Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<p>This insight re-introduces a weekly monitor for H-Share/A-Share spreads.</p>
<p>The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
<ul>
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the narrowest and widest spread and the average spread over the last three years. </li>
</ul>
<p>In the example for the H/A spreads in the <strong>Materials</strong> sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> and <a href="https://www.smartkarma.com/entities/ganfeng-lithium-co-ltd" target="_blank" data-smartkarma-citation="entities:26795:1" rel="noopener">Ganfeng Lithium (1772 HK)</a> are spreads at the relatively narrow end of their 52-week ranges, while <a href="https://www.smartkarma.com/entities/maanshan-iron-steel-h" target="_blank" data-smartkarma-citation="entities:204:1" rel="noopener">Maanshan Iron &amp; Steel H (323 HK)</a>, <a href="https://www.smartkarma.com/entities/bbmg-corp-h" target="_blank" data-smartkarma-citation="entities:2821:1" rel="noopener">BBMG Corp H (2009 HK)</a>, <a href="https://www.smartkarma.com/entities/sinopec-shanghai-petrochemical-co-ltd" target="_blank" data-smartkarma-citation="entities:17576:1" rel="noopener">Sinopec Shanghai Petrochemical (338 HK)</a>, and <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement Co Ltd H (914 HK)</a> are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.</p>
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<p>Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.</p>
<div class="content-highlight">
<p>Recommendations are in highlights like this.</p>
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<section class="figure">
<p>More below the fold.  </p>
<hr>
<p><em>By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).</em></p>
</section>

This insight re-introduces a weekly monitor for H-Share/A-Share spreads.
The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...

H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the narrowest and widest spread and the average spread over the last three years. 

In the example for the H/A spreads in the Materials sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. Shandong Gold Mining Co., Ltd. (1787 HK) and Ganfeng Lithium (1772 HK) are spreads at the relatively narrow end of their 52-week ranges, while Maanshan Iron &amp; Steel H (323 HK), BBMG Corp H (2009 HK), Sinopec Shanghai Petrochemical (338 HK), and Anhui Conch Cement Co Ltd H (914 HK) are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.






Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.

Recommendations are in highlights like this.


More below the fold.  

By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).


Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

David Blennerhassett

Event-Driven

Haier Electronics Group Co / Event-Driven

<div>
<p><a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener"></a>On the 31 July, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> (HEG) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101131.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Scheme such that HEG shareholder will receive 1.6 new <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> (HSH) H shares plus HK$1.95 in cash. </p>
<p>The pre-condition concerned approval from HSH's shareholders and CSRC approval. The pre-conditions were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0901/2020090103529.pdf" target="_blank" rel="noopener">fulfilled</a> on the 1 September. The next step in this process is for HEG shareholders to vote on the Scheme. The despatch of the Scheme Doc has now been extended to the 30 November, from 4 September previously.</p>
<p> A 632-page Application Proof for the listing of HSH H-shares has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0911/2020091100023.pdf" target="_blank" rel="noopener">lodged</a>. This will be a <a href="https://en-rules.hkex.com.hk/entiresection/2269" target="_blank" rel="noopener">listing by introduction</a>.</p>
<p>The question at the time of the Scheme announcement, as it is now - is where will the HSH (as yet unlisted) H-shares trade with respect to the HSH A-shares? </p>
<p>An independent valuer backed out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point. However, this was just a valuer's opinion. There is no guarantee this is where the Hs will trade. </p>
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<div>
<p>The market is assigning around a 37% discount (HSH Hs vs. HSH As). Relative to a basket of liquid A/Hs and listed A/H peers, this is a level to get involved.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


On the 31 July, Haier Electronics Group Co (1169 HK) (HEG) announced a pre-conditional Scheme such that HEG shareholder will receive 1.6 new Haier Smart Home (600690 CH) (HSH) H shares plus HK$1.95 in cash. 
The pre-condition concerned approval from HSH's shareholders and CSRC approval. The pre-conditions were fulfilled on the 1 September. The next step in this process is for HEG shareholders to vote on the Scheme. The despatch of the Scheme Doc has now been extended to the 30 November, from 4 September previously.
 A 632-page Application Proof for the listing of HSH H-shares has now been lodged. This will be a listing by introduction.
The question at the time of the Scheme announcement, as it is now - is where will the HSH (as yet unlisted) H-shares trade with respect to the HSH A-shares? 
An independent valuer backed out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point. However, this was just a valuer's opinion. There is no guarantee this is where the Hs will trade. 


