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

Haitong Securities Co Ltd (H) / Event-Driven

<ul>
<li>The gross spreads of large HK merger arb situations have increased since 18 October. The widening spread is due to the unfortunate fallout from the China TCM deal break. </li>
<li>We assess the widening spreads of HK's merger arb situations on several factors. Deal risk of the HK merger arb situations is evaluated by allocating 15 points across each factor.</li>
<li>In descending order, the companies with the lowest deal risk are <a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd-h" target="_blank" rel="noopener">Haitong Securities Co Ltd (H) (6837 HK)</a>, <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" rel="noopener">CPMC Holdings (906 HK)</a>, <a href="https://www.smartkarma.com/entities/greatview-aseptic-packaging" target="_blank" rel="noopener">Greatview Aseptic Packaging (468 HK)</a>, <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>, and Canvest.</li>
</ul>


The gross spreads of large HK merger arb situations have increased since 18 October. The widening spread is due to the unfortunate fallout from the China TCM deal break. 
We assess the widening spreads of HK's merger arb situations on several factors. Deal risk of the HK merger arb situations is evaluated by allocating 15 points across each factor.
In descending order, the companies with the lowest deal risk are Haitong Securities Co Ltd (H) (6837 HK), CPMC Holdings (906 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), and Canvest.


HK Merger Arb: Evaluating the Post China TCM Widening Spreads

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads: <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/beijing-capital-grand-ltd" target="_blank" data-smartkarma-citation="entities:18241:1" rel="noopener">Beijing Capital Grand (1329 HK)</a>, <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>, <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>, <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>. 
</li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/platinum-asset-management" target="_blank" data-smartkarma-citation="entities:914:1" rel="noopener">Platinum Asset Management (PTM AU)</a>, <a href="https://www.smartkarma.com/entities/silverlake-axis-ltd" target="_blank" data-smartkarma-citation="entities:14150:1" rel="noopener">Silverlake Axis (SILV SP)</a>, <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a>, <a href="https://www.smartkarma.com/entities/t-gaia-corp" target="_blank" data-smartkarma-citation="entities:8339:1" rel="noopener">T Gaia Corp (3738 JP)</a>, <a href="https://www.smartkarma.com/entities/elematec-corp" target="_blank" data-smartkarma-citation="entities:2866:1" rel="noopener">Elematec Corp (2715 JP)</a>. </li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Seven &amp; I Holdings (3382 JP), Beijing Capital Grand (1329 HK), Shanghai Henlius Biotech (2696 HK), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK). 

Lowest spreads: Platinum Asset Management (PTM AU), Silverlake Axis (SILV SP), Nec Networks &amp; System Integr (1973 JP), T Gaia Corp (3738 JP), Elematec Corp (2715 JP). 


Merger Arb Mondays (04 Nov) - Haitong, Canvest, Capital Grand, Capitol, Fuji Soft, NESIC, Elematec

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes are dropping fast (down 28%wow, down 60-65% vs peak a few weeks ago).</li>
<li>AH premia expanded on average. Liquid H/A pairs saw the H underperform the A in the pair by 1.52% last week. </li>
<li>Continuing differences in opinion between onshore and offshore opinion regarding the vibe of Chinese stimulus will continue to lead to interesting dispersion. Identify the trend and jump in.</li>
</ul>


Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes are dropping fast (down 28%wow, down 60-65% vs peak a few weeks ago).
AH premia expanded on average. Liquid H/A pairs saw the H underperform the A in the pair by 1.52% last week. 
Continuing differences in opinion between onshore and offshore opinion regarding the vibe of Chinese stimulus will continue to lead to interesting dispersion. Identify the trend and jump in.


