Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Beijing Capital Land Ltd H / Event-Driven

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<p>Back on the 9 July, <a href="https://www.smartkarma.com/entities/beijing-capital-land-ltd-h" target="_blank" data-smartkarma-citation="entities:4543:1" rel="noopener">Beijing Capital Land Ltd H (2868 HK)</a> (BCL) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0709/2021070901284.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer from its controlling shareholder, state-owned Beijing Capital Group, otherwise known as the Capital Group. The Offer price of HK$2.80/share was a 62.79% premium to last close, and a 150% premium to the average closing price over the previous 60 trading days. The Offer price would NOT be increased. No dividends are expected to be declared. A concurrent Offer for BCL's domestic shares at RMB2.334080/share was also tabled.</p>
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<p>The pre-conditions, which cannot be waived, included approvals from NDRC, MoC, SAFE, and if applicable, SASAC.</p>
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<p>As BCL is PRC incorporated and compulsory acquisition is not afforded under PRC law,  this delisting proposal is by way of a Merger by Absorption, which involves a Scheme-like vote from disinterested shareholders.</p>
<p>Unlike a number of PRC-incorporated privatisations, there is no tendering acceptance condition attached to this delisting.</p>
<p>Typically Merger by Absorption transactions complete in around four months.</p>
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<p>This <em>appeared</em> a relatively clean deal although from the onset, it traded wide to terms, at an average gross spread to terms of ~13%, up to and including yesterday.</p>
<p>The dispatch of the Composite Doc was, as expected, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0729/2021072901655.pdf" target="_blank" rel="noopener">delayed</a> to the 9 September (officially granted by the SFC on the  2 August) from the 29 July. </p>
<p>A profit warning was announced on the <a href="https://www1.hkexnews.hk/search/titlesearch.xhtml?lang=en" target="_blank" rel="noopener">30 July</a>. </p>
<p>Last night, BCL said the Pre-Condition has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081801497.pdf" target="_blank" rel="noopener">satisfied</a>. There was no further application to the SFC to extend the dispatch of the Composite Doc.</p>
<p>This is a positive development. Expect the spread to tighten when shares begin trading this morning. </p>
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<p>More below the fold.</p>
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Back on the 9 July, Beijing Capital Land Ltd H (2868 HK) (BCL) announced a pre-conditional Offer from its controlling shareholder, state-owned Beijing Capital Group, otherwise known as the Capital Group. The Offer price of HK$2.80/share was a 62.79% premium to last close, and a 150% premium to the average closing price over the previous 60 trading days. The Offer price would NOT be increased. No dividends are expected to be declared. A concurrent Offer for BCL's domestic shares at RMB2.334080/share was also tabled.


The pre-conditions, which cannot be waived, included approvals from NDRC, MoC, SAFE, and if applicable, SASAC.


As BCL is PRC incorporated and compulsory acquisition is not afforded under PRC law,  this delisting proposal is by way of a Merger by Absorption, which involves a Scheme-like vote from disinterested shareholders.
Unlike a number of PRC-incorporated privatisations, there is no tendering acceptance condition attached to this delisting.
Typically Merger by Absorption transactions complete in around four months.


This appeared a relatively clean deal although from the onset, it traded wide to terms, at an average gross spread to terms of ~13%, up to and including yesterday.
The dispatch of the Composite Doc was, as expected, delayed to the 9 September (officially granted by the SFC on the  2 August) from the 29 July. 
A profit warning was announced on the 30 July. 
Last night, BCL said the Pre-Condition has been satisfied. There was no further application to the SFC to extend the dispatch of the Composite Doc.
This is a positive development. Expect the spread to tighten when shares begin trading this morning. 


More below the fold.


Beijing Capital Land (2868 HK): Pre-Cons Satisfied. This Should Trade Tight

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<p><a href="https://www.smartkarma.com/entities/beijing-capital-land-ltd-h" target="_blank" data-smartkarma-citation="entities:4543:1" rel="noopener">Beijing Capital Land Ltd H (2868 HK)</a> (BCL) has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0709/2021070901284.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer from its controlling shareholder, state-owned Beijing Capital Group, otherwise known as the Capital Group.</p>
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<p>The Offer price is HK$2.80/share, a 62.79% premium to last close, and a 150% premium to the average closing price over the previous 60 trading days. The Offer price will NOT be increased. No dividends are expected to be declared. A concurrent Offer for BCL's domestic shares at RMB2.334080/share is also tabled.</p>
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<p>The pre-conditions, which cannot be waived, include approvals from NDRC, MoC, and SAFE.</p>
</div>
<div>
<p>As BCL is PRC incorporated, this delisting proposal is by way of a Merger by Absorption, which involves a Scheme-like vote from disinterested shareholders. There is no tendering acceptance condition attached to this delisting.</p>
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<p>This appears a relatively clean deal. The Long Stop date for the pre-cons is the 9 July 2022, although these approvals <em>should</em> be wrapped up well before then.</p>
<p>Merger by Absorption transactions <em>typically</em> complete in around four months.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


Beijing Capital Land Ltd H (2868 HK) (BCL) has announced a pre-conditional Offer from its controlling shareholder, state-owned Beijing Capital Group, otherwise known as the Capital Group.


