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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a> has disclosed a preconditional privatisation offer from PAG, the controlling shareholder, at HK$2.00 per H share, a 33.3% premium to the undisturbed price.  </li>
<li>The precondition relates to regulatory approvals. The key conditions for the privatisation will be approval by at least 75% independent H Shareholders (&lt;10% of all independent H Shareholders rejection). </li>
<li>The shareholders with blocking stakes which have not provided irrevocables will likely be supportive as the offer is reasonable and there is a potential scrip alternative. </li>
</ul>



Shandong Fengxiang (9977 HK) has disclosed a preconditional privatisation offer from PAG, the controlling shareholder, at HK$2.00 per H share, a 33.3% premium to the undisturbed price.  
The precondition relates to regulatory approvals. The key conditions for the privatisation will be approval by at least 75% independent H Shareholders (&lt;10% of all independent H Shareholders rejection). 
The shareholders with blocking stakes which have not provided irrevocables will likely be supportive as the offer is reasonable and there is a potential scrip alternative. 


Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a> entered a trading halt “<em>pending the release of an announcement pursuant to the Code on Takeovers and Mergers.</em>” PAG, the controlling shareholder, likely aims to privatise Fengxiang. </li>
<li>The offer will likely be structured as a privatisation by merger by absorption requiring approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). </li>
<li>The presence of several substantial shareholders necessitates a reasonable offer. An offer of HK$1.80-2.00 (a 21%—33% premium to the last close) could win over these shareholders' backing.</li>
</ul>



Shandong Fengxiang (9977 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” PAG, the controlling shareholder, likely aims to privatise Fengxiang. 
The offer will likely be structured as a privatisation by merger by absorption requiring approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). 
The presence of several substantial shareholders necessitates a reasonable offer. An offer of HK$1.80-2.00 (a 21%—33% premium to the last close) could win over these shareholders' backing.


Fengxiang (9977 HK): Privatisation by PAG?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ppb-group-berhad" target="_blank" data-smartkarma-citation="entities:793:1" rel="noopener"><strong>PPB Group (PEP MK)</strong></a>'s grains &amp; agri arm, and four other feedmillers, has been labelled a cartel and fined by the Malaysian competition watchdog. A judicial review is ongoing.</li>
<li>Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



PPB Group (PEP MK)'s grains &amp; agri arm, and four other feedmillers, has been labelled a cartel and fined by the Malaysian competition watchdog. A judicial review is ongoing.
Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: PPB In The Doghouse, But These Levels Are Excessive

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japfa-ltd" target="_blank" data-smartkarma-citation="entities:15597:1" rel="noopener">Japfa Ltd (JAP SP)</a> disclosed privatisation through a scheme of arrangement from the Santosa family at S$0.62 per share, a 34.8% premium, to the undisturbed price of S$0.460.</li>
<li>While the offer is attractive compared to historical share price ranges, it is light compared to peer and historical multiples.</li>
<li>The offer has not been declared final. However, the irrevocable, the lack of a disinterested shareholder holding a blocking stake and moderate retail ownership minimises the vote risk.  </li>
</ul>



Japfa Ltd (JAP SP) disclosed privatisation through a scheme of arrangement from the Santosa family at S$0.62 per share, a 34.8% premium, to the undisturbed price of S$0.460.
While the offer is attractive compared to historical share price ranges, it is light compared to peer and historical multiples.
The offer has not been declared final. However, the irrevocable, the lack of a disinterested shareholder holding a blocking stake and moderate retail ownership minimises the vote risk.  


Japfa (JAP SP): Santosa Family’s S$0.62 Scheme Offer

<ul>
<li>On March 8, <a href="https://www.bloomberg.com/news/articles/2024-03-08/top-asia-poultry-firm-japfa-owners-said-to-mull-go-private-deal?embedded-checkout=true" target="_blank" rel="noopener">Bloomberg reported</a> that <a href="https://www.smartkarma.com/entities/japfa-ltd" target="_blank" data-smartkarma-citation="entities:15597:1" rel="noopener">Japfa Ltd (JAP SP)</a> owners were considering taking it private and started talks about a loan of around US$150 million. </li>
<li>Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. </li>
<li>An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  </li>
</ul>


On March 8, Bloomberg reported that Japfa Ltd (JAP SP) owners were considering taking it private and started talks about a loan of around US$150 million. 
Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. 
An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  


Japfa (JAP SP): Evaluating a Potential Privatisation

Malaysia

Leong Hup International Berhad provides poultry services. The Company offers breeding, egg production, broiler, and livestock feeding solutions, as well as manufactures chicken products. Leong Hup International serves customers in Asian.

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Leong Hup International (LHIB MK)

Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00

The shareholders with blocking stakes which have not provided irrevocables will likely be supportive as the offer is reasonable and there is a...

Arun George

Fengxiang (9977 HK): Privatisation by PAG?

The presence of several substantial shareholders necessitates a reasonable offer. An offer of HK$1.80-2.00 (a 21%—33% premium to the last close)...

Arun George

StubWorld: PPB In The Doghouse, But These Levels Are Excessive

Whether poultry feed pricing needs to be "adjusted" by PPB; the cartel case is dismissed (or dumbed down) - or a combination of both - PPB appears...

David Blennerhassett

Japfa (JAP SP): Santosa Family’s S$0.62 Scheme Offer

The offer is arguably light. However, the irrevocable, the lack of a disinterested shareholder holding a blocking stake and moderate retail...

Arun George

Japfa (JAP SP): Evaluating a Potential Privatisation

An attractive takeover premium would be required, irrespective of the offer structure. Funding could be an issue due to the high current leverage.

Arun George

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