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

<p><a href="https://www.smartkarma.com/entities/sf-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:31496:1" rel="noopener">SF Real Estate Investment Trust (SF HK)</a> is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>. SF REIT will be the first logistics-focused REIT to be listed in Hong Kong.</p><p>SF REIT has launched its IPO with an indicative price range of HK$4.68-5.16 per unit. The total proceeds will be HK$2,433.6-2,683.2 million ($313-345 million) at the price range. Two cornerstone investors will subscribe for $50.0 million of the offer units (15.2% of the offer units at the mid-point of the price range). The cornerstone investors are China Orient International Asset Management and <a href="https://www.smartkarma.com/entities/ci-financial-corp" target="_blank" data-smartkarma-citation="entities:25448:1" rel="noopener">Ci Financial (CIX CN)</a>. </p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/sf-reit-ipo-initiation-the-reit-flow-of-things" target="_blank" data-smartkarma-citation="insights:50673" rel="noopener">SF REIT IPO Initiation: The REIT Flow of Things</a>,  we noted that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector. However, our valuation analysis suggests that units are fully priced at the minimum offer price. Consequently, we are inclined to give this IPO a pass and wait for a lower entry point. </p></div>

SF Real Estate Investment Trust (SF HK) is a REIT formed with an initial focus on income-generating logistics properties in Hong Kong and China. The sponsor is S.F. Holding (002352 CH). SF REIT will be the first logistics-focused REIT to be listed in Hong Kong.SF REIT has launched its IPO with an indicative price range of HK$4.68-5.16 per unit. The total proceeds will be HK$2,433.6-2,683.2 million ($313-345 million) at the price range. Two cornerstone investors will subscribe for $50.0 million of the offer units (15.2% of the offer units at the mid-point of the price range). The cornerstone investors are China Orient International Asset Management and Ci Financial (CIX CN). In SF REIT IPO Initiation: The REIT Flow of Things,  we noted that SF REIT offers an attractive proposition for investors willing to invest in a niche segment of the Asian REIT sector. However, our valuation analysis suggests that units are fully priced at the minimum offer price. Consequently, we are inclined to give this IPO a pass and wait for a lower entry point. 

HK/China Equity Long-Short

Osbert Tang, CFA

<p>In this Insight, we take a look on <a href="https://www.smartkarma.com/entities/sf-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:31496:1" rel="noopener">SF Real Estate Investment Trust (SF HK)</a> (SF REIT), which is a proposed REIT listing in Hong Kong with <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> (SFH) as its sponsor. The REIT will initially have three logistics properties in its portfolio, one in Hong Kong and two in China (Foshan and Wuhu). Having a gross lettable area of 307,990.8 sq.m., the appraised value of these properties amounted to HK$6.1bn.</p><p>On balance and based on the information in the application proof prospectus, we view the REIT positively. Key positives are: 1.) quality assets; 2.) stable profit and cash flow; and 3.) potential injection. On the other hand, the key negatives are: 1.) focus on HK; 2.) reliance on SFH; and 3.) small size.</p>

In this Insight, we take a look on SF Real Estate Investment Trust (SF HK) (SF REIT), which is a proposed REIT listing in Hong Kong with S.F. Holding (002352 CH) (SFH) as its sponsor. The REIT will initially have three logistics properties in its portfolio, one in Hong Kong and two in China (Foshan and Wuhu). Having a gross lettable area of 307,990.8 sq.m., the appraised value of these properties amounted to HK$6.1bn.On balance and based on the information in the application proof prospectus, we view the REIT positively. Key positives are: 1.) quality assets; 2.) stable profit and cash flow; and 3.) potential injection. On the other hand, the key negatives are: 1.) focus on HK; 2.) reliance on SFH; and 3.) small size.

SF REIT Pre-IPO: Initial Thoughts on S.F. Holding's (002352 CH) Logistics REIT In HK

Event-Driven

Jinmao (China) Hotel Investments & Management / Event-Driven

Jinmao (China) Hotel Investments & Management (6139 HK)

Jinmao (China) Hotel Investments & Management

<p><a href="https://www.smartkarma.com/entities/jinmao-hotel-jinmao-china-hotel-investments-and-management-limited" target="_blank" data-smartkarma-citation="entities:16994:1" rel="noopener">Jinmao Hotel &amp; Jinmao (China) Hotel Investments and Management Limited (6139 HK)</a> is a fixed single investment trust with a focus on the Chinese hospitality industry. After market close on Friday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/china-jinmao-holdings-group" target="_blank" data-smartkarma-citation="entities:35:1" rel="noopener">China Jinmao Holdings (817 HK)</a>, the controlling shareholder with a 66.77% stake. China Jinmao will offer HK$4.80 per stapled unit. The bid represents a premium of 30.4% over the closing price of HK$3.68 per share stapled unit on the last trading day (5 June 2020). China Jinmao has received irrevocables from independent unitholders representing 21.04% of the total share stapled units in issue.</p><div class="content-highlight"><p>The key condition precedents are the headcount test (majority in the number of unitholders other than the offeror) along with the scheme approved by at least 75% independent unitholders and &lt;10% rejection by all independent unitholders. Overall, we believe that the privatisation bid will be successful. </p></div>