The market is assigning around a 37% discount (HSH Hs vs. HSH As). Relative to a basket of liquid A/Hs and listed A/H peers, this is a level to get involved.


More below the fold.


China Conch Venture Holdings / Event-Driven

<div>
<p>This week in StubWorld ...</p>
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<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19943:1" rel="noopener">China Conch Venture Holdings (586 HK)</a> continues to underperform 17.8%-held <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd-094855ab-abec-4b71-956b-5bfc85e22fdd" target="_blank" data-smartkarma-citation="entities:389:1" rel="noopener">Anhui Conch Cement Co Ltd A (600585 CH)</a>, with the implied stub at its lowest level since CCV was listed in December 2013.</p>
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</div>
</div>
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<p>Preceding my comments on CCV and <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> / <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a>, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<div class="content-remarks">
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...




China Conch Venture Holdings (586 HK) continues to underperform 17.8%-held Anhui Conch Cement Co Ltd A (600585 CH), with the implied stub at its lowest level since CCV was listed in December 2013.




Preceding my comments on CCV and Haier Smart Home (600690 CH) / Haier Electronics Group Co (1169 HK), are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Waste Not, Want Not. China Conch Venture's All-Time Low

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.

<p>After market close on Friday, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a>/HEG announced a pre-conditional privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/qingdao-haier-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Qingdao Haier Co Ltd A (600690 CH)</a>/HSH. The offeror will offer 1.60 new HSH H shares and a HK$1.95 cash payment per scheme share. In connection with the privatisation proposal, HSH is seeking a listing of the HSH H shares by way of introduction on the Main Board of the HKEX. Based on the independent valuer’s HSH H shares value range of RMB16.45-16.90 (HK$18.23-18.72), the privatisation proposal values each scheme share at a theoretical mid-point of HK$31.51. At this theoretical mid-point, the bid represents a premium of 44.20% over the closing price of HK$21.85 per share on the last trading day (12 December 2019). </p><div class="content-highlight">
<p>As the share exchange accounts for the majority of the consideration (around 94%), the attractiveness of the proposal hinges on the robustness of the HSH H share valuation. On the assumption that the HSH H shares value range is reasonable and fair, the privatisation proposal is attractive for scheme shareholders due to several factors. </p>
<p>However, the independent valuer’s HSH H shares value range looks generous. The valuation range was based on three methodologies, all of which have issues in our view. While the independent valuer’s HSH H shares value range is flawed, on balance, we think that the privatisation proposal will likely succeed due to HEG’s shareholder register. </p>
</div>

After market close on Friday, Haier Electronics Group Co (1169 HK)/HEG announced a pre-conditional privatisation offer by way of a scheme of arrangement from Qingdao Haier Co Ltd A (600690 CH)/HSH. The offeror will offer 1.60 new HSH H shares and a HK$1.95 cash payment per scheme share. In connection with the privatisation proposal, HSH is seeking a listing of the HSH H shares by way of introduction on the Main Board of the HKEX. Based on the independent valuer’s HSH H shares value range of RMB16.45-16.90 (HK$18.23-18.72), the privatisation proposal values each scheme share at a theoretical mid-point of HK$31.51. At this theoretical mid-point, the bid represents a premium of 44.20% over the closing price of HK$21.85 per share on the last trading day (12 December 2019). 
As the share exchange accounts for the majority of the consideration (around 94%), the attractiveness of the proposal hinges on the robustness of the HSH H share valuation. On the assumption that the HSH H shares value range is reasonable and fair, the privatisation proposal is attractive for scheme shareholders due to several factors. 
However, the independent valuer’s HSH H shares value range looks generous. The valuation range was based on three methodologies, all of which have issues in our view. While the independent valuer’s HSH H shares value range is flawed, on balance, we think that the privatisation proposal will likely succeed due to HEG’s shareholder register. 


