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.

Event-Driven

<ul>
<li>
<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> has despatched the scheme document. The offeror will offer HK$4.00 per scheme share. The scheme meeting is scheduled for 9:30 am on 17 December.</li>
<li>Unsurprisingly, the IFA considers the offer to be fair and reasonable. We think that the IFA analysis of historical share prices and privatisation precedents is flawed. </li>
<li>As no shareholder holds a blocking stake, the bid will likely succeed. At last close, the shares trade at a gross spread of 6.4% to the offer price. </li>
</ul>



Chinese Estates Holdings (127 HK) has despatched the scheme document. The offeror will offer HK$4.00 per scheme share. The scheme meeting is scheduled for 9:30 am on 17 December.
Unsurprisingly, the IFA considers the offer to be fair and reasonable. We think that the IFA analysis of historical share prices and privatisation precedents is flawed. 
As no shareholder holds a blocking stake, the bid will likely succeed. At last close, the shares trade at a gross spread of 6.4% to the offer price. 


Chinese Estates’ Scheme Document, IFA Opinion

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The Scheme Document for <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> has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1123/2021112301050.pdf" target="_blank" rel="noopener">dispatched</a>. The Scheme Meeting will take place on the 17 December. </li>
<li>Founder, Joseph Lau, and his wife Chan Hoi Wan, who control 74.99% of shares out, are offering HK$4.00/share for Chinese Estates, a leading property developer in Hong Kong.</li>
<li>The Independent Financial Adviser (Gram Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is on or before the 19 January 2022.</li>
</ul>


The Scheme Document for Chinese Estates Holdings (127 HK) has been dispatched. The Scheme Meeting will take place on the 17 December. 
Founder, Joseph Lau, and his wife Chan Hoi Wan, who control 74.99% of shares out, are offering HK$4.00/share for Chinese Estates, a leading property developer in Hong Kong.
The Independent Financial Adviser (Gram Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is on or before the 19 January 2022.


Chinese Estates (127 HK): Scheme Doc Out. Meeting on 17 December

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hang-lung-group-ltd" target="_blank" data-smartkarma-citation="entities:50:1" rel="noopener"><strong>Hang Lung (10 HK</strong>)</a> is coming up "expensive" on my monitor, yet remains one of the cheapest property plays in Hong Kong on a P/B metric.</li>
<li>Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market cap - &gt;20%.</li>
</ul>



Hang Lung (10 HK) is coming up "expensive" on my monitor, yet remains one of the cheapest property plays in Hong Kong on a P/B metric.
Preceding my comments on Hang Lung are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market cap - &gt;20%.


StubWorld: Scion Adriel Likes Hang Lung Group Shares

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*Worries In Both Hong Kong and Mainland China: </em></strong>The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and</p><p><strong><em>*Poor Capital Management Becoming A Big Problem: </em></strong>Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling. </p>

*Worries In Both Hong Kong and Mainland China: The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and*Poor Capital Management Becoming A Big Problem: Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling. 

<div>
<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
</div>
<div>
<p>I number 39, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 39, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Chinese Estates, Pipedo, Intega, Dragon Crown

Hong Kong

Shimao Property Holdings Limited develops real estate projects in China.

China Motor Bus Company Limited, through its subsidiaries, develops and invests in properties.

Wing Tai Properties Ltd. invests in and manages real estate.  The Company invests in residential and commercial properties, serviced apartments, and boutique hotels.

Far East Consortium International Limited, through its subsidiaries, develops and invests in real estate.  The Company also operates hotels.

Far East Consortium International (35 HK)

Langham Hospitality Investments and Langham Hospitality Investment Limited is a stapled entity. The Company primarily owns and invests in a portfolio of hotels in Asia.

China South City Holdings Ltd. owns and operates an integrated logistics and trade center of industrial materials in China. The trade center primarily features textile and clothing materials; leather and accessories; electronics accessories and products; metals;chemicals and plastic materials and products; and printing and packaging materials.

Joy City Property Limited, is engaged in the development, operation, sale, leasing and management of mixed-use complexes and commercial properties such as shopping malls, hotels, offices, serviced apartments and resort and tourist properties.

Tai Cheung Holdings Limited, through its subsidiaries, invests in, develops, and manages properties.  The Company also invests in securities.

LVGEM China Real Estate Investment Co., Ltd. is a property developer. The Company participates in property development and sales, commercial property investment and operations, and comprehensive  services. LVGEM focuses its operations across the Pearl River Delta region.

Lvgem China Real Estate Investment Co (95 HK)

Shanghai Industrial Urban Development Group Ltd., through its subsidiaries, develops and invests in properties.

Shanghai Industrial Urban Dvp Grp (563 HK)

Shanghai New Huang Pu Industrial Group Co., Ltd. develops, sells, and leases residential and commercial real estate properties.  The Company also renovates old buildings.  Shanghai New Huangpu provides food and entertainment services and trades building materials.

Shanghai New Huang Pu Industrial Group Co., Ltd.  (600638 CH)

Shanghai New Huang Pu Industrial Group Co., Ltd. 

Ajmera Realty & Infra India Ltd manufactures color coated galvanized steel and aluminum coils/roofing sheets.  The Company supplies a range of coating specifications in polyester, plastisol, and other materials to suit individual customer requirements.

Kee Tai Properties Co., Ltd. develops, sells, and leases residential and commercial buildings which are constructed by independent builders.

Unitech Limited is a real estate development company.  The Company develops self-sustaining residential areas, commercial spaces, amusement parks, infrastructure development, thermal power plants, transmission lines, highways, flyovers, industrial facilities, steel plants, and overseas turnkey projects.

Principal Capital PCL is a property development company. The Company's primary objective is to develop property projects with a focus on the Central Business District (CBD) and prime area.

Wolong Real Estate Group Co., Ltd. develops residential and commercial real estate projects.

Wolong Real Estate Group Co, Ltd. (600173 CH)

Shining Building Business Co., Ltd. develops, sells, and leases residential and commercial buildings which are constructed by independent construction companies.

P2P Financial Information Service Co Ltd is mainly engaged in commercial real estate development and services.

P2 P Financial Information Service (600696 CH)

Jiangsu Phoenix Property Investment Co Ltd develops and manages residential and commercial real estate properties.

Kolte-Patil Developers Ltd. builds residential housing, commercial complexes, and mixed residential and commercial projects.

Chinese Estates Holdings Limited, through its subsidiaries, invests in and develops real estate properties.  The Company also invests in securities and provides brokerage and money lending services.

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Chinese Estates Holdings (127 HK)

Chinese Estates’ Scheme Document, IFA Opinion

The scheme meeting is on 17 December. IFA considers the HK$4 per share offer to be fair and reasonable. At last close, the shares trade at a gross...

Arun George

Chinese Estates (127 HK): Scheme Doc Out. Meeting on 17 December

A gross/annualised spread 8.1%/66.2% is not unattractive. But I'd expect pushback due to low liquidity and heading into year-end.

David Blennerhassett

StubWorld: Scion Adriel Likes Hang Lung Group Shares

HLG remains very cheap here on a look-through basis. You're looking at 30-40% upside to HLG here to get back to a simple ratio of 1.45x, the ten...

David Blennerhassett

Link REIT – Looking For Handouts

LINK REIT: The Hong Kong's rental reversion rate remained challenged in FY 1H22 at positive single digits. Mainland expansion likely will be...

Thomas J. Monaco

Asia-Pac Weekly Risk Arb Summary: Chinese Estates, Pipedo, Intega, Dragon Crown

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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