Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hongkong & Shanghai Hotels / Event-Driven

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<li>The Kadoorie family, <a href="https://www.smartkarma.com/entities/hongkong-shanghai-hotels" target="_blank" data-smartkarma-citation="entities:5274:1" rel="noopener">Hongkong &amp; Shanghai Hotels (45 HK)</a>'s major shareholder, is paying HK$2.63bn to increase its holding to 72.43% from 59.98%.</li>
<li>The price under the SPA is $12.80/share, a 92.5% premium to the undisturbed price. Shares promptly gained 19.5% yesterday. No Offer was triggered. </li>
<li>What is conveniently left out of the announcement, and in media articles, is the original owner of these shares - <a href="https://www.smartkarma.com/entities/tai-united-holdings-ltd" target="_blank" data-smartkarma-citation="entities:7166:1" rel="noopener">Tai United Holdings (718 HK)</a>.</li>
</ul>


The Kadoorie family, Hongkong &amp; Shanghai Hotels (45 HK)'s major shareholder, is paying HK$2.63bn to increase its holding to 72.43% from 59.98%.
The price under the SPA is $12.80/share, a 92.5% premium to the undisturbed price. Shares promptly gained 19.5% yesterday. No Offer was triggered. 
What is conveniently left out of the announcement, and in media articles, is the original owner of these shares - Tai United Holdings (718 HK).


HK&S Hotels (45 HK): Kadoories Mop Up Someone Else's Mess

Last week, Fast Retailing Co Ltd (9983 JP) may be materially impacted should the BOJ revamp its purchase programs; a decent arb return in Hyundai Heavy Industries (009540 KS) as the first round offering price is set; Japan Display Inc (6740 JP)'s fundraising headline is negative but the underlying trends look increasingly positive; Qualcomm Inc (QCOM US) should ditch its NXP Semiconductors NV (NXPI US) bid and accept Broadcom Limited (AVGO US)'s final offer; and Intouch Holdings Pcl (INTUCH TB) is at its "cheapest" level in near-on five years. EVENTSFast Retailing Co Ltd (9983 JP)(Mkt Cap: $40.1bn; Liquidity: $329mn)Travis Lundy dissected the BOJ's asset purchase programs, which do not appear in danger of ending.  If the BOJ continues to purchase ¥5.7tn of ETFs per year in the same proportion as they do now, there will be an ingravescent impact on a small number of stocks, including the reduction of Fast Retailing’s existing float by 40% in the next two years.To avoid that - and it should be avoided - there are two possible solutions: either the BOJ changes what indices it buys; or the Nikkei Inc changes the composition methodology of the Nikkei 225 Average.IF you believe that the Nikkei may change the index in order to reduce the BOJ and other ETF buyer's impact on single names, Fast Retailing would be a very large sell as the float would increase 150%, by Travis’ account. FamilyMart UNY Holdings Co Ltd (8028 JP) would see its float rise almost 60%. Travis also highlights a number stocks to short or go long should this change unfold.If you ever wanted to understand the history and implementation of the BOJ asset purchase program, this insight is one for the shelf for future reference.(link to Travis’ insight:  The BOJ's Ongoing ETF Impact - Is a Nikkei 225 Reshuffle in the Cards?)Hyundai Heavy Industries (009540 KS) (Mkt Cap: $7.2bn; Liquidity: $31mn)The first round offering price was set on the Jan 29 at ₩106,000 and Jan 31 was the ex-rights date for this rights offering.At the current price of ₩130,000 (as at the close on Friday) and applying a final offer price of  ₩106,000, the arb profit size for the lower end of the subscription right price will be ₩8,270 which will give a 6.36% return. The upper end of the subscription right price will offer an arb profit of ₩6,304 which will be a 4.85% return (excluding transaction costs). Full workings are expounded in Sanghyun Park ’s note.