The Offer price is HK$2.80/share, a 62.79% premium to last close, and a 150% premium to the average closing price over the previous 60 trading days. The Offer price will NOT be increased. No dividends are expected to be declared. A concurrent Offer for BCL's domestic shares at RMB2.334080/share is also tabled.


The pre-conditions, which cannot be waived, include approvals from NDRC, MoC, and SAFE.


As BCL is PRC incorporated, this delisting proposal is by way of a Merger by Absorption, which involves a Scheme-like vote from disinterested shareholders. There is no tendering acceptance condition attached to this delisting.


This appears a relatively clean deal. The Long Stop date for the pre-cons is the 9 July 2022, although these approvals should be wrapped up well before then.
Merger by Absorption transactions typically complete in around four months.


More below the fold.


Beijing Capital Land (2868 HK): Delisting Offer From Parent

China Machinery Engineering / Event-Driven

<p>On the 27 May, after <a href="https://www.smartkarma.com/entities/china-machinery-engineering-corp" target="_blank" data-smartkarma-citation="entities:10998:1" rel="noopener">China Machinery Engineering (1829 HK)</a>'s shares gained 4.3% to close at $3.62/share, on decent volume, it was speculated PRC regulatory approvals may be (finally) forthcoming.</p>
<p>And sure enough, yesterday after the close of trading CMEC <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0603/2021060300532.pdf" target="_blank" rel="noopener">announced</a> the preconditions - NDRC, MOFCOM &amp; SAFE - had been fulfilled.</p>
<p>CMEC added it needs more time to prepare the Composite Document with an expected despatch date on or before the 9 July. </p>
<p>More below the fold. </p>

On the 27 May, after China Machinery Engineering (1829 HK)'s shares gained 4.3% to close at $3.62/share, on decent volume, it was speculated PRC regulatory approvals may be (finally) forthcoming.
And sure enough, yesterday after the close of trading CMEC announced the preconditions - NDRC, MOFCOM &amp; SAFE - had been fulfilled.
CMEC added it needs more time to prepare the Composite Document with an expected despatch date on or before the 9 July. 
More below the fold. 

CMEC (1829 HK): Clarity On Timing As Pre-Cons Fulfilled

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<p>On the 13 January, <a href="https://www.smartkarma.com/entities/china-machinery-engineering-corp" target="_blank" data-smartkarma-citation="entities:10998:1" rel="noopener">China Machinery Engineering (1829 HK)</a>'s (CMEC) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0113/2021011300422.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer from its controlling shareholder, state-owned Chinese National Machinery Industry Corporation, also known as SINOMACH.</p>
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<p>The Offer price was HK$3.70/share, a 45.10% premium to last close, and a 118.93% premium to the average closing price over the previous 30 trading days. The Offer Price was announced to be FINAL - it will NOT be increased. A concurrent Offer for CMEC's domestic shares at RMB3.082692/share was also tabled.</p>
<p>The pre-conditions, which cannot be waived, include approvals from NDRC, MoC, and SAFE.</p>
<p>Then nothing. Near-on four and half months have elapsed and the only disclosure - in the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0430/2021043000903.pdf" target="_blank" rel="noopener">monthly updates</a> - is that the pre-conditions have yet to be fulfilled.</p>
<p>Then yesterday shares gained 4.3% to close at $3.62/share, its highest level since the Offer was announced. The volume was also solid. </p>
<p>Perhaps regulatory approvals are (finally) forthcoming.</p>
<p>More below the fold.</p>
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On the 13 January, China Machinery Engineering (1829 HK)'s (CMEC) announced a pre-conditional Offer from its controlling shareholder, state-owned Chinese National Machinery Industry Corporation, also known as SINOMACH.


The Offer price was HK$3.70/share, a 45.10% premium to last close, and a 118.93% premium to the average closing price over the previous 30 trading days. The Offer Price was announced to be FINAL - it will NOT be increased. A concurrent Offer for CMEC's domestic shares at RMB3.082692/share was also tabled.
The pre-conditions, which cannot be waived, include approvals from NDRC, MoC, and SAFE.
Then nothing. Near-on four and half months have elapsed and the only disclosure - in the monthly updates - is that the pre-conditions have yet to be fulfilled.
Then yesterday shares gained 4.3% to close at $3.62/share, its highest level since the Offer was announced. The volume was also solid. 
Perhaps regulatory approvals are (finally) forthcoming.
More below the fold.









China Machinery Engineering (1829 HK): Movement In The Works?

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.

