Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<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> has priced its A-share IPO at RMB 57.58/share which is slightly disappointing in terms of premium to the H-share. </li>
<li>Subscriptions start on 22 December, and the IPO should launch a week later, for the largest mainland offering this year and possibly the largest in a decade.</li>
<li>Given the more explicit SHAREHOLDER RETURN PLAN framework published in May this year with the A-Share Circular, expect more management clarity on dividend payout.</li>
</ul>



China Mobile (941 HK) has priced its A-share IPO at RMB 57.58/share which is slightly disappointing in terms of premium to the H-share. 
Subscriptions start on 22 December, and the IPO should launch a week later, for the largest mainland offering this year and possibly the largest in a decade.
Given the more explicit SHAREHOLDER RETURN PLAN framework published in May this year with the A-Share Circular, expect more management clarity on dividend payout.


China Mobile Prices RMB A-Share IPO - Disappointing IPO Price So A-Share Could Yield ~CGBs+230

David Blennerhassett

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a>'s A-share listing progresses in response to an intention from US regulators to delist its ADSs. </li>
<li>Shareholders have approved the listing and the prospectus has been accepted by the CSRC. </li>
<li>Cashed-Up CNOOC is trading cheap to domestic and international peers, together with a 7% yield, one that may increase significantly with a higher payout ratio. </li>
</ul>



CNOOC Ltd (883 HK)'s A-share listing progresses in response to an intention from US regulators to delist its ADSs. 
Shareholders have approved the listing and the prospectus has been accepted by the CSRC. 
Cashed-Up CNOOC is trading cheap to domestic and international peers, together with a 7% yield, one that may increase significantly with a higher payout ratio. 


Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Companies mentioned this week:
<a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom (H) (728 HK)</a>, <a href="https://www.smartkarma.com/entities/pax-global-technology-ltd" target="_blank" data-smartkarma-citation="entities:7514:1" rel="noopener">Pax Global Technology (327 HK)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Companies mentioned this week:
China Telecom (H) (728 HK), Pax Global Technology (327 HK), SK Hynix (000660 KS)

Global Emerging Markets Weekly: 29 October 2021

<a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0806/2021080600069.pdf" target="_blank" rel="noopener">priced</a> its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in <a href="https://www.smartkarma.com/insights/china-mobile-941-hk-it-could-have-been-done-better-but-it-ain-t-bad-for-hs" target="_blank" data-smartkarma-citation="insights:52018" rel="noopener">China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs</a> and <a href="https://www.smartkarma.com/insights/china-telecom-728-hk-ups-div-payout-policy-there-s-a-plan-here-expect-china-mobile-to-follow" target="_blank" data-smartkarma-citation="insights:53355" rel="noopener">China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow</a>.It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But....... There is more below the fold.

China Telecom Corp Ltd (H) (728 HK) has priced its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs and China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow.It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But....... There is more below the fold.

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

As fallout from the Trump Executive Order on Chinese military companies, the NYSE decided to delist the ADRs 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> and <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> and US Persons were obliged to cease investment into the stocks wherever they were listed. The H-Shares of both fell, then rose sharply one what was seen as "National Team buying." Southbound investment in the two names increased, and almost immediately the two companies set to work to "find alternative capital markets opportunities."The idea that <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> and <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> would eventually list their shares in the mainland was deemed an almost foregone conclusion when China introduced the idea of China Depositary Receipts with a <a href="https://www.smartkarma.com/insights/pilot-program-on-china-depositary-receipts-launched-expect-the-big-5-to-prep-quickly" target="_blank" rel="noopener">Pilot Programme announced in April 2018</a>.In mid-March, China Telecom announced its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031700304.pdf" target="_blank" rel="noopener">proposal</a>, and in late April announced that it had applied and the CSRC had accepted its application for an A-Share listing. In late May, China Mobile announced its intention to apply shortly, as discussed in <a href="https://www.smartkarma.com/insights/china-mobile-941-hk-it-could-have-been-done-better-but-it-ain-t-bad-for-hs" target="_blank" data-smartkarma-citation="insights:52018" rel="noopener">China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs</a>.In that piece, I noted my objection to the way the planned capital raise was presented, but also noted that the details were bullish for H-share investors for both stocks. The market hasn't reacted that well to the proposals (the blue lines in the charts below). <section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/186/original/Screenshot+2021-06-21+at+9.48.55+AM.png?1624240150" class="editor-image img-responsive" data-smartkarma-image-id="214186"></figure></section></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/175/original/Screenshot+2021-06-21+at+9.45.38+AM.png?1624239961" class="editor-image img-responsive" data-smartkarma-image-id="214175"></figure></section>One of the reasons was hidden in the back of the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0524/2021052400195.pdf" target="_blank" rel="noopener">Circular</a> for China Mobile, which was almost word-for-word the same as the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031700304.pdf" target="_blank" rel="noopener">Announcement</a> for China Telecom.It was a combination of Shareholder Return and Price Stabilization Obligation. <div class="content-highlight">This morning, China Telecom has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0621/2021062100289.pdf" target="_blank" rel="noopener">announced</a> that it will adjust the Dividend Policy to a 60% payout ratio, lifting it later to 70%. </div>