(link to Sanghyun’s insight:  Hyundai Heavy Rights Offering - Status Update)Japan Display Inc (6740 JP) (Mkt Cap: $1.2bn; Liquidity: $22.4mn)A Nikkei article reported that JDI could face delays raising funds with a large Chinese player, as BOE and Hon Hai back away from a potential investment due to a government-backed pivot towards chip manufacturing, not displays.Mio charts a different tack from the article. He &amp; SC Capital had previously discussed in Japan Display--IPhone X Weakness May Be a Godsend that  JDI's capital requirements are less pressing now and the urgency of a shift to OLED is not as high.A Toshiba Memory IPO could also leave the INCJ with significant excess capital and some of it could be deployed in JDI. Sony is also a player which could be interested in funding JDI/JOLED with its resurgent profit and even its mobile division starting to generate small but steady profits.If restructuring costs are lower than expected and Full Active Display demand is strengthening then JDI's capital requirements should be lower. If the company only needs, say, ¥50-100bn, Mio believes a combination of the INCJ and Sony could very comfortably accommodate that.(link to Mio’s insight:  Delay in Financing Partnership - This May Be Contrarian but We Like This News)Celltrion Inc (068270 KS)(Mkt Cap: $31.6bn; Liquidity: $481mn)The KRX officially said on Feb 7 that Celltrion Inc (068270 KS) would be listed on the KOSPI on Feb 9 leading to a massive index rebalancing activity on Feb 7 &amp; 8, and huge selling in Celltrion on these two days prior to the Feb 9 listing day. Short sellers utopia right?Short sellers appeared in droves, touching 1mn shares on both the 7th &amp; 8th. Or ₩600bil in total or 1.7% of market cap. It’s been 7 years since short sellers went this large in Celltrion. Shares declined 9.92% on the 7th, but after an additional 6.84%  decline on the 8th, shares reversed and ended the day up 6.02%. Bizarre.The focus is now on another index rebalancing. It is estimated that about ₩30tn worth of passive funds are mirroring the KOSPI 200, and about ₩1tn worth of passive money will newly flow into Celltrion around the time when it joins the KOSPI 200 on Mar 8.(link to Sanghyun’s insight:  KOSDAQ 150 Rebalancing &amp; Celltrion Short Selling During Feb 7-8)Kakao Corp (035720 KS) (Mkt Cap: $8.2bn; Liquidity: $146mn)A total of 8,261,731 GDRs got listed on the SGX on the 2 Feb and ~83% were converted (on a 1:1 basis) in the first few days into underlying shares. That still leaves 17% remaining.Taking in into account foreign selling in the underlying shares, Sanghyun estimates only 30% of the converted GDRs were actually turned into profit. That leaves ~70% of the converted shares sitting in the hands of arb traders who are biding their time to unload their Kakao underlying shares. Or about 6-7% of the total number of issued shares.This means a short-term stock overhang. Arb traders aren’t going to sell all of their shares at once. But given Kakao's struggle in the local stock market (mainly due to the Korean government taking a stricter stance on the cryptocurrency exchanges), a rush for the exit from arb traders cannot be ruled out. (link to Sanghyun’s insight:  Kakao GDR-Underlying Share Conversion Status Update)M&amp;AQualcomm Inc (QCOM US) (Mkt Cap: $92.4bn; Liquidity: $723mn)As widely speculated, Broadcom Limited (AVGO US) returned with an improved and final offer of $82 per share, up from $70. Arun George believes Qualcomm shareholders should accept.The offer price places an EV/Sales of 5x for Qualcomm’s standalone ops, a slight premium to the median takeout EV/Revenue of 4.8x for major semiconductor M&amp;A deals since 2015.Aran also considers the risk-reward on antitrust merger clearance to be attractive as Broadcom is disposing of overlapping product lines and is also providing a chunky reverse break-up fee.Broadcom’s offer is premised on either Qualcomm acquiring NXP Semiconductors NV (NXPI US) at $110/share or the transaction being terminated. Elliott Management owns 6% of NXP and values the company at $135 per share. Acceptances for the offer are at 1.7%. It’s a big ask for Qualcomm to convince shareholders to bid against the odds for NXP, one with uncertain regulatory timelines, and one that will lead to Broadcom walking.