Sichuan Languang Justbon Service Group / Event-Driven

<p><a href="https://www.smartkarma.com/entities/sichuan-languang-justbon-service-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:28337:1" rel="noopener">Sichuan Languang Justbon Service Group (2606 HK)</a> has despatched the composite document in relation to <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> base and enhanced offer. Currently, Country Garden owns 71.17% of the outstanding shares comprising 66.99% of the domestic shares and 71.20% of the H Shares. </p><p>The base offer is an unconditional mandatory cash offer for all the issued shares is HK$51.0571 per H-share (RMB42.8547 per domestic share. The enhanced share offer, which is payable only if the delisting is approved, is HK$54.3000 per H-share (RMB45.5768 per domestic share). </p><p>Unsurprisingly, the IFA considers the base and enhanced offer to be fair and reasonable. We broadly agree with the IFA analysis with the exception that the peer multiple comparisons could be improved. </p><p>The two key conditions for the delisting will be approval by at least 75% independent H-shareholders (&lt;10% of all independent H-shareholders rejection) and the satisfaction of the minimum acceptance condition (90% of H-shares held by independent H-shareholders). Satisfaction of the minimum acceptance condition is the key hurdle. We note the privatisation proposals for <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a> and <a href="https://www.smartkarma.com/entities/harbin-electric-co-ltd-h" target="_blank" data-smartkarma-citation="entities:11116:1" rel="noopener">Harbin Electric Co Ltd H (1133 HK)</a> have previously failed due to the inability to meet the 90% minimum acceptance condition.  </p><div class="content-highlight"><p>Country Garden Services has bought itself some leeway by having the right to extend the closing date from 17 June to not later than 3 September. In theory, the extended time period should provide a greater chance of meeting the 90% threshold. At the last close, the gross spread to the enhanced offer price of HK$54.3000 stands at 4.9%.</p></div>

Sichuan Languang Justbon Service Group (2606 HK) has despatched the composite document in relation to Country Garden Services Holdings (6098 HK) base and enhanced offer. Currently, Country Garden owns 71.17% of the outstanding shares comprising 66.99% of the domestic shares and 71.20% of the H Shares. The base offer is an unconditional mandatory cash offer for all the issued shares is HK$51.0571 per H-share (RMB42.8547 per domestic share. The enhanced share offer, which is payable only if the delisting is approved, is HK$54.3000 per H-share (RMB45.5768 per domestic share). Unsurprisingly, the IFA considers the base and enhanced offer to be fair and reasonable. We broadly agree with the IFA analysis with the exception that the peer multiple comparisons could be improved. The two key conditions for the delisting will be approval by at least 75% independent H-shareholders (&lt;10% of all independent H-shareholders rejection) and the satisfaction of the minimum acceptance condition (90% of H-shares held by independent H-shareholders). Satisfaction of the minimum acceptance condition is the key hurdle. We note the privatisation proposals for Beijing Jingneng Clean Energy (579 HK) and Harbin Electric Co Ltd H (1133 HK) have previously failed due to the inability to meet the 90% minimum acceptance condition.  Country Garden Services has bought itself some leeway by having the right to extend the closing date from 17 June to not later than 3 September. In theory, the extended time period should provide a greater chance of meeting the 90% threshold. At the last close, the gross spread to the enhanced offer price of HK$54.3000 stands at 4.9%.

Languang Justbon’s Composite Document, IFA Opinion and Extended Closing Date

China

Harbin Electric Company Limited manufactures a comprehensive range of electric power generation equipment including thermal power generator sets, boilers, steam and hydro turbine and turbine generator sets.  The Company also provides power station engineering services and manufactures ancillary equipment for power stations as well as AC/DC motor and other products.

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Harbin Electric Co Ltd H (1133 HK)

Beijing Capital Land (2868 HK): Pre-Cons Satisfied. This Should Trade Tight

This looks done - play the spread here. Assuming payment late-Oct, I would expect BCL to trade around $2.72 today, or a 3%/15% gross/annualised...

David Blennerhassett

Beijing Capital Land (2868 HK): Delisting Offer From Parent

This looks done - play the spread here. Assuming payment late-Nov, I would expect BCL to trade around $2.65 on Monday, or a 5.6%/15% gross...

David Blennerhassett

CMEC (1829 HK): Clarity On Timing As Pre-Cons Fulfilled

This is being done too cheaply, but no other Offeror will emerge. At $3.46/share, or 6.9%/34.3% gross/annualised, get involved. But this is a...

David Blennerhassett

China Machinery Engineering (1829 HK): Movement In The Works?

Shares are rightly off today. $3.62 was a 2.2% spread and <10% annualised with say, three months to go. At $3.47/share, where it is trading now, or...

David Blennerhassett

Languang Justbon’s Composite Document, IFA Opinion and Extended Closing Date

Satisfaction of the minimum acceptance condition is the key hurdle. At the last close, the gross spread to the enhanced offer price of HK$54.3000...

Arun George

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