Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

China National Building Material / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a> (CNBM), a leading PRC building materials company, is <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1206/2024120601604.pdf" target="_blank" rel="noopener">offering to buy back 841,749,304 H-shares at HK$4.03/share</a>, a 15.1% premium to undisturbed.</li>
<li>CNBM's parent - the CNBM Parent Concert Group - will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently. </li>
<li>That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer. </li>
</ul>



China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
CNBM's parent - the CNBM Parent Concert Group - will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently. 
That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer. 


CNBM (3323 HK)'s Buyback Ups Parent's Stake >50%

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China National Building Material / Equity Bottom-Up

<ul>
<li>We view <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a>'s proposal to buy back 9.98% of H-shares as a good opportunity for the shareholders to cash out in their position.</li>
<li>Without further significant government stimulus, CNBM will find it difficult to return to the HK$4.03 offer price. Potential weak FY24 results also mean downside risks.</li>
<li>Other companies with high gearing and low P/B may follow CNBM's move. We single out the infrastructure construction companies as the likely candidates.</li>
</ul>


We view China National Building Material (3323 HK)'s proposal to buy back 9.98% of H-shares as a good opportunity for the shareholders to cash out in their position.
Without further significant government stimulus, CNBM will find it difficult to return to the HK$4.03 offer price. Potential weak FY24 results also mean downside risks.
Other companies with high gearing and low P/B may follow CNBM's move. We single out the infrastructure construction companies as the likely candidates.


China National Building Materials (3323 HK): Buying Back 9.98% of H-Shares

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a> has launched a conditional share buyback to acquire a maximum of 841.7 million H Shares (18.47% of H Shares) at HK$4.03.</li>
<li>The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts. </li>
<li>The buyback is unattractive and will leave minorities short-changed, weakening a stretched balance sheet. Nevertheless, while potentially tricky, the votes should pass. </li>
</ul>



China National Building Material (3323 HK) has launched a conditional share buyback to acquire a maximum of 841.7 million H Shares (18.47% of H Shares) at HK$4.03.
The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts. 
The buyback is unattractive and will leave minorities short-changed, weakening a stretched balance sheet. Nevertheless, while potentially tricky, the votes should pass. 


China National Building Material (3323 HK): H Share Buyback Short Changes Minorities

Equity Derivatives and Volatility Specialist, Clifton Derivatives

John Ley

Equity Derivatives and Volatility Specialist

Clifton Derivatives

Independent derivative and volatility research firm focusing on events/catalysts, earnings, relative value and cross asset volatility strategies.

<ul>
<li>Communication Services had 39% of single stock option volumes vs only 22% of the open interest highlighting short expiry / speculative nature of trading.</li>
<li>Tencent and Baidu heading in opposite directions – Baidu vol on the inexpensive side vs Tencent vol.</li>
<li>Xiaomi one of only 2 optionable names trading at 52-week high (Sunny optical being the other).</li>
</ul>


Communication Services had 39% of single stock option volumes vs only 22% of the open interest highlighting short expiry / speculative nature of trading.
Tencent and Baidu heading in opposite directions – Baidu vol on the inexpensive side vs Tencent vol.
Xiaomi one of only 2 optionable names trading at 52-week high (Sunny optical being the other).


EQD | Hong Kong Single Stock Options Weekly December 16 – 20

<ul>
<li>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.</li>
<li>ECM developments: <a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia Holdings (285A JP)</a> priced its IPO at JPY1,455, the midpoint of the IPO price range.</li>
<li>Event-Driven developments: <a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>, <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a>, <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft Inc (9749 JP)</a>, <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a>, <a href="https://www.smartkarma.com/entities/topcon-corp" target="_blank" data-smartkarma-citation="entities:738:1" rel="noopener">Topcon Corp (7732 JP)</a>, <a href="https://www.smartkarma.com/entities/insignia-financial-ltd" target="_blank" data-smartkarma-citation="entities:12349:1" rel="noopener">Insignia Financial (IFL AU)</a>. 
</li>
</ul>


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: Kioxia Holdings (285A JP) priced its IPO at JPY1,455, the midpoint of the IPO price range.
Event-Driven developments: Fosun Tourism (1992 HK), CPMC Holdings (906 HK), Fuji Soft Inc (9749 JP), Nec Networks &amp; System Integr (1973 JP), Topcon Corp (7732 JP), Insignia Financial (IFL AU). 



Weekly Deals Digest (15 Dec) - Fosun Tourism, CPMC, ESR, Fuji Soft, NEC Networks, Topcon, Kioxia

China

China National Building Material Company Limited manufactures cement products. The Company produces silica cements, commodity concretes, cement clinkers, and other products. China National Building Material also produces glass fibers, composite materials, and other products.

China National Building Material (3323 HK)

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China National Building Material (3323 HK)

CNBM (3323 HK)'s Buyback Ups Parent's Stake >50%

Assuming ~50% of the register tenders, I would expect a minimum pro-ration of ~40%, implying a back-end breakeven price of HK$3.65/share. I don't...

David Blennerhassett

China National Building Materials (3323 HK): Buying Back 9.98% of H-Shares

CNBM's buyback proposal offers shareholders a chance to cash out, but without government stimulus, returning to the offer price is not easy. Other...

Osbert Tang, CFA

EQD | Hong Kong Single Stock Options Weekly December 16 – 20

Tencent and Baidu showing contrasting price and volatility levels with Baidu implied vol looking relatively inexpensive. Xiaomi stands out as one...

John Ley

Weekly Deals Digest (15 Dec) - Fosun Tourism, CPMC, ESR, Fuji Soft, NEC Networks, Topcon, Kioxia

Last week, notable developments occurred in Event-Driven (CNBM, CPMC, ESR, Fosun Tourism, Vesync, Fuji Soft, NEC Networks, Topcon, Insignia...

Arun George

Price Gauge

52-week Range

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CNBM (3323 HK)'s Buyback Ups Parent's Stake >50%

Assuming ~50% of the register tenders, I would expect a minimum pro-ration of ~40%, implying a back-end breakeven price of HK$3.65/share. I don't...

David Blennerhassett

China National Building Materials (3323 HK): Buying Back 9.98% of H-Shares

​CNBM's buyback proposal offers shareholders a chance to cash out, but without government stimulus, returning to the offer price is not easy. Other...

Osbert Tang, CFA