SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

SGX Asia Currencies and Commodities Insights

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Evergrande Property Services / Event-Driven

The plight of <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a>, the "world's most indebted property developer" has been exhaustively covered and picked apart both here at Smartkarma and in the media. (Although I highly recommend <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a>'s Bloomberg <a href="https://www.bloomberg.com/news/articles/2021-09-20/understanding-evergrande-the-chinese-real-estate-conglomerate-that-s-nearing-collapse?sref=frV97TwV" target="_blank" rel="noopener">podcast</a> for his bird's eye synopsis).
Concerns for the embattled real estate play are leading to formerly friendly and close shareholders exiting at massive losses, such as recently suspended <a href="https://www.smartkarma.com/entities/chinese-estates-holdings-limited" target="_blank" data-smartkarma-citation="entities:20954:1" rel="noopener">Chinese Estates Holdings (127 HK)</a> (as discussed in <a href="https://skr.ma/1HQM2" target="_blank" rel="noopener">Chinese Estates (127 HK): Potential Privatisation?</a>); and spreading to smaller investors such as <a href="https://www.smartkarma.com/entities/blue-river-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20130:1" rel="noopener">Blue River Holdings (498 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1004/2021100403346.pdf" target="_blank" rel="noopener">dumping</a> <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Vehicle (708 HK)</a> (reportedly missed its last payroll payment) at a material loss - Blue River also sold stakes in Evergrande and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> (EPS). <a href="https://www.smartkarma.com/entities/china-strategic-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:20588:1" rel="noopener">China Strategic Hldgs (235 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0921/2021092101057.pdf" target="_blank" rel="noopener">announced</a> on the 21 September it proposes to sell its 1.37% stake in Evergrande Vehicle. 
Evergrande has also been selling off assets, most recently a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0929/2021092900039.pdf" target="_blank" rel="noopener">19.93% stake</a> in <a href="https://www.smartkarma.com/entities/shengjing-bank-co-ltd-h" target="_blank" data-smartkarma-citation="entities:96:1" rel="noopener">Shengjing Bank Co Ltd H (2066 HK)</a> for ~RMB10bn. 
Now we have Evergrande <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1004/2021100400771.pdf" target="_blank" rel="noopener">suspended</a> due to a material transaction; EPS due to a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1004/2021100400799.pdf" target="_blank" rel="noopener">possible general Offer</a>; and the intriguing part, <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1004/2021100400101.pdf" target="_blank" rel="noopener">suspended</a> due the acquisition of a company "and the relevant possible mandatory offer to acquire the shares of the" company.
China's state-backed Global Times <a href="https://www.globaltimes.cn/page/202110/1235627.shtml" target="_blank" rel="noopener">said</a> Hopson will buy a 51% stake in EPS "and the deal could be valued at more than 40 billion HKD" ($5.1bn). One of those media sources appears to be <a href="https://www.cls.cn/detail/846513" target="_blank" rel="noopener">Cailian Press</a>, which also has SOE affiliation. Jiemian.com, Cailian's sister publication - the two merged in <a href="https://www.chinamoneynetwork.com/2018/02/28/chinese-media-firms-jiemian-cailian-press-merge-creating-financial-information-giant" target="_blank" rel="noopener">February 2018</a> - <a href="https://www.jiemian.com/article/6667341.html" target="_blank" rel="noopener">reckons</a> the fine print on a deal won't be known for a few days.<a href="https://www.jiemian.com/article/6667341.html" target="_blank" rel="noopener"></a>
All three companies remain suspended at the time of writing. Given this transaction could come out any old way, this insight touches on some of the permutations Hopson may take to gain majority control in EPS, if that is the end-game.

The plight of Evergrande (3333 HK), the "world's most indebted property developer" has been exhaustively covered and picked apart both here at Smartkarma and in the media. (Although I highly recommend Travis Lundy's Bloomberg podcast for his bird's eye synopsis).
Concerns for the embattled real estate play are leading to formerly friendly and close shareholders exiting at massive losses, such as recently suspended Chinese Estates Holdings (127 HK) (as discussed in Chinese Estates (127 HK): Potential Privatisation?); and spreading to smaller investors such as Blue River Holdings (498 HK) dumping Evergrande Vehicle (708 HK) (reportedly missed its last payroll payment) at a material loss - Blue River also sold stakes in Evergrande and Evergrande Property Services (6666 HK) (EPS). China Strategic Hldgs (235 HK) announced on the 21 September it proposes to sell its 1.37% stake in Evergrande Vehicle. 
Evergrande has also been selling off assets, most recently a 19.93% stake in Shengjing Bank Co Ltd H (2066 HK) for ~RMB10bn. 
Now we have Evergrande suspended due to a material transaction; EPS due to a possible general Offer; and the intriguing part, Hopson Development (754 HK) suspended due the acquisition of a company "and the relevant possible mandatory offer to acquire the shares of the" company.
China's state-backed Global Times said Hopson will buy a 51% stake in EPS "and the deal could be valued at more than 40 billion HKD" ($5.1bn). One of those media sources appears to be Cailian Press, which also has SOE affiliation. Jiemian.com, Cailian's sister publication - the two merged in February 2018 - reckons the fine print on a deal won't be known for a few days.
All three companies remain suspended at the time of writing. Given this transaction could come out any old way, this insight touches on some of the permutations Hopson may take to gain majority control in EPS, if that is the end-game.

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.

<a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> is a Chinese property management provider. The controlling shareholder is the <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a>, which represents 60.96% of outstanding shares. It floated on 2 December 2020 to raise net proceeds of US$930 million (gross proceeds around US$1.8 billion) at HK$8.80 per share.  Evergrande Property Services entered a trading halt today pursuant to the Hong Kong Code on Takeovers and Mergers. Evergrande is in talks to sell a 51% controlling stake to <a href="https://www.smartkarma.com/entities/hopson-development-holdings" target="_blank" data-smartkarma-citation="entities:8108:1" rel="noopener">Hopson Development (754 HK)</a> for more than HK$40 billion ($5 billion), according to the Chinese financial news platform Cailian. Hopson also entered a trading halt today citing a major transaction to acquire the shares of a company listed on the HKEx and the relevant possible mandatory offer pursuant to the Hong Kong Code on Takeovers and Mergers.The potential stake sale was anticipated as Evergrande flagged on 14 September that it was actively exploring with potential investors the sales of part of its interests in <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Auto (708 HK)</a> and Evergrande Property Services.The rumoured Evergrande Property Services valuation implies a possible general offer of HK$3.70 per share, a -27.7% discount to the last close price of HK$5.12 per share. The steep discount to the last close is perhaps unsurprisingly as Evergrande is a distressed seller. The potential sale even at a distressed price could help Evergrande buy short-term breathing space to its liquidity issues.    If the potential deal materialises, Evergrande will cease to be the controlling shareholder and hold 9.96% of the outstanding shares. Evergrande Property Services’ shares have sunk 41% YTD due to the liquidity issues plaquing Evergrande. A new controlling shareholder will gradually reduce Evergrande Property Services reliance on Evergrande and also remove a significant share overhang.<div class="content-highlight">
Clearly, there will be limited shareholders who will accept the possible general offer price at a -27.7% discount to the last close. In the short term, Evergrande Property Services shares will likely be under pressure until the deal closes and there are some signs of closure on Evergrande's liquidity issues. 
While this potential transaction represents a sale at a distressed price (below the all-time low share price), the shift to a more stable controlling shareholder along with a market focus on fundamentals/valuation will help in the re-rating of Evergrande Property Services over the medium-term. 
</div>

