Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Reuters this afternoon carried an <a href="https://www.reuters.com/markets/deals/exclusive-tencent-plans-divest-24-bln-meituan-stake-sources-2022-08-16/" target="_blank" rel="noopener">article</a> that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> was seeking to divest "US$24bn" (17%) of $78bn market cap delivery company <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> by year-end to mollify domestic regulators.</li>
<li>Tencent would seek to launch a share sale within 2022 <em>"if market conditions are favourable." </em>Meituan shares tanked 9%, immediately.</li>
<li>The article suggests disposal via block sale (faster than negotiating with a private buyer), odd given Tencent's Q1 2022 experience with the JD.com unwind. But it leads to BIG flows.</li>
</ul>


Reuters this afternoon carried an article that Tencent (700 HK) was seeking to divest "US$24bn" (17%) of $78bn market cap delivery company Meituan (3690 HK) by year-end to mollify domestic regulators.
Tencent would seek to launch a share sale within 2022 "if market conditions are favourable." Meituan shares tanked 9%, immediately.
The article suggests disposal via block sale (faster than negotiating with a private buyer), odd given Tencent's Q1 2022 experience with the JD.com unwind. But it leads to BIG flows.


Tencent (700 HK) To Divest Meituan (3690 HK) - Impact and Index Implications

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

GOME Retail Holdings / Equity Capital Markets

<ul>
<li>As the mismatch between short-term assets and liabilities expands, GOME is raising HK$776.5m at HK$0.40 per-share, which is a 12.1% discount to the closing price on 27th June 2022.</li>
<li>This is clearly insufficient to pay down <a href="https://www.smartkarma.com/entities/gome-retail-holdings-ltd" target="_blank" data-smartkarma-citation="entities:170:1" rel="noopener">GOME Retail Holdings (493 HK)</a>'s RMB 40.0bn short term debt and accounts payable obligations falling due in the next 12 months.</li>
<li>With the omni-channel transformation taking longer than expected to turn around performance, the company might find it difficult to refinance the debt and maintain the supply chain as usual.</li>
</ul>


As the mismatch between short-term assets and liabilities expands, GOME is raising HK$776.5m at HK$0.40 per-share, which is a 12.1% discount to the closing price on 27th June 2022.
This is clearly insufficient to pay down GOME Retail Holdings (493 HK)'s RMB 40.0bn short term debt and accounts payable obligations falling due in the next 12 months.
With the omni-channel transformation taking longer than expected to turn around performance, the company might find it difficult to refinance the debt and maintain the supply chain as usual.


GOME Retail Placement: The Crisis Persists

<ul>
<li>I wanted to write this insight over the weekend but could not finish it, but now there is new news to warrant it. </li>
<li>Today, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>  <a href="https://www.prosus.com/news/disposal-of-jdcom-shares-received-from-tencent-holdings-limited/" target="_blank" rel="noopener">announced</a> it had sold the 131,873,028 <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> shares it received in the <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> distribution. This is as expected. Proceeds were US$3.67bn.</li>
<li>Also <a href="https://www.prosus.com/news/the-group-announces-the-beginning-of-an-open-ended-share-repurchase-programme-of-prosus-and-naspers-shares/" target="_blank" rel="noopener">announced</a> this morning is "the beginning of an open-ended share repurchase programme of Prosus and <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> shares." The details are the key to <em>everything</em>. </li>
</ul>


I wanted to write this insight over the weekend but could not finish it, but now there is new news to warrant it. 
Today, Prosus (PRX NA)  announced it had sold the 131,873,028 JD.com Inc. (9618 HK) shares it received in the Tencent (700 HK) distribution. This is as expected. Proceeds were US$3.67bn.
Also announced this morning is "the beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares." The details are the key to everything. 


Prosus/Naspers - Operation Ouroboros Commences, And It's Big (Discount, Flows, Index Impact)

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.</li>
<li>Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.</li>
<li>In this note, we talk about the implication and timing of today’s announcements.</li>
</ul>


Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
In this note, we talk about the implication and timing of today’s announcements.


Prosus, Tencent, JD.com - Good Intentions but Questionable Timing

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> has confirmed its plan to issue infrastructure REIT using six warehouse logistics assets as underlying assets, and they represents 7.6% of its total warehouse area.</li>
<li>The proposed issuance may boost its value by HK$0.16/share, or 7.3% of share price. Should all 4m sq.m. of warehouse assets are securitised, this may nearly double the stock's price.</li>
<li>Since Jun, Sinotrans has repurchased 14m H-shares, suggesting positive view on outlook. There will be more to come, and as the shares will be cancelled, EPS will be enhanced. </li>
</ul>



Sinotrans (598 HK) has confirmed its plan to issue infrastructure REIT using six warehouse logistics assets as underlying assets, and they represents 7.6% of its total warehouse area.
The proposed issuance may boost its value by HK$0.16/share, or 7.3% of share price. Should all 4m sq.m. of warehouse assets are securitised, this may nearly double the stock's price.
Since Jun, Sinotrans has repurchased 14m H-shares, suggesting positive view on outlook. There will be more to come, and as the shares will be cancelled, EPS will be enhanced. 


Sinotrans (598 HK): How Much Value Can Be Unlocked from Its First REIT?

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com Inc (ADR) (JD US)

Tencent (700 HK) To Divest Meituan (3690 HK) - Impact and Index Implications

Tencent is said to be looking at a $20bn block sale of its stake in Meituan (3690 HK) by year end. That's a big block. Maybe a repeat of JD.com?...

Travis Lundy

GOME Retail Placement: The Crisis Persists

With the omni-channel transformation taking longer than expected to turn around performance, GOME Retail might find it difficult to refinance the...

Oshadhi Kumarasiri

Prosus/Naspers - Operation Ouroboros Commences, And It's Big (Discount, Flows, Index Impact)

The event everyone has been waiting for. Prosus will start selling Tencent to buy back Prosus and Naspers shares to narrow the discount. The...

Travis Lundy

Prosus, Tencent, JD.com - Good Intentions but Questionable Timing

Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market...

Sumeet Singh

Sinotrans (598 HK): How Much Value Can Be Unlocked from Its First REIT?

Value equals to HK$0.16 per share, or 7.3% of its share price, can be realised from the proposed REIT issuance by Sinotrans. Its recent H-share...

Osbert Tang, CFA

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