IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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

Greatview Aseptic Packaging / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shandong-xinjufeng-technology-packaging-co-ltd" target="_blank" data-smartkarma-citation="entities:36744:1" rel="noopener">Shandong Xinjufeng Technology Packaging (301296 CH)</a> agreed to acquire <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>’s 28.22% stake in <a href="https://www.smartkarma.com/entities/greatview-aseptic-packaging" target="_blank" data-smartkarma-citation="entities:10802:1" rel="noopener">Greatview Aseptic Packaging (468 HK)</a> at HK$2.65 per share.</li>
<li>Post-Completion, Xinjufeng will be the largest shareholder. As Xinjufeng’s shareholding will remain below the 30% voting threshold, the transaction will NOT result in a mandatory general offer. </li>
<li>The transaction price, which is a 22.7% premium to the last close, highlights Greatview’s value. Greatview’s forward P/E multiple is undemanding in comparison to peer P/E multiples.</li>
</ul>



Shandong Xinjufeng Technology Packaging (301296 CH) agreed to acquire Jardine Matheson Holdings (JM SP)’s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65 per share.
Post-Completion, Xinjufeng will be the largest shareholder. As Xinjufeng’s shareholding will remain below the 30% voting threshold, the transaction will NOT result in a mandatory general offer. 
The transaction price, which is a 22.7% premium to the last close, highlights Greatview’s value. Greatview’s forward P/E multiple is undemanding in comparison to peer P/E multiples.


Greatview Aseptic (468 HK): Xinjufeng Technology Acquires Jardine Matheson’s Stake

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Worldwide, inflation is surging and outlook is for it to stay elevated for an extended period of time. Meanwhile, we are seeing retreats in some commodity prices lately. </li>
<li>We witnessed that some stocks have showed divergences against the downward movement of their input prices, and this made them look interesting.</li>
<li>Share prices for <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>, <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a> and <a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl (2313 HK)</a> are still at low levels while their input costs have already come down sharply.</li>
</ul>


Worldwide, inflation is surging and outlook is for it to stay elevated for an extended period of time. Meanwhile, we are seeing retreats in some commodity prices lately. 
We witnessed that some stocks have showed divergences against the downward movement of their input prices, and this made them look interesting.
Share prices for CPMC Holdings (906 HK), Want Want (151 HK) and Shenzhou Intl (2313 HK) are still at low levels while their input costs have already come down sharply.


China Industrials: Positioning for Lower Inflation? If Yes, Here Are Three Names of Interest...

Equity Bottom-Up

<ul>
<li>FY21 result of <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> indicated it is under pressure from higher input costs in 2H21, as profit growth rate has slowed to 3.1%, from 36.5% in 1H21. </li>
<li>1H22 will stay challenging, but management guided for improvement in 2H22. That said, CPMC expects gross margin for FY22 can be marginally higher than in FY21.</li>
<li>Structural story of higher can demand, rise in industry concentration and increase de-plasticisation remains intact. We see any pull-back in share price as opportunity. </li>
</ul>


FY21 result of CPMC Holdings (906 HK) indicated it is under pressure from higher input costs in 2H21, as profit growth rate has slowed to 3.1%, from 36.5% in 1H21. 
1H22 will stay challenging, but management guided for improvement in 2H22. That said, CPMC expects gross margin for FY22 can be marginally higher than in FY21.
Structural story of higher can demand, rise in industry concentration and increase de-plasticisation remains intact. We see any pull-back in share price as opportunity. 


CPMC Holdings (906 HK): Short Term Tough but Long Term Story Intact

<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> looks to have kept its input cost managed and alleviated such pressure through hedging of raw material costs and raising product prices. The recent retreat in commodity prices upon the government's efforts to keep them under control also partly mitigates the pressure. Interestingly, the company sees influx of orders previously placed with smaller competitors as they are badly affected by elevated cost and power storage.The company revealed that its production has not experienced material interruption during power shortage as its plants are highly-graded by local governments. It continued to expect a stable margin for FY21 despite all disruptive factors in 2H21. At 7.8x PER and 0.65x P/B for FY22F, we think that CPMC is appealing after a 26% retreat in share price from the peak. Its ROE of 9.7% for FY22F is also a historically high level.

CPMC Holdings (906 HK) looks to have kept its input cost managed and alleviated such pressure through hedging of raw material costs and raising product prices. The recent retreat in commodity prices upon the government's efforts to keep them under control also partly mitigates the pressure. Interestingly, the company sees influx of orders previously placed with smaller competitors as they are badly affected by elevated cost and power storage.The company revealed that its production has not experienced material interruption during power shortage as its plants are highly-graded by local governments. It continued to expect a stable margin for FY21 despite all disruptive factors in 2H21. At 7.8x PER and 0.65x P/B for FY22F, we think that CPMC is appealing after a 26% retreat in share price from the peak. Its ROE of 9.7% for FY22F is also a historically high level. 

CPMC (906 HK): Cost Pressure Appears Controlled While Demand Looks Firm

<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> has staged another set of good result with net profit grew 36.5% YoY and 20.6% HoH to a record of Rmb249.4m. It is encouraging to see that, even with sharp rise in raw material prices, its gross margin has just contracted marginally and gross profit still rose 20.1% YoY. We think this demonstrated the solid underlying product demand and its ability to pass on a significant portion of higher costs.In the post-result call, management looks to be very optimistic about 2H21, expecting good HoH recovery in margin. The ramp up in production capacity, further price hikes and solid structural demand growth are key drivers. We think CPMC will be able to achieve an ROE of 10% by FY22, and with record profit for next two years, its current 0.76x 12-month forward P/B is clearly not sufficient in reflecting its improvement in profitability over the horizon.

CPMC Holdings (906 HK) has staged another set of good result with net profit grew 36.5% YoY and 20.6% HoH to a record of Rmb249.4m. It is encouraging to see that, even with sharp rise in raw material prices, its gross margin has just contracted marginally and gross profit still rose 20.1% YoY. We think this demonstrated the solid underlying product demand and its ability to pass on a significant portion of higher costs.In the post-result call, management looks to be very optimistic about 2H21, expecting good HoH recovery in margin. The ramp up in production capacity, further price hikes and solid structural demand growth are key drivers. We think CPMC will be able to achieve an ROE of 10% by FY22, and with record profit for next two years, its current 0.76x 12-month forward P/B is clearly not sufficient in reflecting its improvement in profitability over the horizon.  

CPMC Holdings (906 HK): Healthy 1H21 Despite Rising Cost, Highlights from Post-Result Call

China

CPMC Holdings Ltd. manufactures food packaging products.

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CPMC Holdings (906 HK)

Greatview Aseptic (468 HK): Xinjufeng Technology Acquires Jardine Matheson’s Stake

The transaction price, which is a 22.7% premium to the last close, highlights Greatview’s value. Greatview’s forward P/E multiple is undemanding in...

Arun George

China Industrials: Positioning for Lower Inflation? If Yes, Here Are Three Names of Interest...

Share prices of CPMC Holdings, Want Want and Shenzhou Intl have not yet reacted to reflect the recent declines in input costs due to the retreat in...

Osbert Tang, CFA