(link to Arun's insight: Qualcomm: Just Say Yes to Broadcom)Toyo Kohan Co Ltd (5453 JP) (Mkt Cap: $660mn; Liquidity: $3.4mn)Toyo Seikan Group Holdings L (5901 JP) announced a Tender Offer to buy out minorities of its 47.5%-owned subsidiary Toyo Kohan.This deal has a minimum condition of Toyo Seikan getting over 66.7% of shares held. If they achieve 90%, Toyo Kohan will buy back minorities directly. If only 67%, Toyo Seikan will ask for a shareholder meeting to approve a reverse share split so that Toyo Kohan squeezes out all investors with less than one round lot. Though a  decent premium against the 3-month average, the Tender Offer of  ¥718/share is not a significant premium vs. the last close of ¥626/share and is probably too cheap by a turn of EBITDA in terms of getting the right price for minorities. (link to Travis’ insight:  Toyo Seikan To Take Out Toyo Kohan Minorities)Changyou.com Ltd (ADS) (CYOU US) (Mkt Cap: $1.6bn; Liquidity: $8.7mn)The original proposal, at US$42.10/ADS, was considered low-ball. Then again, Chinese ADR/ADS privatisations tend to dance to a different beat and can be well worth your while taking your cause to the courts. So when the Chairman stated that he was reviewing the proposed purchase price, how much lower can this offer go?Pranav Rao believes a binding proposal (if announced) will (or should) not be below ~US$37/ADS, which works out to roughly 2x CYOU's cash and cash equivalents, and 9x LTM earnings ex-cash and 6.6x forward EV/EBITDA, the average of the China Mobile Games Adr (CMGE US) and Shanda Games Ltd (GAME US) proposals.(link to Pranav’s insight:  CYOU: Shanda Games 2.0?)Kawasaki Kasei Chemicals Ltd (4117 JP) (Mkt Cap: $123mn; Liquidity: $1.1mn)Air Water Inc (4088 JP) announced it would launch a Tender Offer to buy out minorities of its 47.0%-owned subsidiary Kawasaki Kasei, a producer of chemicals for the dye and pigment industries and for pesticides. The Tender Offer is at ¥340/share, which is a 20-year high or 10+x EV/EBITDA on a trailing 12mo EBITDA.That’s probably enough to push this through although EBITDA is expected to not quite double between March 2018 and March 2021, using the company's own management forecasts. That’s places the offer price at more like 5x EV/EBITDA 2021E.Simplex holds around 12% but according to Travis, but their small-cap activist/engagement funds have not been publicly noisy. (link to Travis’ insight: Air Water To Take The Rest of Kawasaki Kasei Chem)Ucs Co Ltd (8787 JP) (Mkt Cap: $313mn; Liquidity: $0.2mn)As previously speculated in Travis’ insight Japan CVS Sector: Boots On the Ground, FamilyMart UNY Holdings announced it would conduct a share exchange to clear out minorities in UCS. The cash value of ¥1,830/share is +80% from that insight a year ago.There will be a vote for a consolidation and squeeze-out of minorities on April 6th which will be carried because of UNY's 81% stake in the target, and UCS shares will be delisted at the end of April. The merger will take place on May 1st, and investors will get their money at the end of July. So ... what to do? Not much. This deal will get done. Even if every single minority investor votes against – and it's not clear people would be upset with the price - it still gets done. If you had good terms for leverage, you would buy this at a discount of a bit more than 2%. (link to Travis’ insight: UCS (8787 JP) Minorities To Get Squeezed Out)Calgon Carbon Corp (CCC US) (Mkt Cap: $1.1bn; Liquidity: $28.6mn)CTFN updated the Calgon Carbon-Kuraray Co Ltd (3405 JP) deal regarding CFIUS approval with sources indicating "nothing