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

Canvest Environmental Protection Group / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/canvest-environmental-protection-group-co-ltd" target="_blank" data-smartkarma-citation="entities:100:1" rel="noopener">Canvest Environmental Protection Group (1381 HK)</a> disclosed a pre-conditional Cayman scheme privatisation from <a href="https://www.smartkarma.com/entities/grandblue-environment-co-a" target="_blank" data-smartkarma-citation="entities:17887:1" rel="noopener">Grandblue Environment Co A (600323 CH)</a> at HK$4.90 per share, an 11.6% premium to the last close price.</li>
<li>The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.</li>
<li>While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.</li>
</ul>



Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.


Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>After hitting a low point in Q4 2023, Research on Hong Kong companies has been slow to pick up reflecting the ongoing skepticism from investors. </li>
<li>Reports on the large China tech companies dominated the top ten companies covered over the last couple of years and in the first half of 2024.</li>
<li>As China continues to dominate and make news in the global EV market, research in that sector has picked up.</li>
</ul>


After hitting a low point in Q4 2023, Research on Hong Kong companies has been slow to pick up reflecting the ongoing skepticism from investors. 
Reports on the large China tech companies dominated the top ten companies covered over the last couple of years and in the first half of 2024.
As China continues to dominate and make news in the global EV market, research in that sector has picked up.


BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/grandblue-environment-co-a" target="_blank" data-smartkarma-citation="entities:17887:1" rel="noopener">Grandblue Environment Co A (600323 CH)</a> disclosed a potential pre-conditional privatisation of <a href="https://www.smartkarma.com/entities/canvest-environmental-protection-group-co-ltd" target="_blank" data-smartkarma-citation="entities:100:1" rel="noopener">Canvest Environmental Protection Group (1381 HK)</a> at HK$4.90 per share, a 20.7% premium to the last close price. </li>
<li>Completing the capital injection from SOE entities into the offeror is a precondition. Grandblue also proposes that the controlling shareholder roll over 7.23% of its effective 44.75% stake. </li>
<li>While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. Timing is the key risk. </li>
</ul>



Grandblue Environment Co A (600323 CH) disclosed a potential pre-conditional privatisation of Canvest Environmental Protection Group (1381 HK) at HK$4.90 per share, a 20.7% premium to the last close price. 
Completing the capital injection from SOE entities into the offeror is a precondition. Grandblue also proposes that the controlling shareholder roll over 7.23% of its effective 44.75% stake. 
While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. Timing is the key risk. 


Canvest Environmental (1381 HK): Possible Privatisation at HK$4.90

HK/China Equity Long-Short

Osbert Tang, CFA

China Everbright Water / Equity Bottom-Up

<ul>
<li>Weaker 2H22 and FY22 earnings are primarily caused by disruption from the pandemic, and the 18.7% share price retreat since 2022 should have well factored in an unexciting year.</li>
<li>Recovery of construction revenue, rebound in margin, completion of pipeline projects, increase in water tariffs and faster receivable collections are the key positive factors to watch. </li>
<li>
<a href="https://www.smartkarma.com/entities/china-everbright-water-limited" target="_blank" data-smartkarma-citation="entities:31446:1" rel="noopener">China Everbright Water (1857 HK)</a> will generate ROE of 9.8% and 10.3% for FY23 and FY24. Such return profile renders its 3.5x PER and 0.35x P/B for FY23 inexpensive. </li>
</ul>


Weaker 2H22 and FY22 earnings are primarily caused by disruption from the pandemic, and the 18.7% share price retreat since 2022 should have well factored in an unexciting year.
Recovery of construction revenue, rebound in margin, completion of pipeline projects, increase in water tariffs and faster receivable collections are the key positive factors to watch. 

China Everbright Water (1857 HK) will generate ROE of 9.8% and 10.3% for FY23 and FY24. Such return profile renders its 3.5x PER and 0.35x P/B for FY23 inexpensive. 


China Everbright Water (1857 HK): More to Look Forward

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>S&amp;P DJI commenced a market consultation for the S&amp;P Global Water Index on 29 July and that could lead to quite a few changes to the index in October.</li>
<li>We currently see 14 deletions and 10 inclusions for the index in October. Most of the changes will have a high impact from passive fund trading.</li>
<li>There could be more changes in April 2023 once stocks listed in Emerging Markets are included in the index.</li>
</ul>


S&amp;P DJI commenced a market consultation for the S&amp;P Global Water Index on 29 July and that could lead to quite a few changes to the index in October.
We currently see 14 deletions and 10 inclusions for the index in October. Most of the changes will have a high impact from passive fund trading.
There could be more changes in April 2023 once stocks listed in Emerging Markets are included in the index.


S&P Global Water Index: Market Consultation Driven Potential Changes

Hong Kong

Guangdong Investment Limited, through its subsidiaries, operates water supply, power and electricity, and infrastructure businesses.  The Company also invests in and develops real estate properties, operates department stores, and provides financial services.

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Guangdong Investment (270 HK)

Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90

While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as...

Arun George

BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)

Tech NEV companies continue to dominate the research landscape for Hong Kong coverage. Bosideng, China Water Affairs, Topsports, BYD and Xiaomi...

David Mudd

Canvest Environmental (1381 HK): Possible Privatisation at HK$4.90

While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. The key risk is the timing...

Arun George

China Everbright Water (1857 HK): More to Look Forward

FY22 is an unexciting year, but there are positive drivers like construction revenue recovery, margin rebound, pipeline project completions, water...

Osbert Tang, CFA

S&P Global Water Index: Market Consultation Driven Potential Changes

S&P DJI's market consultation for the S&P Global Water Index could lead to quite a few changes to the index in October. There are a few potential...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)