Evergrande Property Services (6666 HK) is a Chinese property management provider. The controlling shareholder is the Evergrande (3333 HK), which represents 60.96% of outstanding shares. It floated on 2 December 2020 to raise net proceeds of US$930 million (gross proceeds around US$1.8 billion) at HK$8.80 per share.  Evergrande Property Services entered a trading halt today pursuant to the Hong Kong Code on Takeovers and Mergers. Evergrande is in talks to sell a 51% controlling stake to Hopson Development (754 HK) for more than HK$40 billion ($5 billion), according to the Chinese financial news platform Cailian. Hopson also entered a trading halt today citing a major transaction to acquire the shares of a company listed on the HKEx and the relevant possible mandatory offer pursuant to the Hong Kong Code on Takeovers and Mergers.The potential stake sale was anticipated as Evergrande flagged on 14 September that it was actively exploring with potential investors the sales of part of its interests in Evergrande Auto (708 HK) and Evergrande Property Services.The rumoured Evergrande Property Services valuation implies a possible general offer of HK$3.70 per share, a -27.7% discount to the last close price of HK$5.12 per share. The steep discount to the last close is perhaps unsurprisingly as Evergrande is a distressed seller. The potential sale even at a distressed price could help Evergrande buy short-term breathing space to its liquidity issues.    If the potential deal materialises, Evergrande will cease to be the controlling shareholder and hold 9.96% of the outstanding shares. Evergrande Property Services’ shares have sunk 41% YTD due to the liquidity issues plaquing Evergrande. A new controlling shareholder will gradually reduce Evergrande Property Services reliance on Evergrande and also remove a significant share overhang.
Clearly, there will be limited shareholders who will accept the possible general offer price at a -27.7% discount to the last close. In the short term, Evergrande Property Services shares will likely be under pressure until the deal closes and there are some signs of closure on Evergrande's liquidity issues. 
While this potential transaction represents a sale at a distressed price (below the all-time low share price), the shift to a more stable controlling shareholder along with a market focus on fundamentals/valuation will help in the re-rating of Evergrande Property Services over the medium-term. 


Hopson Development’s Potential 51% Stake in Evergrande Property Services

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

It all started with the injury that Chen, the top female badminton player, suffered during China National Games two weeks ago that went viral and fans took it to <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a> . It is unlikely that the injured toe will cause a massive product recall as it is not a life-threatening injury but it definitely warrants some further investigation by the R&amp;D team that may lead to either an increase of R&amp;D cost, an increase in the COGS that will decrease GPM or extra marketing costs as part of giving players more shoes to prevent injuries. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/932/original/image?1632657827" class="editor-image img-responsive" data-smartkarma-image-id="231932"></figure>

It all started with the injury that Chen, the top female badminton player, suffered during China National Games two weeks ago that went viral and fans took it to Weibo Corp (WB US) . It is unlikely that the injured toe will cause a massive product recall as it is not a life-threatening injury but it definitely warrants some further investigation by the R&amp;D team that may lead to either an increase of R&amp;D cost, an increase in the COGS that will decrease GPM or extra marketing costs as part of giving players more shoes to prevent injuries. 


China

Evergrande Auto researches, develops, and manufactures new energy vehicles. The Company engages in vehicle manufacturing, electric motor control, power batteries, vehicle sales, smart charging, shared mobility, and more. Evergrande Auto also operates health management businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Evergrande Auto (708 HK)

SGX Asia Currencies and Commodities Insights

By Macro Hive SGX Asia Currencies Insights China’s strong BoP continues to offset risks from slower growth and heightened financial...

Singapore Exchange Ltd (SGX)

Hopson Navigates Evergrande's Fire Sale

Indebted Evergrande and Hopson in trading halt over the possible sale of property management unit, the completion of which may trigger a general...

David Blennerhassett

Hopson Development’s Potential 51% Stake in Evergrande Property Services

Evergrande is in talks to sell a 51% stake in Evergrande Services to Hopson Dev for more than HK$40 bn. The shift to a more stable controlling...

Arun George

Li Ning (2331): Toe Injury

The injured toe will lead to either an increase in R&D cost, an increase in the COGS that will decrease GPM or extra marketing costs as part of...

Henry Soediarko

SGX Asia Currencies and Commodities Insights

By Macro Hive SGX Asia Currencies Insights Yuan stability should continue given financial stability risks from Evergrande. We favour being...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)