Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

Three months ago, on September 15th, China's largest publicly-traded automobile dealer <a href="https://www.smartkarma.com/entities/17171" target="_blank" data-smartkarma-citation="entities:17171">China Grand Automotive Services Co Ltd</a> (hereafter "China Grand" or CGAS") <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0915/LTN20150915457.pdf" target="_blank">announced</a> it was in preliminary talks to acquire <a href="https://www.smartkarma.com/entities/20829" target="_blank" data-smartkarma-citation="entities:20829">Baoxin Auto Group Ltd</a>  - China's largest distributor of BMW vehicles.Baoxin shares popped 36% the day after the announcement to HK$3.58/share. The stock could not keep those gains as it did not close for three consecutive days above that price until Friday Dec 4th, and that was only because on Wednesday the stock jumped 10.8% to $3.60/share on 3x the previous day's volume on news, then it jumped 15.5% on 5+x normal volume the next day. That will undoubtedly raise some flags, but one could easily say that until Dec3, "the market" was reasonably skeptical of a deal actually being done at a price favorable to Baoxin minorities. Baoxin shares were suspended Dec7 and on Dec9 a substantial shareholder <a href="http://sdinotice.hkex.com.hk/di/NSForm2.aspx?fn=286782&amp;sa2=ns&amp;sid=50000685&amp;corpn=Baoxin+Auto+Group+Ltd.&amp;sd=15%2f12%2f2014&amp;ed=04%2f12%2f2015&amp;sa1=cl&amp;scsd=11%2f12%2f2014&amp;sced=11%2f12%2f2015&amp;sc=1293&amp;src=MAIN&amp;lang=EN&amp;" target="_blank">filing</a> on the HKEx showed that China Grand had purchased 53.58% of Baoxin at HKD 5.99/share. <a href="https://www.smartkarma.com/profiles/11" target="_blank" data-smartkarma-citation="accounts:11">Crispin</a> wrote <a href="https://www.smartkarma.com/insights/baoxin-auto-group-mandatory-offer-to-kick-in" target="_blank" data-smartkarma-citation="insights:2101">a piece</a> noting a Mandatory Offer would kick in - as was the obvious conclusion. But it appears that filing was "hasty" or people got their wires crossed, and yesterday, the official <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/1211/LTN20151211945.pdf" target="_blank">Joint Announcement</a> of a deal was posted on the HKEx website. The deal is that CGAS will buy 75% of Baoxin and that Mr. Yang Aihua, Baoxin Investment and Auspicious Splendid had entered into an Irrevocable Undertaking agreement to accept the Offer. CGAS also released an English translation of a <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/1211/LTN201512111043.pdf" target="_blank">Major Asset Restructuring Report</a>.This deal looks pretty simple on the face of it, but for those who did the work on the China Resources Enterprise (now <a href="https://www.smartkarma.com/entities/399" target="_blank" data-smartkarma-citation="entities:399">China Resources Beer Holdings</a>) deal this past spring/summer/fall as to timing and deal-implied leverage, you'll see the similarities. That trade, if you looked at it the way we did here at Smartkarma, was REALLY interesting and profitable. If you liked Smartkarma's work on the CRE situation, we've got lots more below the fold.Including Arb Grids.

Three months ago, on September 15th, China's largest publicly-traded automobile dealer China Grand Automotive Services Co Ltd (hereafter "China Grand" or CGAS") announced it was in preliminary talks to acquire Baoxin Auto Group Ltd  - China's largest distributor of BMW vehicles.Baoxin shares popped 36% the day after the announcement to HK$3.58/share. The stock could not keep those gains as it did not close for three consecutive days above that price until Friday Dec 4th, and that was only because on Wednesday the stock jumped 10.8% to $3.60/share on 3x the previous day's volume on news, then it jumped 15.5% on 5+x normal volume the next day. That will undoubtedly raise some flags, but one could easily say that until Dec3, "the market" was reasonably skeptical of a deal actually being done at a price favorable to Baoxin minorities. Baoxin shares were suspended Dec7 and on Dec9 a substantial shareholder filing on the HKEx showed that China Grand had purchased 53.58% of Baoxin at HKD 5.99/share. Crispin wrote a piece noting a Mandatory Offer would kick in - as was the obvious conclusion. But it appears that filing was "hasty" or people got their wires crossed, and yesterday, the official Joint Announcement of a deal was posted on the HKEx website. The deal is that CGAS will buy 75% of Baoxin and that Mr. Yang Aihua, Baoxin Investment and Auspicious Splendid had entered into an Irrevocable Undertaking agreement to accept the Offer. CGAS also released an English translation of a Major Asset Restructuring Report.This deal looks pretty simple on the face of it, but for those who did the work on the China Resources Enterprise (now China Resources Beer Holdings) deal this past spring/summer/fall as to timing and deal-implied leverage, you'll see the similarities. That trade, if you looked at it the way we did here at Smartkarma, was REALLY interesting and profitable. If you liked Smartkarma's work on the CRE situation, we've got lots more below the fold.Including Arb Grids.