is getting done in 30 days … and 75 days is absolutely normal for Japanese deals".CFIUS has been backlogged for a while, so entering into an extended investigation is not an immediate indication of an issue. Several other CFIUS attorneys contacted by CTFN agreed the additional time is indicative of what has become the “new norm” at CFIUS when it comes to reviews. (link to CTFN’s insight: Calgon Carbon-Kuraray Extended CFIUS Review Routine)Very, very briefly in M&amp;A land ...Tai United Holdings Limited (718 HK) (Mkt Cap: $757mn; Liquidity: $0.9mn)I briefly touched on this unusual takeunder (discussed in  Pranav’s insight Tai United: Unconditional Take-Under) after it gained 21% one day, before falling 11% the next. It closed down 14% this week, 6.8% just on Friday; but at $0.96/share, it is still trading through the $0.92 offer price. Shui On Land Ltd (272 HK)  (Mkt Cap: $2.6bn; Liquidity: $8.5mn)Shares closed up 2% for the week, but boosted by a 10.73% gain on Friday on the largest volume (264mn shares or 3% of o/s shares) since its 2006 listing. Last week I mentioned the company had released an announcement that Lo Hong Sui, the controlling shareholder, is in "talks with banks for financing and has from time to time been reviewing options with respect to his interest in the Company". STUBSIntouch Holdings Pcl (INTUCH TB) (Mkt Cap: $5.6bn; Liquidity: $13.4mn)Intouch's discount to NAV is at a 12-month low while the Intouch/ Advanced Info Service Pcl (ADVANC TB) ratio is nudging a five-year trough. That brief, July 2013 low occurred when Temasek (via affiliate Cedar) reduced its holding in Intouch. It also coincided with Intouch bidding for a digital TV license, but ultimately opting out.  Thaicom announced an operating loss in FY17 after booking impairment provisions. It is also at loggerheads with the government over satellite usage, which has resulted in shares halving in the past year. Yet Thaicom comprises only 2% of Intouch's NAV. And net assets at the stub level remain static.From a long-term viewpoint, Intouch is cheap, be it on a discount to NAV, on a simple Intouch/AIS ratio or in terms of the dividend spread.  China Everbright Ltd (165 HK) (Mkt Cap: $3.5bn; Liquidity: $7.7mn)China Everbright Ltd (165 HK) is around the "cheapest" inside a year. 3.95%-held China Everbright Bank Co A (601818 CH) ("CEB") and 27.5%-held Everbright Securities Co (A) (601788 CH) ("CES") comprise 98% of market cap. My discount to NAV of 28% compares with a 12-month average of ~22%. The stub comprises private equity funds management in HK, with net assets (as at 30 June 2017) of ~HK$28bn allocated to global PE projects, secondary market investments, structured finance, fund incubation - amongst others.  There is clear value in these stub ops as reflected the March 2017 listing of 33.6%-held China Aircraft Leasing Group Holdings Ltd (1848 HK). CEL also sold 65mn shares in CES in the 3Q17 (reducing its holding to 1.74bn shares), the first reduction (or any change for that matter) in its stake since CES' listing in 2009. This paves the way for a further selldown. My discussions with management also indicate an intention to list medical, logistics and education companies this year, dependent on CSRC approval.Green Cross Holdings Corp (005250 KS) (Mkt Cap: $1.6bn; Liquidity: $3.9mn)GCH looks fully priced at a premium to NAV of ~25% against a 52-week average of ~13%, if inputting book value for the de-consolidated stub ops.Around 90% of Holdings' revenue and 80% of EBITDA is sourced from 50.1%-held Green Cross Corp (006280 KS) ("Corp"), according to Bloomberg FY16 data. Even applying Corp's multiples to the de-consolidated stub ops equates to a premium to NAV. I can't see a justification for this although the premium first occurred near-on a year ago.  Links to my insights: Keeping Intouch StubWorld - Set-Up &amp; Unwind Extremes: China Everbright; Green Cross

