Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a>'s 33-storey Three Exchange Square.</li>
<li>This "news" is straight out of left field. For its part, HKL said the market rumour is pure speculation.</li>
<li>HKL's P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid. </li>
</ul>


According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)'s 33-storey Three Exchange Square.
This "news" is straight out of left field. For its part, HKL said the market rumour is pure speculation.
HKL's P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid. 


Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>It attracts investors when a company's 15-year ROCE averages over 25% (and has never gone below 20%). <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> is one of those companies.</li>
<li>With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.</li>
<li>We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.</li>
</ul>


It attracts investors when a company's 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.


Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.</li>
<li>A key catalyst for the recent narrowing was JCNC's inclusion in the SIMSCI Index at the end of last month.</li>
<li>JCNC is expensive here - relative to historical values -  and from an implied stub perspective.</li>
</ul>



Jardine Cycle &amp; Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
A key catalyst for the recent narrowing was JCNC's inclusion in the SIMSCI Index at the end of last month.
JCNC is expensive here - relative to historical values -  and from an implied stub perspective.


<ul>
<li>
<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> (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.</li>
<li>The reweighting follows the cancellation of the 59% shareholding in JMH held by <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a>, which was privatised last year.</li>
<li>I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.</li>
</ul>



Jardine Matheson Holdings (JM SP) (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.
The reweighting follows the cancellation of the 59% shareholding in JMH held by Jardine Strategic Holdings (JS SP), which was privatised last year.
I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.


Yesterday after the close of trading, <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a> <a href="https://links.sgx.com/FileOpen/HKLH0906.ashx?App=Announcement&amp;FileID=682657" target="_blank" rel="noopener">announced</a> a US$500mn share buyback program, which will run until 31st December 2022.
As the holding of treasury shares is not permitted in HKL’s constitution, any shares repurchased will be canceled.
Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. That's pretty meaningful.
Jardine evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.
At a ~68% discount its NAV of US$14.75 (as at 30 June) - even after today's move - HKL is cheap. Jardines think so too.
Buy on any weakness.

Yesterday after the close of trading, Hongkong Land (HKL SP) announced a US$500mn share buyback program, which will run until 31st December 2022.
As the holding of treasury shares is not permitted in HKL’s constitution, any shares repurchased will be canceled.
Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. That's pretty meaningful.
Jardine evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.
At a ~68% discount its NAV of US$14.75 (as at 30 June) - even after today's move - HKL is cheap. Jardines think so too.
Buy on any weakness.

Singapore

DFI Retail Group Holdings Ltd operates as a holding company. The Company, through its subsidiaries, focuses on retail stores such as supermarkets, drugstores, and convenience stores. DFI Retail Group Holdings serves customers in Asia.

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DFI Retail Group Holdings (DFI SP)

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

Reportedly two PRC firms and a mainland bank intend to acquire Hongkong Land''s Three Exchange Square. HKL said the rumor is pure speculation....

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Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play

Sheng Siong Group is one of the three largest retailers of groceries in Singapore. With a long-term ROCE >25%, 13% of the mkt cap in cash, and a 4%...

Sameer Taneja

JCNC Is Still Overstretched Vs. Astra

JCNC is expensive here - relative to historical values - and from an implied stub perspective. And the MSCI inclusion event has now passed. I'd...

David Blennerhassett

Jardine Matheson (JM SP): MSCI Blues

Given JMH's strong underlying operating performance, the 40% discount to NAV - one in which there are discounts of discounts, JMH is attractive...

David Blennerhassett

Hongkong Land's (HKL SP) Big Buyback

HKL has historically traded cheap, both on a standalone basis, and with respect to peers. This buyback is the catalyst to narrow that discount to...

David Blennerhassett

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