HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>ORG purchased 27% of CPMC's shares at HK$6/share in 2015.After about eight years, Baosteel's Offer Price was only HK$6.87/share. The annualized return rate was low, which obviously cannot satisfy ORG.</li>
<li>Baosteel and CPMC have been in talks for a long time - There may have been some "tacit agreement" between the two parties. The approval process is smooth so far.</li>
<li>For acquisitions/consolidation between SOEs, private enterprises usually have limited chances of winning.ORG has financial pressure and the approval process face uncertainties. There would be more negotiations among CPMC, ORG, Baosteel.</li>
</ul>


ORG purchased 27% of CPMC's shares at HK$6/share in 2015.After about eight years, Baosteel's Offer Price was only HK$6.87/share. The annualized return rate was low, which obviously cannot satisfy ORG.
Baosteel and CPMC have been in talks for a long time - There may have been some "tacit agreement" between the two parties. The approval process is smooth so far.
For acquisitions/consolidation between SOEs, private enterprises usually have limited chances of winning.ORG has financial pressure and the approval process face uncertainties. There would be more negotiations among CPMC, ORG, Baosteel.


CPMC Holdings (906.HK) Privatization - Some New Information Worth the Attention

<ul>
<li>Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand. </li>
<li>ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.</li>
<li>For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader. </li>
</ul>


Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand. 
ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.
For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader. 


CPMC Holdings (906.HK) - ORG Can't Afford to Lose, But Baosteel Is a Step Ahead

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>With ORG offering a 4.9% higher price and securing Zhang Wei's acceptance, the ball is now back in Baowu's hands. Good reasons exist for Baowu to raise its offer price. </li>
<li>Baowu's subsidiary <a href="https://www.smartkarma.com/entities/shanghai-baosteel-packaging-a" target="_blank" data-smartkarma-citation="entities:25102:1" rel="noopener">Shanghai Baosteel Packaging-A (601968 CH)</a> needs <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a> more than ORG, given its smaller market share and weaker profitability.</li>
<li>At ORG's offer price, CPMC's PERs for FY24 and FY25 of 15.4x and 14.2x are cheaper than Baosteel Packaging's 22x and 18.7x. This gives additional justifications for a higher offer. </li>
</ul>


With ORG offering a 4.9% higher price and securing Zhang Wei's acceptance, the ball is now back in Baowu's hands. Good reasons exist for Baowu to raise its offer price. 
Baowu's subsidiary Shanghai Baosteel Packaging-A (601968 CH) needs CPMC Holdings (906 HK) more than ORG, given its smaller market share and weaker profitability.
At ORG's offer price, CPMC's PERs for FY24 and FY25 of 15.4x and 14.2x are cheaper than Baosteel Packaging's 22x and 18.7x. This gives additional justifications for a higher offer. 


CPMC Holdings (906 HK): Will Baowu Raise the Offer Price After ORG?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>After six months had elapsed, and <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a>'s Offeror just needing SAMR/SAFE clearance before launching a firm bid, a competing Offer from <a href="https://www.smartkarma.com/entities/org-technology-co-ltd-a" target="_blank" data-smartkarma-citation="entities:17510:1" rel="noopener">ORG Technology (002701 CH)</a> appeared unlikely. </li>
<li>Yet in a surprise move, ORG has made a pre-conditional (NDRC, SAFE, MoC, SAMR, and shareholder approval) Offer at HK$7.21/share, a 4.9% premium to the ongoing SASAC/NCSSF Offer. </li>
<li>ORG's pre-con Offer also has a 50% acceptance condition. ORG and concert parties have 24.43%. And Zhang Wei (22.01%) has given has an irrevocable. Directors have 0.87%. Intriguing situation. </li>
</ul>


After six months had elapsed, and CPMC Holdings (906 HK)'s Offeror just needing SAMR/SAFE clearance before launching a firm bid, a competing Offer from ORG Technology (002701 CH) appeared unlikely. 
Yet in a surprise move, ORG has made a pre-conditional (NDRC, SAFE, MoC, SAMR, and shareholder approval) Offer at HK$7.21/share, a 4.9% premium to the ongoing SASAC/NCSSF Offer. 
ORG's pre-con Offer also has a 50% acceptance condition. ORG and concert parties have 24.43%. And Zhang Wei (22.01%) has given has an irrevocable. Directors have 0.87%. Intriguing situation. 


Game On As ORG Lobs Competing Offer For CPMC (906 HK)

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a> disclosed a competing pre-conditional voluntary offer from <a href="https://www.smartkarma.com/entities/org-technology-co-ltd-a" target="_blank" data-smartkarma-citation="entities:17510:1" rel="noopener">ORG Technology Co., Ltd. A (002701 CH)</a> at HK$7.21, a 4.9% premium to Changping Industrial’s HK$6.87 offer.  </li>
<li>Like the Changping Industrial offer, ORG’s offer is pre-conditional on regulatory approvals and has a 50% minimum acceptance condition. Changping Industrial has secured all regulatory approvals except SAMR. </li>
<li>ORG’s skinny premium and precarious irrevocable from Mr Zhang Wei suggests Changping Industrial’s next move is to secure Mr Wei’s irrevocable with a revised higher offer.</li>
</ul>



CPMC Holdings (906 HK) disclosed a competing pre-conditional voluntary offer from ORG Technology Co., Ltd. A (002701 CH) at HK$7.21, a 4.9% premium to Changping Industrial’s HK$6.87 offer.  
Like the Changping Industrial offer, ORG’s offer is pre-conditional on regulatory approvals and has a 50% minimum acceptance condition. Changping Industrial has secured all regulatory approvals except SAMR. 
ORG’s skinny premium and precarious irrevocable from Mr Zhang Wei suggests Changping Industrial’s next move is to secure Mr Wei’s irrevocable with a revised higher offer.


CPMC Holdings (906 HK): ORG’s Competing Offer Kicks off an Auction

China

CPMC Holdings Ltd. manufactures food packaging products.

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CPMC Holdings (906 HK)