Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Acotec Scientific Holdings / Event-Driven

<ul>
<li>Back on the 12 December, <a href="https://www.smartkarma.com/entities/acotec-scientific-holdings-limited" target="_blank" data-smartkarma-citation="entities:32176:1" rel="noopener">Acotec Scientific Holdings (6669 HK)</a> announced a Partial Offer from <a href="https://www.smartkarma.com/entities/boston-scientific-corp" target="_blank" data-smartkarma-citation="entities:11115:1" rel="noopener">Boston Scientific (BSX US)</a>
</li>
<li>The Offer Price of $20/share is for up to 65% of shares out. Irrevocables total up to 60.14% of shares out, sufficient to clear the minimum tendering condition.</li>
<li>My initial read was that the proration was simply 65%. That was wrong. It is higher. Plus there are some interesting quirks to avoid breaching the public float post-Offer.</li>
</ul>


Back on the 12 December, Acotec Scientific Holdings (6669 HK) announced a Partial Offer from Boston Scientific (BSX US)

The Offer Price of $20/share is for up to 65% of shares out. Irrevocables total up to 60.14% of shares out, sufficient to clear the minimum tendering condition.
My initial read was that the proration was simply 65%. That was wrong. It is higher. Plus there are some interesting quirks to avoid breaching the public float post-Offer.


Acotec/Boston Scientific: Even Higher Proration

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Acotec Scientific Holdings / Equity Bottom-Up

<ul>
<li>Acotec’s 2023 performance was unsatisfactory. Core products suffered weak growth. Positive trend of continuing to optimize revenue structure was broken. Sales of latecomers’ competing products would expand rapidly in 2024/2025. </li>
<li>Revenue proportion in overseas markets was still below 5% in 2023. If no highlights in Acotec’s cooperation with Boston Scientific in 2024, this collaboration could be considered a failure.</li>
<li>Due to VBP, margin could further decline. If it's just the current situation, then Acotec is not as good as Zylox-Tonbridge. So, its valuation should also be lower than Zylox-Tonbridge.</li>
</ul>


Acotec’s 2023 performance was unsatisfactory. Core products suffered weak growth. Positive trend of continuing to optimize revenue structure was broken. Sales of latecomers’ competing products would expand rapidly in 2024/2025. 
Revenue proportion in overseas markets was still below 5% in 2023. If no highlights in Acotec’s cooperation with Boston Scientific in 2024, this collaboration could be considered a failure.
Due to VBP, margin could further decline. If it's just the current situation, then Acotec is not as good as Zylox-Tonbridge. So, its valuation should also be lower than Zylox-Tonbridge.


Acotec Scientific Holdings (6669.HK) - The Company Is Now In Trouble

Zylox-Tonbridge Medical Technology / Equity Bottom-Up

<ul>
<li>Zylox is a beneficiary of VBP and it has turned losses into profits. 2024 full-year revenue could be up 40-50% YoY. Net profit could be close to RMB100 million.</li>
<li>Whether in terms of the number of products on the market or the efficiency of R&amp;D, Zylox's performance is superior to peers.Its valuation is expected to be higher than peers.</li>
<li>We’re in a bear market, together with weak liquidity, Zylox's valuation doesn’t fully reflect its strong fundamentals. So, while this is a good company, investors may need to be patient.</li>
</ul>


Zylox is a beneficiary of VBP and it has turned losses into profits. 2024 full-year revenue could be up 40-50% YoY. Net profit could be close to RMB100 million.
Whether in terms of the number of products on the market or the efficiency of R&amp;D, Zylox's performance is superior to peers.Its valuation is expected to be higher than peers.
We’re in a bear market, together with weak liquidity, Zylox's valuation doesn’t fully reflect its strong fundamentals. So, while this is a good company, investors may need to be patient.


Zylox-Tonbridge Medical Technology (2190.HK) - A Good Alpha-Generating Opportunity for Investors

Equity Capital Markets

Zylox-Tonbridge Medical Technology / Equity Capital Markets

On March 23, <a href="https://www.smartkarma.com/entities/zylox-tonbridge-medical-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32974:1" rel="noopener">Zylox-Tonbridge Medical Technology (ZYL HK)</a> submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position.

On March 23, Zylox-Tonbridge Medical Technology (ZYL HK) submitted its listing application to the Hong Kong Stock Exchange and plans to be listed on the main board. Zylox-Tonbridge was founded in 2012. Since its inception, the Company has adopted and executed the strategic business model of developing innovative medical devices and solutions, focusing on the neuro- and peripheral-vascular interventional medical device market in China. The following mainly included insights on industry characteristics, business analysis and financial position. 

Pre-IPO Zylox-Tonbridge Medical Technology - Promising Market with Challenges

<ul>
<li>Back on the 23 December 2022, <a href="https://www.smartkarma.com/entities/skyworth-group-limited" target="_blank" data-smartkarma-citation="entities:10941:1" rel="noopener">Skyworth Group (751 HK)</a> announced (another) partial buyback, at HK$3.80/share, a 20.25% premium to undisturbed. On the 28 March, terms were bumped to $5.00/share. </li>
<li>At the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0531/2023053101428.pdf" target="_blank" rel="noopener">close of the Offer</a>, the Wong Concert Group held 50.35%, and were no longer subject to the creeper rule. The Group now holds 56.04%</li>
<li>Yet another Partial Offer has been announced (HK$3.11/share, a 15.19% premium)), which will lift the Group's stake to 66.45%.  Minimum pro-ration is 37.84%. It is likely to go higher.</li>
</ul>


Back on the 23 December 2022, Skyworth Group (751 HK) announced (another) partial buyback, at HK$3.80/share, a 20.25% premium to undisturbed. On the 28 March, terms were bumped to $5.00/share. 
At the close of the Offer, the Wong Concert Group held 50.35%, and were no longer subject to the creeper rule. The Group now holds 56.04%
Yet another Partial Offer has been announced (HK$3.11/share, a 15.19% premium)), which will lift the Group's stake to 66.45%.  Minimum pro-ration is 37.84%. It is likely to go higher.


Skyworth Group (751 HK)'s Latest Partial Buyback. Thoughts On Proration

China

Acotec Scientific Holdings Limited develops medical equipment. The Company develops, manufactures and markets thrombus aspiration catheter, drug-coated ballon, and other products. Acotec Scientific Holdings markets its products throughout China.

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Acotec Scientific Holdings (6669 HK)

Acotec/Boston Scientific: Even Higher Proration

I was wrong - the minimum proration is 71.31%, not 65%. Given the irrevocables, this Partial Offer will become unconditional. I'd be a buyer here...

David Blennerhassett