Senior Investment Analyst, Black Crane Investment Mgmt Ltd

Perry Tan, CFA, CAIA, FRM

Senior Investment Analyst

Black Crane Investment Mgmt Ltd

Event-Driven

YTO Express (International) Holdings / Event-Driven

YTO Express (International) Holdings (6123 HK)

<div>Takeout at $4.0698, ~11% spread</div><div>Comment in On Time's business:</div><ul>
<li>Thin margin business, 3% EBITDA margins on almost no net margin, never loss making</li>
<li>Problem is subscale, maybe that is why they want to sell</li>
<li>Cash rich, no debt; receivables and payables are a drag on invested capital</li>
<li>Cash flow from ops matches capex, so will need debt for growth capex (which they have not done); also, maintenance capex to sustain business will be problematic'</li>
</ul><div>
<a href="https://www.chinamoneynetwork.com/2017/05/09/yto-express-to-buy-62-of-hong-kongs-on-time-logistics-for-134m" target="_blank">https://www.chinamoneynetwork.com/2017/05/09/yto-express-to-buy-6</a>…</div>

Takeout at $4.0698, ~11% spreadComment in On Time's business:
Thin margin business, 3% EBITDA margins on almost no net margin, never loss making
Problem is subscale, maybe that is why they want to sell
Cash rich, no debt; receivables and payables are a drag on invested capital
Cash flow from ops matches capex, so will need debt for growth capex (which they have not done); also, maintenance capex to sustain business will be problematic'

https://www.chinamoneynetwork.com/2017/05/09/yto-express-to-buy-6…

YTO Express (International) Holdings

On Time Logistics