In today’s briefing:
- Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO
- Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
- InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
- Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports
- Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
- Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
- Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable
- EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 23-27
- Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention
Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO
- Shandong Hi-Speed Holdings Gro (412 HK) completed the acquisition of CITIC Securities 13.52% stake in Shandong Hi-Speed New Energy G (1250 HK) at HK$1.78 per share.
- SPA completion triggers a mandatory unconditional offer at HK$1.78 per share. The composite document will be sent, and the offer will open by 28 January.
- At the last close and for an early February payment, the gross and annualised spread of the offer is 2.9% and 30.2%, respectively.
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
- When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
- And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
- The blocking stake is 1.675%. Expect around fourth months to complete. This is done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
- InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
- InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
- Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.
Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
- Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Malaysia Airports Holdings (MAHB MK).
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
- Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
- The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
- The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.
Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable
- Vesync (2148 HK)‘s major shareholders proposed to privatise at HK$5.60, a 33.3% premium to the pre-suspension price. This is the same as we calculated using the 3-year average P/B.
- At such a price, it will sit at 7.6x PER for FY25F, a level that it only touched briefly 3 times in the last two years.
- This PER is at a 25-30% discount to the sector and justified by its smaller size and lesser diversification. All in all, the proposed price looks fair and reasonable.
EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 23-27
- For both HSI and HSCEI, average daily volumes were on par with prior week despite holidays.
- Historic vols are still trending downward and are consistently uder implied vols.
- Option volumes in both indices are being dominated by short expiries.
Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention
- The assembly character toy segment market size is not big and Bloks is already China’s largest player. So, there will be a day when the growth ceiling is reached.
- Bloks’ business model is more similar to Pop Mart, rather than LEGO, but Bloks’ profitability is lagging behind both of them. The current high revenue growth may not be sustainable.
- Pre-IPO valuation of Bloks reached RMB7.2 billion. Valuation of Bloks should be lower than Pop Mart. If Bloks’ valuation could reach the industry average after IPO, it is already good.
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