Last Week in Event SPACE - Fast Retailing, Hyundai Heavy, Japan Display, Qualcomm, Intouch

Last week, the potential trading opportunities in BGF Co Ltd (027410 KS)'s share swap; Philippine Long Distance Tel (TEL PM) may be at risk should the current duopoly be dismantled; IDFC Ltd (IDFC IN) finds a Capital partner; a higher DPU from the Sekisui House Si Residential (8973 JP) / Sekisui House Ltd (1928 JP)  merger is, at least, attractive; Pou Sheng Intl Holdings Ltd (3813 HK) relocates to granddad's residence; and Television Broadcasts Ltd (511 HK)'s buyback lapses and major shareholders are being sounded out.EventsBGF Co Ltd (027410 KS) (Mkt Cap: $471mn; Liquidity: $8.1mn)Sustinvest and I tag-teamed on this tender offer/share swap, which will commence on the 14th February. With BGF Chairman Hong Suk-jo's seeking to solidify his stake in the BGF Co Ltd (027410 KS)  (Holdco), BGF Retail Co Ltd (282330 KS) (Opco)'s share price has not wholly unexpectedly increased, whereas the Holdco has declined since the 8 December 2017 listing/relisting.Personally, I would simply follow Hong Suk-jo's lead and buy the Holdco as and when it dips to around the implied share swap price. (The final issue price will be determined on the 7-9 Feb VWAP).  BGF has also underperformed a basket of peers since the October suspension date, prior to the Holdco/Opco spin-off.Orion Holdings Corp (001800 KS) / Orion Corp (271560 KS) provided a similar trade thesis. Back on Sept 28th, Douglas Kimrecommended the Holdco over the Opco -  or "go with the owner" - and Orion Holdings is up 22.2% from that note, while Orion Corp is up 20.9%, so a slight edge.Sustinvest is bearish on BGF and previously concluded the Holdco/Opco spin-off did not i) improve corporate governance; ii) maximise management efficiency and transparency, and (iii) enhance the company and shareholder value.links to: My insight: The BGF Retail Swap Shop Sustinvest's insight:  BGF and BGF Retail - Tender Offer and Stock SwapMirae Asset Daewoo Securities Co Ltd (006800 KS) ("MAD")(Mkt Cap: $6.9bn; Liquidity: $36.1mn)MAD's first round offering price was set at ₩5,000, as expected.  On Jan 23, the ex-rights day, the base price of MAD's common was adjusted to ₩9,600 and prefs to ₩6,080. The same day, the common had a strong "share price restoration" with a 9.38% gain. That uptick in the common may not solely have been due to the ex-rights date factor, but an improved outlook for the local brokerage industry. This may lead to a higher dividend of ₩200- ₩300 in FY18, against the market consensus of ₩165. What to do?  If Mirae delivers strong results this year as promised by the bankers, then there is a high probability that the value of the class B pref shares will have increased as much as the common shares increased on Jan 23. Therefore, you would have to adjust the initial class A pref-class B pref price spread to better reflect higher dividends for class B pref this year. This would then compensate for the potential loss on the common share futures contracts that Sanghyun Park recommended for hedging the purchase of the class B pref shares. All the supporting calcs and numbers for the ex-rights, offering price and hedging in Sanghyun's note.(link to Sanghyun's insight: Mirae Asset Daewoo Pref Issuance - Status Update) Philippine Long Distance Tel (TEL PM)(Mkt Cap: $6.4bn; Liquidity: $3.7mn)New Street Research discussed President Duterte’s push for a new entrant, which resulted in the weighted aggregated telecoms out-performance of 20% in 1H17 reverting to a 21% under-performance in 2H. Recent official statements suggest a third mobile entrant will be chosen by 1Q18 end, with (China Telecom (728 HK)) the frontrunner, although Chinese involvement in the telecoms sector may raise concerns on national security.Congress is seeking to remove telecommunications as a public utility, allowing foreign ownership restrictions (currently 40%) to be lifted, easing the way for a foreign entrant.  