Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>After watch accessory play <a href="https://www.smartkarma.com/entities/hengdeli-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15178:1" rel="noopener">Hengdeli Holdings (3389 HK)</a> was suspended on the 17th June pursuant to the Takeovers Code, I didn't hold out high hopes of a knock-out Offer.</li>
<li>And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0620/2024062001397.pdf" target="_blank" rel="noopener">made a Partial Offer</a> (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.</li>
<li>That's a 18.5% premium to last close ... and a 80% discount to NAV, and a 47% discount to Hengdeli's net cash as at 31 December 2023.</li>
</ul>


After watch accessory play Hengdeli Holdings (3389 HK) was suspended on the 17th June pursuant to the Takeovers Code, I didn't hold out high hopes of a knock-out Offer.
And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has made a Partial Offer (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.
That's a 18.5% premium to last close ... and a 80% discount to NAV, and a 47% discount to Hengdeli's net cash as at 31 December 2023.


Hengdeli Holdings (3389 HK)'s Pitiful Partial Offer

<ul>
<li>Watch accessory play <a href="https://www.smartkarma.com/entities/hengdeli-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15178:1" rel="noopener">Hengdeli Holdings (3389 HK)</a> is currently<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0617/2024061700059.pdf" target="_blank" rel="noopener"> suspended</a> pursuant to the Takeovers Code.</li>
<li>Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or <a href="https://www.smartkarma.com/entities/swatch-group-ag" target="_blank" data-smartkarma-citation="entities:22591:1" rel="noopener">Swatch Group (UHR SW)</a> (9.94%) may table an Offer. My money is on Zhang.</li>
<li>This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn - as at 31 December 2023 - against a market cap of HK$0.59bn.</li>
</ul>


Watch accessory play Hengdeli Holdings (3389 HK) is currently suspended pursuant to the Takeovers Code.
Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or Swatch Group (UHR SW) (9.94%) may table an Offer. My money is on Zhang.
This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn - as at 31 December 2023 - against a market cap of HK$0.59bn.


Hengdeli Holdings (3389 HK): Negative EV Play Halted

<ul>
<li>It's just a question of when, not if, the bubble bursts for <a href="https://www.smartkarma.com/entities/pt-barito-renewables-energy-tbk" target="_blank" data-smartkarma-citation="entities:40150:1" rel="noopener">Barito Renewables Energy (BREN IJ)</a>, which is up 1,200% since it October 2023 IPO. </li>
<li>A Reuters article suggests a ¥500bn secondary offering for <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>. Honda has since said there is smoke. And we can assume there is fire.</li>
<li>Loo Choon Yong, <a href="https://www.smartkarma.com/entities/raffles-medical-group-ltd" target="_blank" data-smartkarma-citation="entities:879:1" rel="noopener">Raffles Medical Group (RFMD SP)</a>'s founder and major shareholder, continues to chip away at minorities, and now holds 54.944%,</li>
</ul>


It's just a question of when, not if, the bubble bursts for Barito Renewables Energy (BREN IJ), which is up 1,200% since it October 2023 IPO. 
A Reuters article suggests a ¥500bn secondary offering for Honda Motor (7267 JP). Honda has since said there is smoke. And we can assume there is fire.
Loo Choon Yong, Raffles Medical Group (RFMD SP)'s founder and major shareholder, continues to chip away at minorities, and now holds 54.944%,


Last Week in Event SPACE: Barito Renewables, Honda, Raffles Medical, Daidoh, Hanwha Corp

<ul>
<li>I tally 49 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>Just one new deal was discussed this week on Smartkarma: <a href="https://www.smartkarma.com/entities/sermsuk-pcl" target="_blank" data-smartkarma-citation="entities:15918:1" rel="noopener">Sermsuk PCL (SSC TB)</a>'s Delisting Offer. There are also rumours of an Offer for <a href="https://www.smartkarma.com/entities/raffles-medical-group-ltd" target="_blank" data-smartkarma-citation="entities:879:1" rel="noopener">Raffles Medical Group (RFMD SP)</a>.</li>
<li>Key updates took place on: <a href="https://www.smartkarma.com/entities/l-occitane-international-sa" target="_blank" data-smartkarma-citation="entities:6772:1" rel="noopener">L'Occitane (973 HK)</a>, <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a>, <a href="https://www.smartkarma.com/entities/mma-offshore-ltd" target="_blank" data-smartkarma-citation="entities:594:1" rel="noopener">MMA Offshore (MRM AU)</a>, and <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>.</li>
</ul>


I tally 49 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Just one new deal was discussed this week on Smartkarma: Sermsuk PCL (SSC TB)'s Delisting Offer. There are also rumours of an Offer for Raffles Medical Group (RFMD SP).
Key updates took place on: L'Occitane (973 HK), Shinko Electric Industries (6967 JP), MMA Offshore (MRM AU), and Hollysys Automation Technologies (HOLI US).


