Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<p>The Kerry Group has been busy of late.</p>
<p>Back in December, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> IPO'ed <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> as discussed by <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> in <em><a href="https://skr.ma/uGPdd" target="_blank" rel="noopener">Kerry Express Thailand IPO - Time for Delivery</a></em>.</p>
<p>Last month <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> ("KPL") and <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> ("KLN") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>.  This is an ongoing transaction - see <em><a href="https://skr.ma/D9RK7" target="_blank" rel="noopener">Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer</a></em>. KLN announced last night the composite document has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0308/2021030801425.pdf" target="_blank" rel="noopener">delayed</a> potentially up to the 16 August 201. </p>
<div>
<a href="https://www.smartkarma.com/entities/shangri-la-asia-ltd" target="_blank" data-smartkarma-citation="entities:19690:1" rel="noopener">Shangri-La Asia (69 HK)</a>, majority-owned by the Kerry Group, is well up on its March 2020 COVID low, and up 9.5% YTD.  Around half of its hotels are in China, which have witnessed a strong uptick in local leisure and corporate traveling, generating positive EBITDA as early as June last year, the first time since the first outbreak of the pandemic.</div>
<div></div>
<div>Currently trading at 0.6x P/B against a pre-COVID average multiple of 0.8x., this is worth a second look.</div>
<div></div>
<div>More below the fold.</div>

The Kerry Group has been busy of late.
Back in December, Kerry Logistics Network (636 HK) IPO'ed Kerry Express Thailand (KEX TB) as discussed by Sumeet Singh in Kerry Express Thailand IPO - Time for Delivery.
Last month Kerry Properties (683 HK) ("KPL") and Kerry Logistics Network (636 HK) ("KLN") announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH).  This is an ongoing transaction - see Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer. KLN announced last night the composite document has been delayed potentially up to the 16 August 201. 

Shangri-La Asia (69 HK), majority-owned by the Kerry Group, is well up on its March 2020 COVID low, and up 9.5% YTD.  Around half of its hotels are in China, which have witnessed a strong uptick in local leisure and corporate traveling, generating positive EBITDA as early as June last year, the first time since the first outbreak of the pandemic.

Currently trading at 0.6x P/B against a pre-COVID average multiple of 0.8x., this is worth a second look.

More below the fold.

Event-Driven

Jardine Strategic Holdings / Event-Driven

<div class="content-highlight">
<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: There is NO “headcount” test at the Jardine Strategic special general meeting. The vote is therefore done. Apologies for the misinterpretation.</strong></em></p>
</div>
<hr>
<p>Whilst I did not believe that the Keswicks - the controlling family - had any need to <em>immediately</em> restructure the <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> / <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> organisation, the ultimate restructuring of the group was most likely to be done in a way where value for the family was maximised.</p>
<p>A buyout offer for Strategic would allow Matheson to capture value from minorities if the buyout offer was made below NAV. It is a cheaper alternative to a full buyout of Matheson. It maintains the group ownership levels in Strategic-held subsidiaries. And the family’s ownership in the group (which would be just Matheson and its direct subsidiaries) increases to ~43%, up from ~17.5% by my estimate currently.</p>
<p>And now we have a long-awaited <a href="https://links.sgx.com/FileOpen/JMH%20J.ashx?App=Announcement&amp;FileID=651169" target="_blank" rel="noopener">transaction</a>. And just like that it is also done and dusted.</p>
<blockquote>
<p>Jardine Matheson Holdings Limited has today announced its plans for the simplification of the parent company structure of the Group. This will result in a single holding company with a conventional ownership structure and a further increase in the Group’s operational efficiency and financial flexibility.</p>
</blockquote>
<p>Under the terms of the Acquisition, Strategic shareholders (other than Matheson) will receive US$33.00/share in cash.</p>
<p>The Acquisition will be implemented by way of an Amalgamation under the Bermuda Companies Act, which requires approval by a majority (the headcount test) of at least 75% of the votes cast by Strategic shareholders. Matheson, holding 940,903,135 Strategic shares - representing 84.89% of shares out - is entitled to vote on the amalgamation resolution, all but assuring Strategic shareholder approval.</p>
<p>Apart from playing the Strategic arb, the key questions are where Matheson should trade, and what next for key listed subsidiaries.</p>
<p>More below the fold.</p>


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: There is NO “headcount” test at the Jardine Strategic special general meeting. The vote is therefore done. Apologies for the misinterpretation.


Whilst I did not believe that the Keswicks - the controlling family - had any need to immediately restructure the Jardine Matheson Holdings (JM SP) / Jardine Strategic Holdings (JS SP) organisation, the ultimate restructuring of the group was most likely to be done in a way where value for the family was maximised.
A buyout offer for Strategic would allow Matheson to capture value from minorities if the buyout offer was made below NAV. It is a cheaper alternative to a full buyout of Matheson. It maintains the group ownership levels in Strategic-held subsidiaries. And the family’s ownership in the group (which would be just Matheson and its direct subsidiaries) increases to ~43%, up from ~17.5% by my estimate currently.
And now we have a long-awaited transaction. And just like that it is also done and dusted.

Jardine Matheson Holdings Limited has today announced its plans for the simplification of the parent company structure of the Group. This will result in a single holding company with a conventional ownership structure and a further increase in the Group’s operational efficiency and financial flexibility.

