Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations

WH Group Partial Buyback Offer Now Unconditional

WH Group - Long-Only Fundamental Investors Can Take Advantage Too

WH Group Offer Doc Out - This Little Piggy Went To Market

Quiddity Advisors

Event-Driven

Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...<blockquote>“Never wrestle with pigs. You both get dirty and the pig likes it.”</blockquote>An <a href="https://m.21jingji.com/article/20210818/herald/4a9608d9f5f5c7989d30c32968022298.html" target="_blank" rel="noopener">article</a> out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> Chairman Wan Long].WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/496/original/Screenshot+2021-08-18+at+11.13.20+AM.png?1629256485" class="editor-image img-responsive" data-smartkarma-image-id="224496"></figure></section>It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0617/2021061700420.pdf" target="_blank" rel="noopener">release</a>, "The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." Wan Hongjian recounted in a newspaper interview (reference link <a href="https://www.foodprocessing.com/industrynews/2021/ceo-of-smithfield-parent-steps-down/" target="_blank" rel="noopener">here</a>) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one <a href="https://www.feedstrategy.com/business-markets/wh-group-removes-executive-director-over-embezzlement/" target="_blank" rel="noopener">here</a>) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. A somewhat strange <a href="https://www.yicaiglobal.com/news/exclusive-wh-group-ex-vp-wan-hongjian-talks-about-the-bust-up-with-his-father-smithfield-takeover--" target="_blank" rel="noopener">article</a> showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/509/original/Screenshot+2021-08-18+at+11.36.52+AM.png?1629257931" class="editor-image img-responsive" data-smartkarma-image-id="224509"></figure></section><div class="content-highlight">That appears to have triggered things.</div>But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to "I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!").The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.<h3>The NEW Article</h3>There are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that<ul>
<li>Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary <a href="https://www.smartkarma.com/entities/henan-shuanghui-investment-development" target="_blank" data-smartkarma-citation="entities:20515:1" rel="noopener">Henan Shuanghui Investment &amp; Development (000895 CH)</a> (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. </li>
<li>Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")</li>
<li>Wan Hongjian appears to object vociferously to the choice of Guo Lijun as CEO. </li>
<li>There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.</li>
</ul>It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com <a href="https://finance.sina.com.cn/chanjing/gsnews/2021-08-18/doc-ikqciyzm2080209.shtml" target="_blank" rel="noopener">here</a>. That letter is much more detailed and very clearly says "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."As I hit the "publish" button, the company has just released a "<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800225.pdf" target="_blank" rel="noopener">clarification</a>" which says<blockquote>
The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). 
The Board would like to clarify that the Allegations are untrue and misleading. 
Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). 
The Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.
</blockquote>More below the fold.

Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...“Never wrestle with pigs. You both get dirty and the pig likes it.”An article out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is WH Group (288 HK) Chairman Wan Long].WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its release, "The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." Wan Hongjian recounted in a newspaper interview (reference link here) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one here) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. A somewhat strange article showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. That appears to have triggered things.But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to "I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!").The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.The NEW ArticleThere are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that
Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary Henan Shuanghui Investment &amp; Development (000895 CH) (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. 
Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")
Wan Hongjian appears to object vociferously to the choice of Guo Lijun as CEO. 
There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.
It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com here. That letter is much more detailed and very clearly says "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."As I hit the "publish" button, the company has just released a "clarification" which says
The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). 
The Board would like to clarify that the Allegations are untrue and misleading. 
Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). 
The Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.
More below the fold. 

Henan Shuanghui Investment & Development (000895 CH)

WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud