Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

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<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
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<ul style="list-style-type: disc;">
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
<p>On average, </p>
<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  </p>
<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> where the net selling activity amounted to 15.5% and 22% of volume respectively. </p>
<p>Hisense remains at the overbought end of the 52-week range. <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> are now at 52-week wides. </p>
<div class="content-highlight">
<p>Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.</p>
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<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>
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The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...



H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. 

On average, 
The first sector is Consumer, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of Hisense Home Appliances Group Co., Ltd. H (921 HK), this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  
Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both Tsingtao Brewery Co Ltd H (168 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) where the net selling activity amounted to 15.5% and 22% of volume respectively. 
Hisense remains at the overbought end of the 52-week range. Great Wall Motor (2333 HK) and Guangzhou Automobile Group (2238 HK) are now at 52-week wides. 

Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.





For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

David Blennerhassett

Event-Driven

Last Week in Event SPACE: Northern Star/Saracen, Vedanta, Toyota, Swire

Equity Bottom-Up

Huadian Fuxin Energy Corp / Equity Bottom-Up

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<p>On the 1 June, <a href="https://www.smartkarma.com/entities/huadian-fuxin-energy-corp-ltd" target="_blank" data-smartkarma-citation="entities:59:1" rel="noopener">Huadian Fuxin Energy Corp (816 HK)</a> joined an ever-growing list of clean-energy companies subject to restructurings/takeovers by <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0601/2020060103584.pdf" target="_blank" rel="noopener">announcing</a> its major shareholder, Huadian with 62.76% - via wholly-owned listed vehicle Fujian Huadian Furui (the Offeror) - had tabled a privatisation Offer by way of a Merger by Absorption.  The Offer price of $2.50/share, was a 65.56% premium to last close and 85.34% premium to the average closing for the 90 days prior to the Offer announcement. The Offer Price is Final.</p>
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<div>
<p>A final dividend of RMB0.054/share (~HK$0.0587/share) was also be added to the consideration price, for those shareholders whose names were on the register as at 9 July. </p>
<p>Following pre-conditional approvals from NDRC, MoC, &amp; SAFE <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0821/2020082101221.pdf" target="_blank" rel="noopener">announced</a> on the 21 August, the Composite Document has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0826/2020082600007.pdf" target="_blank" rel="noopener">issued</a>.</p>
<p>This is a streamlined merger by absorption, absent a tendering condition. The IFA opines the Offer is fair &amp; reasonable. </p>
<p>The H Share Class Meeting will be held on the 16 September, with an expected payment on (or before) the 12 October.</p>
<p>This is a clean transaction and will continue to trade tight to terms. Either play the narrow spread or look to position in one of Huadian's peers. </p>
<p>As always, more below the fold. </p>
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<div>
<hr>
<p><em>This insight addresses the content within the Composite Doc. For a more detailed overview of Huadian, please refer to my prior insight: <a href="https://skr.ma/g466D" target="_blank" rel="noopener">Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play</a>.</em></p>
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On the 1 June, Huadian Fuxin Energy Corp (816 HK) joined an ever-growing list of clean-energy companies subject to restructurings/takeovers by announcing its major shareholder, Huadian with 62.76% - via wholly-owned listed vehicle Fujian Huadian Furui (the Offeror) - had tabled a privatisation Offer by way of a Merger by Absorption.  The Offer price of $2.50/share, was a 65.56% premium to last close and 85.34% premium to the average closing for the 90 days prior to the Offer announcement. The Offer Price is Final.


A final dividend of RMB0.054/share (~HK$0.0587/share) was also be added to the consideration price, for those shareholders whose names were on the register as at 9 July. 
Following pre-conditional approvals from NDRC, MoC, &amp; SAFE announced on the 21 August, the Composite Document has now been issued.
This is a streamlined merger by absorption, absent a tendering condition. The IFA opines the Offer is fair &amp; reasonable. 
The H Share Class Meeting will be held on the 16 September, with an expected payment on (or before) the 12 October.
This is a clean transaction and will continue to trade tight to terms. Either play the narrow spread or look to position in one of Huadian's peers. 
As always, more below the fold. 