Under the terms of the Acquisition, Strategic shareholders (other than Matheson) will receive US$33.00/share in cash.
The Acquisition will be implemented by way of an Amalgamation under the Bermuda Companies Act, which requires approval by a majority (the headcount test) of at least 75% of the votes cast by Strategic shareholders. Matheson, holding 940,903,135 Strategic shares - representing 84.89% of shares out - is entitled to vote on the amalgamation resolution, all but assuring Strategic shareholder approval.
Apart from playing the Strategic arb, the key questions are where Matheson should trade, and what next for key listed subsidiaries.
More below the fold.

Jardine Matheson: Collapsing The Circularity

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<div>
<p>In this flash Webinar, we welcome Insight Providers <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a>, <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> and <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> to discuss the recently announced acquisition of <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> by <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>.  </p>
</div>
<div>
<h3>The webinar was hosted on Monday, 8 March 2021, 10:30 SGT/HKT.</h3>
</div>
<p></p>
<p>Subscribe and listen on the go:</p>
<p><iframe src="https://open.spotify.com/embed-podcast/episode/19mOcuaxsIixnUOTCWeTTf" width="100%" height="232" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe></p>


In this flash Webinar, we welcome Insight Providers Angus Mackintosh, Brian Freitas and David Blennerhassett to discuss the recently announced acquisition of Jardine Strategic Holdings (JS SP) by Jardine Matheson Holdings (JM SP).  


The webinar was hosted on Monday, 8 March 2021, 10:30 SGT/HKT.


Subscribe and listen on the go:


Smartkarma Flash Webinar | Jardine Matheson Acquires Jardine Strategic

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<p>*<strong><em>Trip.com Should Continue to Get a Significant Upward Re-Rating: </em></strong>Mainland China has been at the epicenter of this tourism slowdown. If the virus impact continues to be held in check for 2-3 weeks post-Golden Week, the risk to tourism and confidence should start to seriously abate; and </p><p><strong><em>*Travel Rebound Underway:</em></strong> The good news is that mainland China hasn’t “officially” reported local COVID-19 infections since August 15<sup>th</sup>, although there were two asymptomatic cases disclosed in late September. After nine plus months of hiding and the Covid-19 pandemic largely under control in mainland China, the Ministry of Culture and Tourism stated that the first four days of the Golden Week holiday beginning October 1<sup>st</sup> witnessed nearly 425 mn local trips - nearly 80% of the level posted in 2019.</p>

*Trip.com Should Continue to Get a Significant Upward Re-Rating: Mainland China has been at the epicenter of this tourism slowdown. If the virus impact continues to be held in check for 2-3 weeks post-Golden Week, the risk to tourism and confidence should start to seriously abate; and *Travel Rebound Underway: The good news is that mainland China hasn’t “officially” reported local COVID-19 infections since August 15th, although there were two asymptomatic cases disclosed in late September. After nine plus months of hiding and the Covid-19 pandemic largely under control in mainland China, the Ministry of Culture and Tourism stated that the first four days of the Golden Week holiday beginning October 1st witnessed nearly 425 mn local trips - nearly 80% of the level posted in 2019.

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> is even wide at 51% discount to NAV, also adjusting for cross-holdings. Is the time ripe for the Keswicks to collapse the structure? Would a move back to Hong Kong help narrow the discount?</p>
</div>
<p><a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> was trading cheap on a NAV and stub basis this time last month (<a href="https://skr.ma/15ciq" target="_blank" rel="noopener">StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap</a>). It is now even cheaper. Time for a JCNC breakout.</p>
</div>
<div>
<p>Preceding my comments on Jardines, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<div>
<div class="content-remarks">
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>
</div>
</div>


This week in StubWorld ...



Jardine Matheson Holdings (JM SP) is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. Jardine Strategic Holdings (JS SP) is even wide at 51% discount to NAV, also adjusting for cross-holdings. Is the time ripe for the Keswicks to collapse the structure? Would a move back to Hong Kong help narrow the discount?

Jardine Cycle &amp; Carriage (JCNC SP) was trading cheap on a NAV and stub basis this time last month (StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap). It is now even cheaper. Time for a JCNC breakout.


Preceding my comments on Jardines, are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Would Jardines Move Back To HK?

Singapore

Mandarin Oriental International Limited is an owner and operator of luxury hotels, resorts, and residences. The Group now operates, or has under development, hotels in the Americas, Europe, Middle East, and North Africa. Mandarin Oriental International also operates, or has under development, residences at Mandarin Oriental.

Mandarin Oriental International (MAND SP)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Mandarin Oriental International (MAND SP)

Shangri-La Asia (69 HK): Stay Safe

Based on the average price to book - pre-COVID - I would expect around 33% upside from here, or HK$10.80/share, where it traded as recently as May...

David Blennerhassett

Jardine Matheson: Collapsing The Circularity

Only the headcount test stands in the way of the Strategic's privatisation completion. Elsewhere, Mandarin Oriental looks inexpensive, as does JCNC.

David Blennerhassett

Smartkarma Flash Webinar | Jardine Matheson Acquires Jardine Strategic

Join a webinar with Angus Mackintosh, Brian Freitas and David Blennerhassett to discuss the announced acquisition of Jardine Strategic by Jardine...

Smartkarma Research

Trip.com – All Systems Go

Trip.com - All Systems Go: Travel during Golden Week, and C-Trip looks to be biggest beneficiary as largest online travel agency.

Thomas J. Monaco

StubWorld: Would Jardines Move Back To HK?

This week in StubWorld ... Jardine Matheson Holdings (JM SP) is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. Jardine...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)