Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a> spiked 12.3% yesterday in response to media reports (like <a href="https://www.thestandard.com.hk/breaking-news/section/4/202702/China-Mobile-explores-acquiring-Hong-Kong-telecom-firm-HKBN%C2%A0" target="_blank" rel="noopener">this one</a>) that <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> was running a ruler over the company.</li>
<li>This follows Bloomberg reports last month and in May last year, that I Square's HGC Global Communications and numerous PE outfits were kicking tyres of the Hong Kong broadband play.</li>
<li>Over the weekend, Hong Kong's security chief was quoted as saying "the internet could become a major loophole when maintaining national security". <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT (6823 HK)</a> is a potential privatisation candidate. </li>
</ul>



HKBN Ltd (1310 HK) spiked 12.3% yesterday in response to media reports (like this one) that China Mobile (941 HK) was running a ruler over the company.
This follows Bloomberg reports last month and in May last year, that I Square's HGC Global Communications and numerous PE outfits were kicking tyres of the Hong Kong broadband play.
Over the weekend, Hong Kong's security chief was quoted as saying "the internet could become a major loophole when maintaining national security". HKT (6823 HK) is a potential privatisation candidate. 


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.

<ul>
<li>
<a href="https://www.reuters.com/markets/deals/china-mobile-explores-acquiring-hong-kong-telecom-firm-hkbn-sources-2023-04-18/" target="_blank" rel="noopener">Reuters reported</a> that <a href="https://www.smartkarma.com/entities/china-mobile" target="_blank" data-smartkarma-citation="entities:35371:1" rel="noopener">China Mobile (600941 CH)</a> is exploring a potential buyout of <a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a>. The shares surged 12.3% to HK$6.57, above I Squared’s rumoured HK$6.00 offer. </li>
<li>To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme offer of around HK$8.50 would likely be required.</li>
<li>PAG is also a rumoured bidder. The flurry of interest around HKBN suggests a good probability that one of the bidders will come through with a formal offer.</li>
</ul>



Reuters reported that China Mobile (600941 CH) is exploring a potential buyout of HKBN Ltd (1310 HK). The shares surged 12.3% to HK$6.57, above I Squared’s rumoured HK$6.00 offer. 
To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme offer of around HK$8.50 would likely be required.
PAG is also a rumoured bidder. The flurry of interest around HKBN suggests a good probability that one of the bidders will come through with a formal offer.


HKBN (1310 HK): China Mobile Is the Latest to Show Interest

<ul>
<li>
<a href="https://www.bloomberg.com/news/articles/2023-02-28/hong-kong-s-hkbn-is-said-to-get-1-billion-buyout-offer-from-hgc" target="_blank" rel="noopener">Bloomberg reported</a><a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a> has received a takeover offer from HGC Global Communications at a valuation of more than US$1 billion (implies around HK$6 per share).</li>
<li>The shares rose 11.6% to HK$5.59 before entering a trading halt. The rumoured price is underwhelming compared to historical multiples and share prices. </li>
<li>HKBN has a relatively concentrated shareholder register which suggests that the rumoured takeover premium of around 20% is not going to cut it.</li>
</ul>



Bloomberg reportedHKBN Ltd (1310 HK) has received a takeover offer from HGC Global Communications at a valuation of more than US$1 billion (implies around HK$6 per share).
The shares rose 11.6% to HK$5.59 before entering a trading halt. The rumoured price is underwhelming compared to historical multiples and share prices. 
HKBN has a relatively concentrated shareholder register which suggests that the rumoured takeover premium of around 20% is not going to cut it.


