On Sunday 24 October, <a href="https://www.smartkarma.com/entities/yuexiu-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:19699:1" rel="noopener">Yuexiu Real Estate Investment Trust (405 HK)</a> announced that they had agreed to buy Yuexiu Financial Tower (越秀金融大廈) by buying the equity interests in Guangzhou Construction &amp; Development Holdings from its parent. The asset is an International Grade A office building and one of the ten tallest skyscrapers in Guangzhou.  The Property has a total gross floor area of 210,283sq.m. as a 68-storey above-ground commercial building (4 floors retail, 64 floors offices) and a 4-storey basement with 827 underground Carpark Spaces. </p><p>The property is being purchased for nearly RMB 7.8bn, and would have represented 19% of pro-forma revenue in the 6 months to June 2021. It lowers the concentration of Guangzhou IFC in the <a href="https://www.smartkarma.com/entities/yuexiu-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:19699:1" rel="noopener">Yuexiu Real Estate Investment Trust (405 HK)</a> portfolio from 55% to 44% on a pro-forma basis, and enjoyed average occupancy of 92.5% year-to-date through end-September 2021. </p><p>The acquisition is expected to be DPU and DPU Yield accretive to Yuexiu REIT.</p><h3>The Rights Issue</h3><p>Financing will involve about HK$1bn of cash, a loan facility of RMB 3.828bn, and a Rights Issue of HK$3.919bn for 1,234,403,038 Rights Issue Units (37 for 100 shares) at HK$3.20/share.</p><p>There will be an EGM in early December to approve the Rights Issue. Yue Xiu has undertaken to exercise all the rights allocated to it, and has fully underwritten the Rights Offering to other unitholders and there will be no excess application arrangements. </p><p>This will make Yue Xiu the largest PRC property REIT in Hong Kong.</p><p>The shares opened down sharply yesterday and fell further, then they are down more today. If the shares close here (HK$3.33/unit as I write (but HK$3.28 at the close)) it would be the second-lowest close in more than 10 years. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/521/original/Screenshot+2021-10-26+at+1.26.58+PM.png?1635226426" class="editor-image img-responsive" data-smartkarma-image-id="237521"></figure></section><p>It stinks to have been an owner last Friday, but it sets up something interesting now.</p><p>More details below.</p>

On Sunday 24 October, Yuexiu Real Estate Investment Trust (405 HK) announced that they had agreed to buy Yuexiu Financial Tower (越秀金融大廈) by buying the equity interests in Guangzhou Construction &amp; Development Holdings from its parent. The asset is an International Grade A office building and one of the ten tallest skyscrapers in Guangzhou.  The Property has a total gross floor area of 210,283sq.m. as a 68-storey above-ground commercial building (4 floors retail, 64 floors offices) and a 4-storey basement with 827 underground Carpark Spaces. The property is being purchased for nearly RMB 7.8bn, and would have represented 19% of pro-forma revenue in the 6 months to June 2021. It lowers the concentration of Guangzhou IFC in the Yuexiu Real Estate Investment Trust (405 HK) portfolio from 55% to 44% on a pro-forma basis, and enjoyed average occupancy of 92.5% year-to-date through end-September 2021. The acquisition is expected to be DPU and DPU Yield accretive to Yuexiu REIT.The Rights IssueFinancing will involve about HK$1bn of cash, a loan facility of RMB 3.828bn, and a Rights Issue of HK$3.919bn for 1,234,403,038 Rights Issue Units (37 for 100 shares) at HK$3.20/share.There will be an EGM in early December to approve the Rights Issue. Yue Xiu has undertaken to exercise all the rights allocated to it, and has fully underwritten the Rights Offering to other unitholders and there will be no excess application arrangements. This will make Yue Xiu the largest PRC property REIT in Hong Kong.The shares opened down sharply yesterday and fell further, then they are down more today. If the shares close here (HK$3.33/unit as I write (but HK$3.28 at the close)) it would be the second-lowest close in more than 10 years. It stinks to have been an owner last Friday, but it sets up something interesting now.More details below.

Yuexiu REIT Rights Offering - A Small Discount Rights Offering Becomes Shadow Takeover

Hong Kong

Yuexiu Real Estate Investment Trust is a Hong Kong-listed real estate investment trust primarily engaged in the leasing of commercial properties in mainland China. Its portfolio includes Grade-A offices, commercial complexes, retail businesses, hotels, serviced apartments, and professional clothing markets. The company is headquartered in Wanchai, Hong Kong, and was incorporated in 1997.

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Yuexiu Real Estate Investment Trust (405 HK)

Yuexiu Property (123 HK) Rights Offering

Yuexiu Property is conducting a rights offer. The stock has fallen the amount it "needs" to in order to account for BVPS dilution. Next, there...

Travis Lundy

Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue

As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.

Arun George

Yue Xiu REITs (405 HK) – Market-Oriented Expansion Is the Key

Its share price fell 35% (HSI -10%) since 1H22 results due to weak fundamental caused by pandemic (DPS -30% YoY) and US rate hike.

CMB International

HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included

There could be up to 34 adds and 22 deletes for the HSCI in March based on market cap, liquidity and prolonged suspensions. A lot of new listings,...

Brian Freitas

Yuexiu REIT Rights Offering - A Small Discount Rights Offering Becomes Shadow Takeover

This looks like an innocuous if somewhat obnoxious little Rights Issue. It is worse. With the sharp fall in price, it looks likely this could turn...

Travis Lundy

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