(Mostly) Asia-Pac M&A: Sermsuk, L'Occitane, Shinko Electric, MMA Offshore, Hollysys

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<ul><li><a href="https://www.smartkarma.com/entities/19950" target="_blank" data-smartkarma-citation="entities:19950:1">Oriental Watch Holdings (398 HK)</a> is a HK/China watch retailer listed in HK since 1993</li><li>Rental prices in HK have dropped sharply and consumer sentiment in HK is improving</li><li>Oriental reached peak valuation of 6.2 HKD in July 2011</li><li>Oriental bottomed at 0.9 HKD in July 2016</li><li>With shares recently around 1.75 HKD they have doubled from last year but are still very cheap</li><li>Market cap is 1B HKD (128M USD) but EV only 221M HKD (28M USD)</li><li>First Half results showed turnaround, Second Half to be even better</li><li>Management moving to 90% payout as expansion plans are on hold: potential 10% yield in 2018</li><li>Fair Value: should trade at least at 0.75x book (2.9 HKD), or 65% upside </li></ul>

Oriental Watch Holdings (398 HK) is a HK/China watch retailer listed in HK since 1993Rental prices in HK have dropped sharply and consumer sentiment in HK is improvingOriental reached peak valuation of 6.2 HKD in July 2011Oriental bottomed at 0.9 HKD in July 2016With shares recently around 1.75 HKD they have doubled from last year but are still very cheapMarket cap is 1B HKD (128M USD) but EV only 221M HKD (28M USD)First Half results showed turnaround, Second Half to be even betterManagement moving to 90% payout as expansion plans are on hold: potential 10% yield in 2018Fair Value: should trade at least at 0.75x book (2.9 HKD), or 65% upside 

Oriental Watch: 0.45x Book, 2x 2018 Ex-Cash P/E, 78% of Mkt Cap Is Cash; 10% Dividend Likely in 2018

Hong Kong

ENM Holdings Limited, through its subsidiaries, wholesales and retails fashion wear and accessories. The Company also operates recreational club, and invests in securities.

Auto Italia Holdings Limited distributes brand-name products including motor vehicles. The Company serves customers in Hong Kong, Macau, mainland China, and elsewhere in Asia.

Esprit Holdings Limited, through its subsidiaries, designs, licenses, sources, wholesales, and retails high quality life-style products under the ESPRIT brand name in Europe, Asia Pacific and North America.  The Company also sells Red Earth cosmetics, skin, and body care products and operates Salon Esprit in Asia Pacific.

Bossini International Holdings Limited, through its subsidiaries, retails and distributes garment.

International Housewares Retail Company Limited operates retail houseware retail stores. The Company offers customers a variety of houseware products in Hong Kong, Singapore, West Malaysia, China and Macau.

International Housewares Retail (1373 HK)

King Fook Holdings Limited, through its subsidiaries, retails jewelry and trades bullions. The Company also provides securities and commodities broking services as well as wholesales diamond.

Mulsanne Group Holding Limited offers omni channel branding and marketing services. The Company offers online advertising, social media campaign, and other services. Mulsanne Group Holding provides its services throughout China.

Goldlion Holdings Limited, through its subsidiaries, distributes and manufactures garments and accessories.  The Company also invests in properties and operates a commercial center with restaurants and a business center.

Veeko International Holdings Limited, through its subsidiaries, designs, manufactures, and retails branded ladies apparel products.

Asia Commercial Holdings Limited is principally engaged in high-end watch retailing and its retail sales network set up luxury watch stores and flagship stores to sell international brands of watches to customers. The Company also invests in properties.

Cash Converters International Limited is a franchised retail network that specialises in the sale of second hand goods. The Stores located around the world offers a range of service which varies, with pawn-broking loans available in selected markets, as well as a personal finance business that operates, in various forms in the micro-lending category around the world.

Sreeleathers Limited Name is a retailer and wholesaler of footwear and other leather accessories throughout India.

HIMARAYA Co., Ltd. operates a chain of sporting goods stores based in the Chubu region.  The Company mainly sells ski, snowboard, golf, and camping equipment.

Moneymax Financial Services Ltd. provides financial services through pawnbroking, retailing and trading of pre-owned jewelry and watches. The Company owns and operates stores throughout Singapore.

HANDSMAN CO., LTD. sells building materials and home improvement products in Miyazaki prefecture.  The Company also sells consumer electronics, automobile accessories, and pet supplies.  Handsman offers workshops that provide various tools and sawing machines, and free rental trucks.

GFOOT CO., LTD. operates a shoe store chain in mainly in Aichi Prefecture, and Tokyo, Kanagawa, and Saitama Prefectures.  The Company sells shoes for men, women and children, sports shoes, and rain shoes.

Art Vivant Co Ltd operates art galleries selling mainly contemporary art printings and selection of popular artists at stores and also at exhibitions. The Company's main products include oil and water color printings, carvings, and glass works.

DAIMARUENAWIN Co., Ltd. distributes fuel products such as Liquefied Petroleum Gas (LPG), kerosene, light oil, and heavy oil.  The Company also sells air conditioning equipment, housing equipment, industrial machine parts, and industrial and medical gas.

RIGHT ON Co, Ltd. retails jeans and casual wear.  The Company operates the chain stores nationwide in various type of styles such as suburban roadside stores, and stores in shopping centers and station buildings.

Bonia Corporation Berhad is investment holding and management company. Through its subsidiaries, the Company designs, manufactures, retails, and wholesales leather goods, menswear, watches, and eyewear under the Bonia and Bonia Uomo brand names. Bonia also develops and invests in properties.

Hengdeli Holdings Limited, through its subsidiaries, retails and wholesales international brand watches in China.

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Hengdeli Holdings (3389 HK)