Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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&nbsp;Evergrande plans to raise ~US$600m through a top-up placement. Fundamentally we would be inclined to avoid the deal given the stock has more than doubled in the month of April alone and is now trading above the RNAV estimates of most analysts vs its peers who are still trading at a discount.However,&nbsp;the shares have been amongst the top traded shares in southbound flows,&nbsp;and the risk of share placement (post CR Land placement) have been well highlighted by analysts. Thus, given the recent share price performance, the deal shouldn't really be a surprise to the market. Furthermore, the shares are being offered at a 8-10% discount vs. ~5% dilution &nbsp;while the recent rise in stock liquidity means the deal represents less than 7 days of recent trading volumes, thus, making it easy to digest, should markets remain supportive. Thus, for momentum investors we would be inclined to take the deal.&nbsp;

&nbsp;Evergrande plans to raise ~US$600m through a top-up placement. Fundamentally we would be inclined to avoid the deal given the stock has more than doubled in the month of April alone and is now trading above the RNAV estimates of most analysts vs its peers who are still trading at a discount.However,&nbsp;the shares have been amongst the top traded shares in southbound flows,&nbsp;and the risk of share placement (post CR Land placement) have been well highlighted by analysts. Thus, given the recent share price performance, the deal shouldn't really be a surprise to the market. Furthermore, the shares are being offered at a 8-10% discount vs. ~5% dilution &nbsp;while the recent rise in stock liquidity means the deal represents less than 7 days of recent trading volumes, thus, making it easy to digest, should markets remain supportive. Thus, for momentum investors we would be inclined to take the deal.&nbsp;

Momentum has been too strong to ignore, though fundamentals don't warrant buying

Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Thematic (Sector/Industry)

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on offshore bonds) and on Jan 12 got a waiver on a HK$400 million loan from HSBC.&nbsp; The notes dropped 40 percent last month as some of Kaisa’s Shenzhen projects were blocked and executives including founder Kwok Ying Shing quit. They continued to fall in January, reaching 29.9 cents on the dollar on Jan. 7. Its $800 million of 8.875 percent 2018 bonds also plunged.

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on offshore bonds) and on Jan 12 got a waiver on a HK$400 million loan from HSBC.&nbsp; The notes dropped 40 percent last month as some of Kaisa’s Shenzhen projects were blocked and executives including founder Kwok Ying Shing quit. They continued to fall in January, reaching 29.9 cents on the dollar on Jan. 7. Its $800 million of 8.875 percent 2018 bonds also plunged.

China Property / Debt - when Kaisa broke our Trust

China

China Evergrande Group is an integrated residential property developer. The Company, through its subsidiaries, operates in property development, investment, management, finance, internet, health, culture, and tourism markets.

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Evergrande (3333 HK)

Momentum has been too strong to ignore, though fundamentals don't warrant buying

Evergrande plans to raise ~US$600m through a top-up placement. Fundamentally we would be inclined to avoid the deal given the stock has more than...

Sumeet Singh

China Property / Debt - when Kaisa broke our Trust

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on...

David Millhouse

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