New Street questions how attractive the Philippines is for a new entrant given issues around interconnect, equipment sharing, lack of engineers, ownership rules, lack of suitable partners etc.PLDT is at risk from an increase in capex from a new entrant. On the flipside, fixed revenue growth should be robust in the medium term, where PLDT is best exposed, helped by low penetration rates.  Furthermore, the topography of the Philippines will prove challenging for a new entrant.(link to New Street's insight: Philippine Telcos: Third Entrant Noise to Persist)CJ O Shopping Co Ltd (035760 KS) (Mkt Cap: $1.3bn; Liquidity: $7.9mn)The merger ratio of CJ O Shopping and CJ E&amp;M was set at 1: 0.4104397 (CJ O Shopping : CJ E&amp;M Corp (130960 KS) ) and prices have quickly moved to a level where you wouldn't be able to seize meaningful arbitrage opportunities.A possible short squeeze unfolded on Jan 17th (CJ O up 8.93%). Sanghyun speculates whether there is more to come. Korea NPS (KNPS for short) is by far the largest and only 'meaningfully active' stock lender, and it owns an 11.47% stake in CJ O Shopping. KNPS has been actively exercising voting rights, so there is a high possibility that KNPS will soon make an early reimbursement request to those stock borrowers. The problem is, not a lot of the KNPS-owned CJ O Shopping shares are understood to be currently loaned.Could CJ O Shopping's institutional shareholders (particularly Mirae Asset) be really incentivized to oppose this merger? That’s not known. For the time being, this arb situation is unexciting.(link to Sanghyun's insight: CJ O Shopping &amp; CJ E&amp;M Merger - Arbitrage Opportunity Assessment)Hanssem Co Ltd (009240 KS) (Mkt Cap: $3.8bn; Liquidity: $10.6mn)Shinsegae Co Ltd (004170 KS) has acquired Casamia, the sixth largest home furnishing provider in Korea for ₩180bn (92% stake). Casamia had sales of ₩122bn in 2016 and net profit of ₩8.4bn, implying a purchase consideration of 23x earnings and 1.6x sales. With the acquisition of Casamia by Shinsegae, the three major Korean home furnishing companies all have their strategies in place for the home furnishing market: Lotte has the partnership with IKEA, Hyundai Dept Store has Hyundai Livart Co Ltd (079430 KS), and Shinsegae now owns Casamia. As a result of this acquisition by Shinsegae, Casamia should be able to expand its business in Shinsegae's department stores nationwide.The acquisition will make the home furnishing market even more competitive, affecting the top three local, home furnishing companies in Korea, including Hanssem Co Ltd (009240 KS), Hyundai Livart, and Fursys Inc (016800 KS).(link to Douglas' insight: Korea M&amp;A Spotlight: Shinsegae Acquires Casamia)M&amp;AMinato Bank Ltd/The (8543 JP) (Mkt Cap: $786mn; Liquidity: $1mn)Travis wrote again about *The Most Interesting Arb in the World*, which is the partial tender offers by Resona Holdings Inc (8308 JP) for Sumitomo Mitsui Financial Group (8316 JP)’s stakes in Minato Bank and Kansai Urban Banking Corp (8545 JP) (“KUB”) in a bit over two week’s time, followed by an end-March scrip exchange into new holdco Kansai Mirai Financial Group, which is to be majority controlled by Resona.Travis notes that the weakening of the share prices of Minato Bank and KUB means the partial tenders become more interesting in their own right, and the slight widening of the Minato/KUB relative discounts means there is a scrip arb trade to be made even without considering the tender offers.In addition, the basket of KMFG names against a basket of equally-sized regional banks shows KMFG is near its relative 18month low.Both Minato and KUB are illiquid averaging a bit over US$1mn/day, each, but there is room to trade this for smaller players. This is a somewhat technical long/short arbitrage trade. It is an even-more-technical risk arb trade, but the spreads