Analyst

Steve Zhou, CFA

Equity Bottom-Up

CIFI Ever Sunshine Services Gr / Equity Bottom-Up

<ul>
<li>In the Politburo meeting this week, China announced the intention to stabilize the property market and improve housing inventory.  Following the meeting, Beijing announced a relaxation of home purchase restrictions.</li>
<li>Given the extreme pessimism on China property, good opportunities exist for select quality companies in the China property space, especially in property management.</li>
<li>One name I would like to highlight is <a href="https://www.smartkarma.com/entities/cifi-ever-sunshine-services-gr" target="_blank" data-smartkarma-citation="entities:28932:1" rel="noopener">CIFI Ever Sunshine Services Gr (1995 HK)</a>, a non-SOE property management company with a good reputation in terms of execution.</li>
</ul>


In the Politburo meeting this week, China announced the intention to stabilize the property market and improve housing inventory.  Following the meeting, Beijing announced a relaxation of home purchase restrictions.
Given the extreme pessimism on China property, good opportunities exist for select quality companies in the China property space, especially in property management.
One name I would like to highlight is CIFI Ever Sunshine Services Gr (1995 HK), a non-SOE property management company with a good reputation in terms of execution.


China Property:  Sentiment Likely To Improve; Prefer Ever Sunshine Services (1995 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.

Event-Driven

Huafa Property Services Group / Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/huafa-property-services-group" target="_blank" data-smartkarma-citation="entities:5841:1" rel="noopener">Huafa Property Services Group (982 HK)</a> vote on <a href="https://www.smartkarma.com/entities/huafa-industrial-co-ltd-zhuhai" target="_blank" data-smartkarma-citation="entities:2329:1" rel="noopener">Huafa Industrial Co., Ltd. Zhuhai (600325 CH)</a>’ HK$0.29 offer is on 28 August. However, shares trade wide ahead of the vote.</li>
<li>Several readers have enquired about the unusually high spread ahead of the vote of a seemingly clean deal. The conversations raised several concerns. </li>
<li>The concerns are unwarranted, and this remains a clean deal. At the last close and for the 30 September payment, the gross/annualised spread was 5.5%/68.9%. </li>
</ul>


The Huafa Property Services Group (982 HK) vote on Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’ HK$0.29 offer is on 28 August. However, shares trade wide ahead of the vote.
Several readers have enquired about the unusually high spread ahead of the vote of a seemingly clean deal. The conversations raised several concerns. 
The concerns are unwarranted, and this remains a clean deal. At the last close and for the 30 September payment, the gross/annualised spread was 5.5%/68.9%. 


Huafa Property Services (982 HK): What’s Going on as Shares Trades Very Wide Ahead of the Vote?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huafa-property-services-group" target="_blank" data-smartkarma-citation="entities:5841:1" rel="noopener">Huafa Property Services Group (982 HK)</a>’s IFA opines that <a href="https://www.smartkarma.com/entities/huafa-industrial-co-ltd-zhuhai" target="_blank" data-smartkarma-citation="entities:2329:1" rel="noopener">Huafa Industrial Co., Ltd. Zhuhai (600325 CH)</a>’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August. </li>
<li>Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. The offer price is final.</li>
<li>No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%. </li>
</ul>



Huafa Property Services Group (982 HK)’s IFA opines that Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August. 
Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. The offer price is final.
No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%. 


Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huafa-property-services-group" target="_blank" data-smartkarma-citation="entities:5841:1" rel="noopener">Huafa Property Services Group (982 HK)</a> announced a privatisation offer from <a href="https://www.smartkarma.com/entities/huafa-industrial-co-ltd-zhuhai" target="_blank" data-smartkarma-citation="entities:2329:1" rel="noopener">Huafa Industrial Co., Ltd. Zhuhai (600325 CH)</a> at HK$0.29 per share, a 30.6% premium to the undisturbed price.</li>
<li>Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.</li>
<li>The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.  </li>
</ul>



Huafa Property Services Group (982 HK) announced a privatisation offer from Huafa Industrial Co., Ltd. Zhuhai (600325 CH) at HK$0.29 per share, a 30.6% premium to the undisturbed price.
Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.  


Huafa Property Services (982 HK): Scheme Offer at HK$0.29

<ul>
<li>According to public news, China is considering asking local governments to purchase significant amount of unsold homes in the country. </li>
<li>
<a href="https://www.smartkarma.com/entities/nippon-paint-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7387:1" rel="noopener">Nippon Paint Holdings (4612 JP)</a> is a good proxy for exposure to China property with downside protection.</li>
<li>China made up 40% of Nippon Paint's operating profit (1Q24 numbers).  Nippon Paint is the absolute leader in decorative paint in China, with 25% market share in 2023 (TUC).</li>
</ul>


According to public news, China is considering asking local governments to purchase significant amount of unsold homes in the country. 

Nippon Paint Holdings (4612 JP) is a good proxy for exposure to China property with downside protection.
China made up 40% of Nippon Paint's operating profit (1Q24 numbers).  Nippon Paint is the absolute leader in decorative paint in China, with 25% market share in 2023 (TUC).


Nippon Paint (4612 JP):  Strong 1Q24; Overlooked Proxy For China Property

China

CIFI Ever Sunshine Services Group Limited operates as a property management service provider. The Company provides residential properties, non-residential properties, sales assistance services, housing repair services, pre-delivery inspection services, and community value-added services. CIFI Ever Sunshine Services Group serves customers in China.

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CIFI Ever Sunshine Services Gr (1995 HK)

China Property: Sentiment Likely To Improve; Prefer Ever Sunshine Services (1995 HK)

Given the extreme pessimism on valuation, good opportunities exist for select quality companies in the China property space, especially in property...

Steve Zhou, CFA

Huafa Property Services (982 HK): What’s Going on as Shares Trades Very Wide Ahead of the Vote?

Several readers have enquired about the unusually high spread ahead of the vote on a seemingly clean deal. The conversations raised several...

Arun George

Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote

No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the...

Arun George

Huafa Property Services (982 HK): Scheme Offer at HK$0.29

The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment...

Arun George

Nippon Paint (4612 JP): Strong 1Q24; Overlooked Proxy For China Property

China made up 40% of Nippon Paint's operating profit (1Q24 numbers). Nippon Paint is the absolute leader in decorative paint in China, with 25%...

Steve Zhou, CFA

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