A/H Premium Tracker (To 1 Nov 2024): AH Premia Higher as A-Share Tech Underperforms

David Blennerhassett

<ul>
<li>Back in March, the CSRC said it aimed to "form two to three investment banks and institutions with international competitiveness and market leadership by 2035".
</li>
<li>Last week's announced merger between China's leading state-backed brokerages, <a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> and <a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5665:1" rel="noopener">Haitong (6837 HK)</a>, is a move in that direction. Expect more scrip mergers to follow. </li>
<li>There have also been some media reports that the GJS/Haitong terms disadvantage holders of other Hong Kong broker stocks if potentially acquired in a merger. It's not quite that simple. </li>
</ul>


Back in March, the CSRC said it aimed to "form two to three investment banks and institutions with international competitiveness and market leadership by 2035".

Last week's announced merger between China's leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong (6837 HK), is a move in that direction. Expect more scrip mergers to follow. 
There have also been some media reports that the GJS/Haitong terms disadvantage holders of other Hong Kong broker stocks if potentially acquired in a merger. It's not quite that simple. 


<ul>
<li>A month after China's leading state-backed brokerages, <a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> and <a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5665:1" rel="noopener">Haitong Securities (H) (6837 HK)</a>, announced an intention to merge, we have a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1009/2024100900977.pdf" target="_blank" rel="noopener">firm deal</a>. </li>
<li>Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded</li>
<li>Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a>'s Offer, is one of timing.</li>
</ul>


A month after China's leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong Securities (H) (6837 HK), announced an intention to merge, we have a firm deal. 
Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded
Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with TCM (570 HK)'s Offer, is one of timing.


Guotai Junan (2611 HK)/Haitong (6837 HK)'s Merger: A Win For H-Shareholders

China

Guotai Junan Securities Co.,Ltd. provides financial services. The Company offers corporate finance, fixed income securities, asset management, risk management, and other services. Guotai Junan Securities Company serves clients throughout China.

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Guotai Junan Securities (2611 HK)

HK Merger Arb: Evaluating the Post China TCM Widening Spreads

The gross spreads of large HK merger arb situations have increased since 18 October, the China TCM deal break date. We assess the spreads of HK's...

Arun George

Merger Arb Mondays (04 Nov) - Haitong, Canvest, Capital Grand, Capitol, Fuji Soft, NESIC, Elematec

This week, the highest gross spreads are Seven & I (28.8%), Capital Grand (18.1%), Henlius (13.1%), Canvest (12.4%), GA Pack (10.0%), Shinko...

Arun George

GJS/Haitong Merger Musings

Some media outlets believe that the GJS/Haitong terms may place holders of other Hong Kong broker stocks at a disadvantage if potentially acquired...

David Blennerhassett

Guotai Junan (2611 HK)/Haitong (6837 HK)'s Merger: A Win For H-Shareholders

Done and done. After bigly moves in both stock, I see the gross/annualised return at 21%/22%, assuming late 3Q25. If you can take down borrow...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HK Merger Arb: Evaluating the Post China TCM Widening Spreads

The gross spreads of large HK merger arb situations have increased since 18 October, the China TCM deal break date. We assess the spreads of HK's...

Arun George

Merger Arb Mondays (04 Nov) - Haitong, Canvest, Capital Grand, Capitol, Fuji Soft, NESIC, Elematec

This week, the highest gross spreads are Seven & I (28.8%), Capital Grand (18.1%), Henlius (13.1%), Canvest (12.4%), GA Pack (10.0%), Shinko...

Arun George

A/H Premium Tracker (To 1 Nov 2024): AH Premia Higher as A-Share Tech Underperforms

AH premia widened this week with liquid spreads widening more than average spreads. The premium curve was inconsistent. Opportunistic reversion...

Travis Lundy

GJS/Haitong Merger Musings

Some media outlets believe that the GJS/Haitong terms may place holders of other Hong Kong broker stocks at a disadvantage if potentially acquired...

David Blennerhassett

Guotai Junan (2611 HK)/Haitong (6837 HK)'s Merger: A Win For H-Shareholders

Done and done. After bigly moves in both stock, I see the gross/annualised return at 21%/22%, assuming late 3Q25. If you can take down borrow...

David Blennerhassett