are quite attractive. (link to Travis' insight: Kansai Mirai:  Still The Most Interesting Arb In The World) IDFC Ltd (IDFC IN) / Capital First Ltd (CAFL IN)After calling off a proposed merger with the Shriram Group due to a disagreement in valuation, IDFC has found a new partner in Capital First Ltd (CAFL). Pursuant to the merger which is subject to regulatory and shareholders approval,  IDFC will issue 139 shares for every 10 shares of CAFL, valuing CAFL at ~2.3x FY19E P/B. According to Das Capital Management and Advisors, the post-merger combined entity will have an AUM of Rs.1.3 tn (US$20.6bn) and a distribution network of 250 branches and 13000 micro ATM points, serving more than 7 mn customers across the country. Das Capital believes the merger will offer significant synergies to both IDFCB and Capital First as both have businesses which are complementary to each other, with very little overlap. IDFCB may be the larger beneficiary as it secures a high-quality retail asset without paying an excessive price. There will, however, be near-term regulatory and integration challenges.(link to Das Capital's insight: IDFC Bank-Capital First Merger, Win-Win for Both Entities)  Sekisui House Si Residential (8973 JP)  (Mkt Cap: $1.2bn; Liquidity: $2mn)On the 24th of January 2018, J-REITs Sekisui House Reit Inc (3309 JP) ("SHR"), an office and hotel REIT with assets in the three major metropolitan areas of Japan (Tokyo, Osaka, Nagoya), and Sekisui House Si Residential (8973 JP) ("SHI") announced  SHR will issue shares to SHI shareholders and SHR will act as the surviving entity.This looks like a pretty clean deal and will likely go through. The great thing about REITs in Japan is that they are quite transparent about their assets, earnings, costs, yields, occupancy, etc. Neither company comes across as particularly compelling to Travis Lundy – SHR &amp; SHI go from being two small REITs to being a slightly larger REIT. However, the forecast for an 11% higher DPU a year from now is attractive. Expect the ratio to trade very tight.(link to Travis' insight: Sekisui REITs to Merge - An Extremely Stable (Genius?) Portfolio)Pou Sheng Intl Holdings Ltd (3813 HK; "PSI")(Mkt Cap: $1.3bn; Liquidity: $3.3mn)Pranav Rao looked at this relatively straightforward deal wherein Pou Chen (9904 TT) made a scheme offer at HK$2.03/share, a ~32% premium to last close and at the 52-week high for Pou Sheng. A 10% blocking stake is equivalent to 198.7mn shares, or 3.72% of total shares outstanding.Yue Yuen Industrial Hldg (551 HK) ("YYI") holds 62.8% in PSI and needs a simple majority vote to sell its stake. Pou Chen, the major shareholder in YYI with 49.98%, will abstain from voting. Pranav does not see any pushback given the offer is in line with peers on a forward PE (14.3x) and is at a premium on a forward EV/EBITDA (8.3x vs. peers of 7.2x).YYI shareholders will receive a special dividend from the disposal, up to ~HK$4.14/share, or ~12% of YYI's share price.Given the deal dynamics, Pranav would be long Pou Sheng International at HK$1.95-1.96 for an annualized return of 8-10%, assuming payment in mid-May.(link to Pranav's insight: Pou Sheng International: Privatization by Grandparent)Television Broadcasts Ltd (511 HK) (Mkt Cap: $1.6bn; Liquidity: $2.1mn)As expected, and discussed in my note last Monday, the Offer/Buyback has now lapsed. The Buyback was a management-led initiative premised on excess cash on the balance sheet. Once the Offer lapses, the company can revert to its $2.60/share dividend policy (~9.1% yield) and/or pay a special dividend, suggesting limited downside. The $9.60/share special dividend proposed by Silchester appears optimistic. TVB is up 5.2% since the lapse announcement.As an aside, there are media reports Silchester has been approached by a third party to sell its ~14% stake.