Haier Electronics’ Privatisation Bid from Haier Smart Home

<div>
<p><a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> (HEG) was briefly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1213/2019121300104.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Takeovers Code on the 19 December 2019, which was followed by a <a href="http://www.haier.net/en/investor_relations/haier/gsgg/corporatenews/P020191212852299367714.pdf" target="_blank" rel="noopener">press release</a> from Haier's parent <a href="https://www.smartkarma.com/entities/qingdao-haier-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> (HSH) that it was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.</p>
<p>Then crickets.</p>
<h3>The Announcement</h3>
<p>This past Friday evening, HEG <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101131.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. </p>
<p>An independent valuer places a fair value for the (as yet unlisted) H shares between RMB16.45-RMB16.90/share. This backs out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point, against HEG's last close of HK$26.85; but a 44.20% premium to the price at the time of the 2019 December suspension. Plus an all-time high. The cash/equity split is 6.2%/93.8%. The A-shares closed last Wednesday (the day before shares were halted) at RMB 18.00, which would be closer to HK$33.95 (including the $1.95 in cash).</p>
<p>The pre-conditions concern CSRC approval with respect to the issuance of the H shares and approval by two-thirds of HSH's shareholders to approve the resolutions.</p>
<p>And then there are the exchangeable bonds to take into account.</p>
<p>More below the fold.</p>
</div>


Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by a press release from Haier's parent Haier Smart Home (600690 CH) (HSH) that it was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.
Then crickets.
The Announcement
This past Friday evening, HEG announced a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. 
An independent valuer places a fair value for the (as yet unlisted) H shares between RMB16.45-RMB16.90/share. This backs out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point, against HEG's last close of HK$26.85; but a 44.20% premium to the price at the time of the 2019 December suspension. Plus an all-time high. The cash/equity split is 6.2%/93.8%. The A-shares closed last Wednesday (the day before shares were halted) at RMB 18.00, which would be closer to HK$33.95 (including the $1.95 in cash).
The pre-conditions concern CSRC approval with respect to the issuance of the H shares and approval by two-thirds of HSH's shareholders to approve the resolutions.
And then there are the exchangeable bonds to take into account.
More below the fold.


Haier (1169 HK): Avatar Scrip Offer From Parent

China

Hisense Home Appliances Group Co., Ltd. manufactures and sells refrigerators, air conditioners, freezers, and product components.

Hisense Home Appliances Group Co., Ltd. H (921 HK)

Hisense Home Appliances Group Co., Ltd. H

Price Gauge
52-week Range	0.00 - 0.00
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Hisense Home Appliances Group Co., Ltd. H (921 HK)

Haier (1169 HK): Back To Entry Levels

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

David Blennerhassett

StubWorld: Waste Not, Want Not. China Conch Venture's All-Time Low

This week in StubWorld ... China Conch Venture Holdings (586 HK) continues to underperform 17.8%-held Anhui Conch Cement Co Ltd A (600585 CH),...

David Blennerhassett

Haier Electronics’ Privatisation Bid from Haier Smart Home

After market close on Friday, Haier Electronics Group Co (1169 HK)/HEG announced a pre-conditional privatisation offer by way of a scheme of...

Arun George

Haier (1169 HK): Avatar Scrip Offer From Parent

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

Weekly Monitor for H-Share/A-Share spreads showing spread/discount performance, spread Z-scores, southbound buying and selling and net activity...

Travis Lundy

Haier (1169 HK): Back To Entry Levels

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

David Blennerhassett

StubWorld: Waste Not, Want Not. China Conch Venture's All-Time Low

This week in StubWorld ... China Conch Venture Holdings (586 HK) continues to underperform 17.8%-held Anhui Conch Cement Co Ltd A (600585 CH),...

David Blennerhassett

Haier Electronics’ Privatisation Bid from Haier Smart Home

After market close on Friday, Haier Electronics Group Co (1169 HK)/HEG announced a pre-conditional privatisation offer by way of a scheme of...

Arun George

Haier (1169 HK): Avatar Scrip Offer From Parent

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

David Blennerhassett