IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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.

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. </li>
<li>The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.</li>
<li>If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. </li>
</ul>



China Traditional Chinese Medicine (570 HK) profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. 
The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.
If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. 


China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. </li>
<li>The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. </li>
<li>Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. </li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. 
The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. 
Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. 


China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<ul><li>Insurers / In Depth: Electric cars are draining the batteries of China’s insurers</li><li>Plenum /Plenum Explained: China to combat cross-border corruption, improve constitutional review</li><li>Personnel /: Communist Party creates financial graft-busting committee</li></ul>

Insurers / In Depth: Electric cars are draining the batteries of China’s insurersPlenum /Plenum Explained: China to combat cross-border corruption, improve constitutional reviewPersonnel /: Communist Party creates financial graft-busting committee

CX Daily: Electric Cars Are Draining the Batteries of China’s Insurers 

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. </li>
<li>The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. </li>
<li>The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.</li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.


China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

<ul>
<li>On 21 February, <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.</li>
<li>The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. </li>
<li>The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   </li>
</ul>


On 21 February, China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. 
The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   


China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

China

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)

Guangzhou Baiyunshan Pharmaceutical Holdings

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Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)

China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

The profit warning is an unwelcome development but should not pose a risk to the scheme by triggering the MAC clause. At the last close, the gross...

Arun George

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

The monthly update will relieve the bulls, but there remain potential stumbling blocks. Nevertheless, the risk vs. reward remains attractive.

Arun George

CX Daily: Electric Cars Are Draining the Batteries of China’s Insurers

Insurers / In Depth: Electric cars are draining the batteries of China’s insurers China’s rapid adoption of new-energy vehicles (NEVs) is posing a...

Caixin Global

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable...

Arun George

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