As fallout from the Trump Executive Order on Chinese military companies, the NYSE decided to delist the ADRs of China Mobile (941 HK) and China Telecom Corp Ltd (H) (728 HK) and US Persons were obliged to cease investment into the stocks wherever they were listed. The H-Shares of both fell, then rose sharply one what was seen as "National Team buying." Southbound investment in the two names increased, and almost immediately the two companies set to work to "find alternative capital markets opportunities."The idea that China Telecom Corp Ltd (H) (728 HK) and China Mobile (941 HK) would eventually list their shares in the mainland was deemed an almost foregone conclusion when China introduced the idea of China Depositary Receipts with a Pilot Programme announced in April 2018.In mid-March, China Telecom announced its proposal, and in late April announced that it had applied and the CSRC had accepted its application for an A-Share listing. In late May, China Mobile announced its intention to apply shortly, as discussed in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs.In that piece, I noted my objection to the way the planned capital raise was presented, but also noted that the details were bullish for H-share investors for both stocks. The market hasn't reacted that well to the proposals (the blue lines in the charts below). One of the reasons was hidden in the back of the Circular for China Mobile, which was almost word-for-word the same as the Announcement for China Telecom.It was a combination of Shareholder Return and Price Stabilization Obligation. This morning, China Telecom has announced that it will adjust the Dividend Policy to a 60% payout ratio, lifting it later to 70%. 

China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow

China

China Telecom Corporation Limited, through its subsidiaries, provides wireline telephone, data, and Internet, as well as leased line services in China.

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China Telecom Corp Ltd (Adr) (CHA US)

CNOOC (883 HK): This Is An Outright Buy

CNOOC is inexpensive versus its two domestic peers, its international peers, and to historical levels. I would expect the imminent A-share listing...

David Blennerhassett

Global Emerging Markets Weekly: 29 October 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow

China Telecom ups its dividend payout policy ahead of A-Share listing in order to support higher A-share valuation. The goal is to boost A-share...

Travis Lundy

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52-week Range

Market Cap (USDm)

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China Mobile Prices RMB A-Share IPO - Disappointing IPO Price So A-Share Could Yield ~CGBs+230

China Mobile (941) has priced its A-Share IPO at a disappointingly low price, possibly to spur follow-on interest which the China Telecom A-Share...

Travis Lundy

CNOOC (883 HK): This Is An Outright Buy

CNOOC is inexpensive versus its two domestic peers, its international peers, and to historical levels. I would expect the imminent A-share listing...

David Blennerhassett

Global Emerging Markets Weekly: 29 October 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

China Telecom has priced its A-share IPO at an 87% premium to the H. To get to the same 2021e DivYield, China Mobile will have to be 20+ higher,...

Travis Lundy

China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow

China Telecom ups its dividend payout policy ahead of A-Share listing in order to support higher A-share valuation. The goal is to boost A-share...

Travis Lundy