This insight addresses the content within the Composite Doc. For a more detailed overview of Huadian, please refer to my prior insight: Huadian Fuxin (816 HK) Becomes The Latest Clean Energy Takeover Play.


Huadian Fuxin (816 HK): Doc Out. Done Deal

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.

Beijing Jingneng Clean Energy / Event-Driven

<p><a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a>/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – <a href="https://www.smartkarma.com/entities/huadian-fuxin-energy-corp-ltd" target="_blank" data-smartkarma-citation="entities:59:1" rel="noopener">Huadian Fuxin Energy Corp (816 HK)</a>,  <a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener">Huaneng Renewables Corp H (958 HK)</a> and CP Clean Energy and the potential privatisation of <a href="https://www.smartkarma.com/entities/cgn-new-energy-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:4295:1" rel="noopener">CGN New Energy Holdings (1811 HK)</a>.</p><div class="content-highlight"><p>The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (&lt;10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. </p></div>

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in China. On 6 July, it announced a possible privatisation bid from Beijing Energy Holding through a conditional voluntary cash general offer. Beijing Energy Holding and concert parties have a combined 71.40% stake (100% of domestic shares and 16.7% of H-shares). This potential privatisation joins a list of recent SOE privatisations of clean energy companies – Huadian Fuxin Energy Corp (816 HK),  Huaneng Renewables Corp H (958 HK) and CP Clean Energy and the potential privatisation of CGN New Energy Holdings (1811 HK).The offer if forthcoming could lead to the privatisation and delisting of BJCE. As the potential privatisation is structured as a conditional voluntary cash general offer, the two key conditions will be the approval by at least 75% disinterested H-shareholders (&lt;10% of all disinterested H-shareholders rejection) and a minimum tendering acceptance condition. While the details and terms of the possible offer remain under wraps, we estimate a privatisation price of around HK$2.56 per share. 

Beijing Jingneng Clean Energy’s Potential Privatisation Bid

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

China Yangtze Power Co, Ltd. / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/china-yangtze-power-co-ltd" target="_blank" data-smartkarma-citation="entities:3210:1" rel="noopener">China Yangtze Power Co, Ltd. (600900 CH)</a> (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.</p><p>Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).</p>

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China

CGN Power Co., Ltd. operates and manages nuclear power generating stations. The Company sells all of the electricity from its stations, manages, oversees the construction of nuclear power stations, and provides technical research plus develops support services. CGN Power has stations in Guangdong, Fujian and Liaoning, and is a subsidiary of China General Nuclear Power Corporation.

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CGN Power (1816 HK)

Last Week in Event SPACE: Northern Star/Saracen, Vedanta, Toyota, Swire

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

Huadian Fuxin (816 HK): Doc Out. Done Deal

On the 1 June, Huadian Fuxin Energy Corp (816 HK) joined an ever-growing list of clean-energy companies subject to restructurings/takeovers by...

David Blennerhassett

Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in...

Arun George

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Quiddity H/A Spread Monitor for the week ending 23 October 2020. Spreads widened in Consumer, narrowed in every other sector. Southbound were...

Travis Lundy

Last Week in Event SPACE: Northern Star/Saracen, Vedanta, Toyota, Swire

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

Huadian Fuxin (816 HK): Doc Out. Done Deal

On the 1 June, Huadian Fuxin Energy Corp (816 HK) joined an ever-growing list of clean-energy companies subject to restructurings/takeovers by...

David Blennerhassett

Beijing Jingneng Clean Energy’s Potential Privatisation Bid

Beijing Jingneng Clean Energy (579 HK)/BJCE is the largest gas-fired heat and power supplier in Beijing and the leading wind power operator in...

Arun George

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder...

Osbert Tang, CFA

Quiddity Weekly H/A: Share Spread Monitor 23 Oct 2020