Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

China Merchants China Direct Investments / Event-Driven

<ul>
<li>Activist Argyle Street's approach to closed-end investment company <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> (CMCDI) has a certain David Webb-like quality.</li>
<li>Apart from the deep value angle, the analysis of director Elizabeth Kan's potential conflict of interest is particularly insightful. Argle will vote against Kan's re-election at the 20th June AGM</li>
<li>Given this upcoming vote, as I've done with <a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano (709 HK)</a> and <a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a> previously, it's useful to investigate the lesser-known shareholder register, a byproduct of investigative disclosure reports.</li>
</ul>


Activist Argyle Street's approach to closed-end investment company China Merchants China Direct Investments (133 HK) (CMCDI) has a certain David Webb-like quality.
Apart from the deep value angle, the analysis of director Elizabeth Kan's potential conflict of interest is particularly insightful. Argle will vote against Kan's re-election at the 20th June AGM
Given this upcoming vote, as I've done with Giordano (709 HK) and L'Occitane (973 HK) previously, it's useful to investigate the lesser-known shareholder register, a byproduct of investigative disclosure reports.


CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up

<ul>
<li>The recent news on <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> was director Elizabeth Kan narrowly getting re-elected. Of interest, ISS recommended shareholders vote AGAINST. Glass Lewis was FOR re-election.</li>
<li>The key takeaway here is that the majority of the minorities want change. The next development may occur in the lead up to the management agreement renewal in November. </li>
<li>In addition, Argyle Street Management, CMSCI's key shareholder activist, is also requesting the company buy back 20% of shares outstanding at 90% of NAV. </li>
</ul>


The recent news on China Merchants China Direct Investments (133 HK) was director Elizabeth Kan narrowly getting re-elected. Of interest, ISS recommended shareholders vote AGAINST. Glass Lewis was FOR re-election.
The key takeaway here is that the majority of the minorities want change. The next development may occur in the lead up to the management agreement renewal in November. 
In addition, Argyle Street Management, CMSCI's key shareholder activist, is also requesting the company buy back 20% of shares outstanding at 90% of NAV. 


CMCDI (133 HK): Buybacks And Management Fees Into Focus

<ul>
<li>At the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0620/2024062000484.pdf" target="_blank" rel="noopener">AGM yesterday</a>, <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a>'s director Elizabeth Kan was re-appointed, but by a wafer-thin margin: 29.97% of shares out FOR, and 29.44% AGAINST.</li>
<li>Stripping out Victor Chu's stake (~2%?) and China Merchant's (27.6%), or collectively ~29.6% of shares out, it's fair to say the remainder of the shareholder register wants her out. </li>
<li>CMCDI is currently trading at a 55% discount to the latest NAV (as at 31st May 2024) of <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0614/2024061400482.pdf" target="_blank" rel="noopener">HK$30.42/share</a>.  Argyle continues to add to its position. </li>
</ul>


At the AGM yesterday, China Merchants China Direct Investments (133 HK)'s director Elizabeth Kan was re-appointed, but by a wafer-thin margin: 29.97% of shares out FOR, and 29.44% AGAINST.
Stripping out Victor Chu's stake (~2%?) and China Merchant's (27.6%), or collectively ~29.6% of shares out, it's fair to say the remainder of the shareholder register wants her out. 
CMCDI is currently trading at a 55% discount to the latest NAV (as at 31st May 2024) of HK$30.42/share.  Argyle continues to add to its position. 


CMCDI (133 HK): Kan Re-Elected. But Only Just

<ul>
<li>In January this year, Argyle Street, a (now) 8% shareholder of <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> (CMCDI), a closed-end investment company, proposed a solution to boost shareholder value.</li>
<li>Two months later, Rydal Value Fund (stake unknown) also proposed a means to boosting shareholder value along similar lines.</li>
<li>CMCDI is currently trading at a ~63% discount to NAV. But it is up 78% since Argyle's initial proposal, and recently touched a six-year high. Argyle is still buying.</li>
</ul>


In January this year, Argyle Street, a (now) 8% shareholder of China Merchants China Direct Investments (133 HK) (CMCDI), a closed-end investment company, proposed a solution to boost shareholder value.
Two months later, Rydal Value Fund (stake unknown) also proposed a means to boosting shareholder value along similar lines.
CMCDI is currently trading at a ~63% discount to NAV. But it is up 78% since Argyle's initial proposal, and recently touched a six-year high. Argyle is still buying.


<ul>
<li>There are people who'll take profit in <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I (3382 JP)</a> because of path dependency til year-end. It will drag out a while: buy the dips, trim on pops.</li>
<li>Just like in <a href="https://www.smartkarma.com/entities/lufax-holding-ltd-b751749a-8feb-4b4d-85a7-d99ac0308fe7" target="_blank" data-smartkarma-citation="entities:40067:1" rel="noopener">Lufax Holding (6623 HK)</a>'s special dividend, expect Ping An to boost its holding in <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology (1833 HK)</a> via the stealthy scrip dividend option. </li>
<li>The landscape for <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a> has FULLY changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable.  </li>
</ul>


There are people who'll take profit in Seven &amp; I (3382 JP) because of path dependency til year-end. It will drag out a while: buy the dips, trim on pops.
Just like in Lufax Holding (6623 HK)'s special dividend, expect Ping An to boost its holding in Ping An Healthcare and Technology (1833 HK) via the stealthy scrip dividend option. 
The landscape for Nec Networks &amp; System Integr (1973 JP) has FULLY changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable.  


Last Week in Event SPACE: Seven & I, PA Gooddoctor, Nec Networks, Genscript/Legend, ASM PT, Hanwha

Hong Kong

China Merchants China Direct Investments Limited is a close-ended investment company. It invests principally in unlisted enterprises in China. It also invests in hi-tech projects, including initial public offerings and/or pre-listing placements and any shares listed in Hong Kong.

China Merchants China Direct Investments (133 HK)

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China Merchants China Direct Investments (133 HK)

CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up

CMCDI is cheap. If small, illiquid names, with a activism angle are your thing, pick up shares here. Keep an eye on the AGM. If Kan is booted, this...

David Blennerhassett

CMCDI (133 HK): Buybacks And Management Fees Into Focus

CMCDI remains cheap. I think a buyback is a distinct possibility. And changes to the management agreement have to occur within the next few months.

David Blennerhassett

CMCDI (133 HK): Kan Re-Elected. But Only Just

CMCDI remains cheap. Argyle is still buying. If small, illiquid names, with a activism angle are your forte, get involved.

David Blennerhassett

Activism Takes On CMCDI (133 HK)

This in interesting. As per my note, Lazard held 15.89%. Lazard's latest disclosure states they've cleared 14%, paying $14.67/share, implying they...

David Blennerhassett

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Nec Networks, Genscript/Legend, ASM PT, Hanwha

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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