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.

Equity Capital Markets

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<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>
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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

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

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<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

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Yuexiu Real Estate Investment Trust / Event-Driven

Yuexiu Real Estate Investment Trust (405 HK)

<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

David Blennerhassett

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<p>Back on the 10 March 2020, PRC commercial property-play <a href="https://www.smartkarma.com/entities/soho-china-ltd" target="_blank" data-smartkarma-citation="entities:4123:1" rel="noopener">Soho China Ltd (410 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0310/2020031000240.pdf" target="_blank" rel="noopener">announced</a> its shares had been suspended pursuant to the Hong Kong Code on Takeovers and Mergers. Shares gained 47.58% prior to the suspension.</p>
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<p>Various media sources suggested Blackstone Group was seeking to take the company private at a rumoured price of $6/share, a ~100% premium to the undisturbed price of $2.98.</p>
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<p>SOHO subsequently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0311/2020031100644.pdf" target="_blank" rel="noopener">clarified</a> it had been in "<em>discussions with overseas financial investors to explore the possibility of a strategic partnership ... which may or may not lead to a general offer", </em>but stopped short of mentioning the name of the suitor(s).</p>
<p>Then nothing. After a handful of monthly updates pursuant to the Takeovers Code, stating there <em>were</em> no updates, SOHO <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0813/2020081301248.pdf" target="_blank" rel="noopener">announced</a> on the 13 August that the  "<em>Board wishes to update the shareholders and potential investors of the Company that in relation to the Potential Transaction referred to in the announcement of 11 March 2020, all previous discussions with various investors have now been terminated and have not at this time resulted in the terms for a Potential Transaction being agreed</em>."</p>
<h3>The New News</h3>
<p>SOHO <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061500114.pdf" target="_blank" rel="noopener">announced</a> this morning its shares had been suspended pursuant to the Hong Kong Code on Takeovers and Mergers. And just to be consistent, shares gained 27% in the last two days of trading leading into the suspension.</p>
<p>SOHO remains 63.93% held by founder Pan Shiyi and his wife Zhang Xin.</p>
<p>Blackstone kicking tyres again?</p>
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<p>As always, there is more below the fold.</p>
</div>


Back on the 10 March 2020, PRC commercial property-play Soho China Ltd (410 HK) announced its shares had been suspended pursuant to the Hong Kong Code on Takeovers and Mergers. Shares gained 47.58% prior to the suspension.


Various media sources suggested Blackstone Group was seeking to take the company private at a rumoured price of $6/share, a ~100% premium to the undisturbed price of $2.98.


SOHO subsequently clarified it had been in "discussions with overseas financial investors to explore the possibility of a strategic partnership ... which may or may not lead to a general offer", but stopped short of mentioning the name of the suitor(s).
Then nothing. After a handful of monthly updates pursuant to the Takeovers Code, stating there were no updates, SOHO announced on the 13 August that the  "Board wishes to update the shareholders and potential investors of the Company that in relation to the Potential Transaction referred to in the announcement of 11 March 2020, all previous discussions with various investors have now been terminated and have not at this time resulted in the terms for a Potential Transaction being agreed."
The New News
SOHO announced this morning its shares had been suspended pursuant to the Hong Kong Code on Takeovers and Mergers. And just to be consistent, shares gained 27% in the last two days of trading leading into the suspension.
SOHO remains 63.93% held by founder Pan Shiyi and his wife Zhang Xin.
Blackstone kicking tyres again?


As always, there is more below the fold.


SOHO China (410 HK) Suspended Pursuant To The Takeovers Code - Again

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<p>SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.</p><p>We have looked at the background of the deal in our previous note,<a href="https://www.smartkarma.com/insights/sf-reit-pre-ipo-one-trick-pony-who-s-not-doing-the-trick" target="_blank" rel="noopener"> SF REIT Pre-IPO -One trick pony, who’s not doing the trick</a>.</p><p>In this note, we’ll run the deal through our ECM framework and talk about valuations.</p>

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note, SF REIT Pre-IPO -One trick pony, who’s not doing the trick.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF REIT IPO - Don’t See a Clear Reason to Buy

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): 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

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

SOHO China (410 HK) Suspended Pursuant To The Takeovers Code - Again

With shares suspended, nothing to be done. Separately, Spring REIT is trading 40% below the 2018 Offer price of $.85/share.

David Blennerhassett

SF REIT IPO - Don’t See a Clear Reason to Buy

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

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