Baoxin: CGAS Partial Offer Promises Interesting Future - And Arb Grids

China

Beijing Bashi Media Co., Ltd. provides urban bus transportation and advertising services.  The Company also provides taxi, inter-provincial transportation, car rental, and other transportation related services.

Wuxi Commercial Mansion Grand Orient Co., Ltd. operates a department store retail business. Its department stores sell a variety of products including home appliances, apparel, textiles, and leather products.  Wuxi Commercial also sells cars. The Company sells its general merchandise through its own website www.eastall.com and has operation in food serve.

Wuxi Commercial Mansion Grand Orient Co (600327 CH)

Fujian Zhangzhou Development Co., Ltd., trades automobile, manages and operates toll roads, produces and distributes tap water, and provides waste management services.

China Meidong Auto Holdings Limited is an automobile dealership and maintenance group in China.

Global Top E-Commerce Co.,Ltd. is in the businesses of cross-border E-commerce and the design, production and marketing of trouseres for men and women.

Global Top E-Commerce Co., Ltd. A (002640 CH)

Pang Da Automobile Trade Company Limited sells, repairs and provides maintenance services for cars and construction machinery.

Beijing Digital Telecom Co., Ltd. is a communication company that services The People's Republic of China.  The Company is a distributor of communications terminals and related services. It also retails mobile communications and digital products.

Beijing Sanfo Outdoor Products Co. Ltd. offers outdoor sports products. The Company operates retail stores throughout China, providing outdoor clothing, gear, tents, and other related products. Beijing Sanfo Outdoor Products also offers direct sales via the internet, telephone, and mail.

Shanghai Aiyingshi Co., Ltd. retails maternal and child products. The Company provides children's dairy products, diapers, feeding and maternity supplies, toys, baby clothing and shoes, and other related products. Shanghai Aiyingshi markets its products in China.

GOME Retail Holdings Limited retails household appliances. The Company provides televisions, washing machines, computers, mobile phones, digital devices, air conditioners, and other products. GOME Retail Holdings also provides equipment repairing, recycling, and other services.

VT HOLDINGS CO., LTD. sells automobiles produced by Honda, replacement parts, and used cars.  The Company provides vehicle maintenance and repair services and arranges automobile financing and insurance.

PC Jeweller Ltd. manufacture, retails, and wholesale jewelry.  The Company sells jewelry through its showrooms and over the Internet.  PC Jeweller offers a wide range of products including gold jewellery, diamond jewellery and other jewellery including silver articles, with a focus on diamond jewellery and jewellery for weddings.

GEO Holdings Corporation operates stores that rent and sell videos, CDs, DVDs, games, and books nationwide. The Company also buys and sells used books and CDs. GEO operates its own stores and also franchise stores.

Haverty Furniture Companies, Inc. sells home furnishings.  The Company stores are located in southern and central United States.  Haverty's offers brand name furniture, such as Broyhill, Thomasville, Lane/Action, La-Z-Boy, and Clayton Marcus.

Cortina Holdings Limited retails and distributes luxury watches in the Asia Pacific region.  The Company also trades, imports, and exports pens, lighters, and clocks.

Shinsegae International Co., Ltd. was spun off from Shinsegae in 1996.  The company imports and distributes famous foreign brands and manufactures/distribut es domestic brand.  The Company's line of business includes the wholesale distribution of men's and women's apparel.

UNITED ARROWS LTD., operates fashion stores, specializing in casual clothing and accessory for men and women.  The Company has stores nationwide.  Main forces are United Arrows, Green Label Relaxing and Chrome Hearts.

America's Car-Mart, Inc, sells and finances the sale of used automobiles and trucks.  The Company operates its dealerships primarily in small cities and rural locations throughout the South-Central United States and provides financing for substantially all of its customers.  Car-Mart's customers are principally consumers with limited or damaged credit histories.

Designer Brands Inc. designs, produces, and retails footwear and accessories. The Company offers shoes, boots, sandals, sneakers, socks, handbags, and accessories. Designer Brands serves customers in the United States.

Symphony Holdings Limited, through its subsidiaries, manufactures and trades footwear products.  The Company also invests in properties.

China Yongda Automobiles Services Holdings Ltd. retails passenger vehicles. The Company sells new and used vehicles and offers automobile rentals. China Yongda Automobiles also provides service.

China Yongda Automobile Services Hldg (3669 HK)

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Baoxin: CGAS Partial Offer Promises Interesting Future - And Arb Grids

Three months ago, on September 15th, China's largest publicly-traded automobile dealer China Grand Automotive Services Co Ltd (hereafter "China...

Travis Lundy