HKBN (1310 HK): Trading Halt, HGC’s Rumoured Takeover Offer

<ul>
<li>A new <a href="https://std.stheadline.com/realtime/article/2058629/%E5%8D%B3%E6%99%82-%E8%B2%A1%E7%B6%93-%E9%A6%99%E6%B8%AF%E5%AF%AC%E9%A0%BB%E8%B3%A3%E7%9B%A4%E8%86%A0%E7%9D%80%E9%80%BE3%E5%80%8B%E6%9C%88-%E6%B6%88%E6%81%AF-%E8%82%A1%E6%9D%B1%E9%80%80%E5%87%BA%E9%9C%80%E6%B1%82%E5%BC%B7%E7%83%88-%E4%B8%80%E6%97%A6%E8%A7%B8%E7%A4%81-%E6%9C%AA%E4%BE%86%E4%BD%9C%E5%83%B9%E5%8B%A2%E6%9B%B4%E4%BD%8E" target="_blank" rel="noopener">Sing Tao Daily article</a> on <a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a> claims that <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>’s offer is a stalemate, and a potential I Squared offer faces regulatory challenges. </li>
<li>The article is being unduly alarmist. The concerns raised on the China Mobile offer remain premature, and there remains a medium-to-high probability of a competing offer from I Squared. </li>
<li>Last Friday, MBK converted its vendor loan notes (VLN) into shares, which could signal that an I Squared competing offer is imminent. </li>
</ul>


A new Sing Tao Daily article on HKBN Ltd (1310 HK) claims that China Mobile (941 HK)’s offer is a stalemate, and a potential I Squared offer faces regulatory challenges. 
The article is being unduly alarmist. The concerns raised on the China Mobile offer remain premature, and there remains a medium-to-high probability of a competing offer from I Squared. 
Last Friday, MBK converted its vendor loan notes (VLN) into shares, which could signal that an I Squared competing offer is imminent. 


HKBN (1310 HK): Another Sing Tao Article as Speculation Swirls on MBK’s Loan Notes Conversion

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" rel="noopener">HKBN Ltd (1310 HK)</a> shares declined 4.4% after a <a href="https://std.stheadline.com/daily/article/2657779/%E6%97%A5%E5%A0%B1-%E8%B2%A1%E7%B6%93-%E4%B8%AD%E7%A7%BB%E5%8B%95%E8%B3%BC%E9%A6%99%E6%B8%AF%E5%AF%AC%E9%A0%BB%E6%81%90%E8%A7%B8%E7%A4%81" target="_blank" rel="noopener">Sing Tao Daily article</a> claimed that the precondition satisfaction of <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>’s offer is at a stalemate. </li>
<li>The mainland regulatory authorities have not provided any feedback on the approval process. The <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> deal break is cited as a cautionary tale.</li>
<li>While the China TCM deal break taught us that no deal is safe, even an SOE-sponsored deal, the article's concerns have little merit. This is a buy.</li>
</ul>



HKBN Ltd (1310 HK) shares declined 4.4% after a Sing Tao Daily article claimed that the precondition satisfaction of China Mobile (941 HK)’s offer is at a stalemate. 
The mainland regulatory authorities have not provided any feedback on the approval process. The China Traditional Chinese Medicine (570 HK) deal break is cited as a cautionary tale.
While the China TCM deal break taught us that no deal is safe, even an SOE-sponsored deal, the article's concerns have little merit. This is a buy.


HKBN (1310 HK): A Press Report Causes Trepidation

Hong Kong

HKT Trust and HKT Ltd trade together as a stapled security.  HKT Ltd provides telecommunications services.  The Company's business provides telecommunications products and services including local telephony services, local data and broadband services, international telecommunications services, and other services.

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HKT Ltd (6823 HK)

If HKBN Gets Taken Out, Who's Next?

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David Blennerhassett

HKBN (1310 HK): China Mobile Is the Latest to Show Interest

To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme...

Arun George

HKBN (1310 HK): Trading Halt, HGC’s Rumoured Takeover Offer

It will be tough to pull off privatisation at the rumoured valuation of more than US$1bn (around HK$6 per share). Nevertheless, the renewed...

Arun George

HKBN (1310 HK): Another Sing Tao Article as Speculation Swirls on MBK’s Loan Notes Conversion

The article is being unduly alarmist. The concerns raised on the China Mobile offer remain premature, and there remains a medium-to-high...

Arun George

HKBN (1310 HK): A Press Report Causes Trepidation

The article's concerns have little merit at this process stage. There is a medium-to-high probability of a competing offer. The selloff is a buying...

Arun George

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