(link to my insight: TVB - Back to the Beginning)Tai United Holdings Limited (718 HK)(Mkt Cap: $671mn; Liquidity: $0.4mn)Songbird SG Pte. Ltd has acquired ex-chairman Chua Hwa Por’s 73.98% stake in Tai United at $0.92/share and will now make an unconditional MGO at the same price. That offer price is 9.8% below last Friday’s closing price of $1.02 and represents an 18 month low.  It is Songbird’s intention to maintain Tai United’s listing.There is not a lot to do in this takeunder. Pricing appears okay on a 0.9x adjusted book value, according to Pranav. Tai United still holds an 11.55% stake in Hongkong &amp; Shanghai Hotels (45 HK), having last acquired shares in October last year.I'd be interested to know who is behind Songbird but the announcement is light on details. Also, in a period of time when property assets, where Tai United is primarily vested, have consistently risen, I'm curious why Chua has agreed to a discounted exit. For some further background on Chua/Tai United, please refer to my earlier note Hongkong &amp; Shanghai Hotels - Check-Out Time.(link to Pranav's insight: Tai United: Unconditional Take-Under)StubsHang Lung Group Ltd (10 HK) / Hang Lung Properties Ltd (101 HK)A 5.1% weekly gain for HLP sent the share price to a 52-week high. HLG's discount to NAV is now out to 28.5% compared to a 23% 12-month average. A simple ratio (HLG/HLP) is the lowest since June 2016.Source: Bloomberg, HKExThe Hong Kong Hang Seng Property Index also touched a 52-week on Friday, as did the HSI. They are highly correlated. As can be seen in the chart on the far right, both Hang Lung's have underperformed the HSI.I don't see any specific new news on HLP following the Amoycan sale. HLP has liquidity on its side, and is well covered on the street, with MS bumping its target price (to HK$22 from $19.50) last week. There is no coverage on HLG, according to Bloomberg. But HLG looks inexpensive for a passive simple single-stock holdco.

Last Week in Event SPACE - BGF, PLDT, IDFC, Sekisui, Pou Sheng, TVB, Cifi

<a href="https://www.smartkarma.com/entities/5274" target="_blank" data-smartkarma-citation="entities:5274:1">Hongkong &amp; Shanghai Hotels (45 HK)</a> ("HSH") is up 40% since late June after <a href="https://www.smartkarma.com/entities/7166" target="_blank" data-smartkarma-citation="entities:7166:1">Tai United (718 HK)</a> rapidly compiled a 10.21% stake. <a href="https://www.smartkarma.com/entities/14544" target="_blank" data-smartkarma-citation="entities:14544:1">Sino Hotels Holdings Ltd (1221 HK)</a> has also <a href="http://sdinotice.hkex.com.hk/filing/di/NSForm1.aspx?fn=86587&amp;sa2=cs&amp;sid=20350101&amp;corpn=Hongkong+and+Shanghai+Hotels%2c+Ltd.%2c+The&amp;sd=22%2f09%2f2016&amp;ed=05%2f07%2f2017&amp;sa1=cl&amp;scsd=13%2f07%2f2016&amp;sced=13%2f07%2f2017&amp;sc=45&amp;src=MAIN&amp;lang=EN&amp;" target="_blank">disclosed</a> it has &gt;5% in HSH. Since November 2015, Tai United's shareholding and investment portfolio has radically transformed. With a market cap of just US$130mn in February last year, Tai's holding in HSH is now worth around US$330mn, or 37% of its market cap. A background check on Tai United and other musings below the fold.

Hongkong &amp; Shanghai Hotels (45 HK) ("HSH") is up 40% since late June after Tai United (718 HK) rapidly compiled a 10.21% stake. Sino Hotels Holdings Ltd (1221 HK) has also disclosed it has &gt;5% in HSH. Since November 2015, Tai United's shareholding and investment portfolio has radically transformed. With a market cap of just US$130mn in February last year, Tai's holding in HSH is now worth around US$330mn, or 37% of its market cap. A background check on Tai United and other musings below the fold.

Hongkong & Shanghai Hotels - Check-Out Time

Hong Kong

Tai United Holdings Limited engages in commodities and securities trading, distressed assets investing, tungsten mining, and medical equipment distribution around the world.

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