Jinmao Hotel &amp; Jinmao (China) Hotel Investments and Management Limited (6139 HK) is a fixed single investment trust with a focus on the Chinese hospitality industry. After market close on Friday, it announced a privatisation offer by way of a scheme of arrangement from China Jinmao Holdings (817 HK), the controlling shareholder with a 66.77% stake. China Jinmao will offer HK$4.80 per stapled unit. The bid represents a premium of 30.4% over the closing price of HK$3.68 per share stapled unit on the last trading day (5 June 2020). China Jinmao has received irrevocables from independent unitholders representing 21.04% of the total share stapled units in issue.The key condition precedents are the headcount test (majority in the number of unitholders other than the offeror) along with the scheme approved by at least 75% independent unitholders and &lt;10% rejection by all independent unitholders. Overall, we believe that the privatisation bid will be successful. 

Jinmao Hotel’s Privatisation Bid from China Jinmao

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>After gaining 47.58% this morning, PRC 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> announced shortly before lunch a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0310/2020031000160.htm" target="_blank" rel="noopener">trading halt</a>.</p>
<p>The news is that Blackstone Group is seeking to take the company private at a rumored price of $6/share, a ~100% premium to the undisturbed price of $2.98.</p>
<p>$6/share backs out a market cap of HK$31.1bn (US$4bn), and an EV of ~HK$53bn.</p>
<p>SOHO is 63.93% held by founder Pan Shiyi and his wife Zhang Xin.</p>
<p>As always, there is more below the fold.</p>

After gaining 47.58% this morning, PRC property-play Soho China Ltd (410 HK) announced shortly before lunch a trading halt.
The news is that Blackstone Group is seeking to take the company private at a rumored price of $6/share, a ~100% premium to the undisturbed price of $2.98.
$6/share backs out a market cap of HK$31.1bn (US$4bn), and an EV of ~HK$53bn.
SOHO is 63.93% held by founder Pan Shiyi and his wife Zhang Xin.
As always, there is more below the fold.

SOHO China Suspended Ahead Of Possible Blackstone Bid

China Merchants Commercial Real Estate Investment Trust / Equity Capital Markets

China Merchants Commercial Real Estate Investment Trust (1503 HK)

China Merchants Commercial Real Estate Investment Trust

<p><a href="https://www.smartkarma.com/entities/china-merchants-commercial-reit" target="_blank" data-smartkarma-citation="entities:28290:1" rel="noopener">CMC Reit (CMCREIT HK)</a> is a REIT formed to primarily own and invest in high quality income-generating commercial properties in China. CMC has launched its IPO with an indicative price range of HK$3.42-4.00 per unit.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-merchants-commercial-reit-ipo-initiation-the-reit-idea" target="_blank" rel="noopener">our initiation note</a>, we noted that CMC offers an attractive value proposition for investors willing to invest in a niche segment of the Asian REIT sector. Our valuation analysis suggests that CMC is fairly valued at the minimum offer price. Consequently, we would participate at most at the minimum offer price of HK$3.42. </p></div>

CMC Reit (CMCREIT HK) is a REIT formed to primarily own and invest in high quality income-generating commercial properties in China. CMC has launched its IPO with an indicative price range of HK$3.42-4.00 per unit.In our initiation note, we noted that CMC offers an attractive value proposition for investors willing to invest in a niche segment of the Asian REIT sector. Our valuation analysis suggests that CMC is fairly valued at the minimum offer price. Consequently, we would participate at most at the minimum offer price of HK$3.42. 

China Merchants Commercial REIT IPO: Valuation AllREIT at the Low-End

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.

Yuexiu Real Estate Investment Trust (405 HK)

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Yuexiu Real Estate Investment Trust (405 HK)

SF REIT IPO: Valuation Insights

SF REIT has launched its IPO to raise $313-345 million at the price range. Our valuation analysis suggests that units are fully priced at the...

Arun George

SF REIT Pre-IPO: Initial Thoughts on S.F. Holding's (002352 CH) Logistics REIT In HK

SF REIT will be an interesting REIT given its close tie with SF Holding. We see the huge potential for future acquisitions from the sponsor a clear...

Osbert Tang, CFA

Jinmao Hotel’s Privatisation Bid from China Jinmao

Jinmao Hotel & Jinmao (China) Hotel Investments and Management Limited (6139 HK) is a fixed single investment trust with a focus on the Chinese...

Arun George

SOHO China Suspended Ahead Of Possible Blackstone Bid

After gaining 47.58% this morning, PRC property-play Soho China Ltd (410 HK) announced shortly before lunch a trading halt. The news is that...

David Blennerhassett

China Merchants Commercial REIT IPO: Valuation AllREIT at the Low-End

CMC Reit (CMCREIT HK) is a REIT formed to primarily own and invest in high quality income-generating commercial properties in China. CMC has...

Arun George

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