HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>Acquiring CPMC at low price is in line with Baosteel's strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn't choose to raise its Offer </li>
<li>ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?</li>
<li>If ORG is “forced to” acquire CPMC due to Baosteel's low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.</li>
</ul>


Acquiring CPMC at low price is in line with Baosteel's strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn't choose to raise its Offer 
ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
If ORG is “forced to” acquire CPMC due to Baosteel's low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.


CPMC Holdings (906.HK) Privatization Update - Will ORG Withdraw Midway?

<ul>
<li>Huarui Offer has been approved by SAMR, which marks a solid step forward.Meanwhile, ORG’s management stated that the reduction of Huangshan Novel shares is to raise funds to acquire CPMC.</li>
<li>While Baosteel may want to “test the waters”, the signals ORG is sending is it will make every effort to advance the acquisition of CPMC and is accelerating the process. </li>
<li>The return on Huarui Offer isn't attractive.We recommend waiting for Baosteel to raise its Offer, or simply choosing to add more positions in China TCM, whose privatization is more lucrative.</li>
</ul>


Huarui Offer has been approved by SAMR, which marks a solid step forward.Meanwhile, ORG’s management stated that the reduction of Huangshan Novel shares is to raise funds to acquire CPMC.
While Baosteel may want to “test the waters”, the signals ORG is sending is it will make every effort to advance the acquisition of CPMC and is accelerating the process. 
The return on Huarui Offer isn't attractive.We recommend waiting for Baosteel to raise its Offer, or simply choosing to add more positions in China TCM, whose privatization is more lucrative.


CPMC Holdings (906.HK) Privatization Update - ORG Is Pushing Baosteel to Raise Its Offer

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside resistance, the EM vs. EAFE ratio is bullishly inflecting, and the US dollar (DXY) exhibits signs of breaking down. Russia (RTS), Taiwan (TAIEX), and Brazil (Bovespa) are deserving of overweights in the EM realm, though China (MSCI China) appears to be bottoming as well -- add exposure. EM Sectors: Technology and Consumer Discretionary are leadership -- overweight. Communications is the next most attractive EM Sector thanks largely to improvement in Tencent (700-HK) -- add exposure. Lastly, Materials exhibits early signs of potential price and RS bottoms -- add selective exposure

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside resistance, the EM vs. EAFE ratio is bullishly inflecting, and the US dollar (DXY) exhibits signs of breaking down. Russia (RTS), Taiwan (TAIEX), and Brazil (Bovespa) are deserving of overweights in the EM realm, though China (MSCI China) appears to be bottoming as well -- add exposure. EM Sectors: Technology and Consumer Discretionary are leadership -- overweight. Communications is the next most attractive EM Sector thanks largely to improvement in Tencent (700-HK) -- add exposure. Lastly, Materials exhibits early signs of potential price and RS bottoms -- add selective exposure

China

Huangshan Novel Co., Ltd. manufactures and markets color printed composite packaging products and vacuum aluminum coated products.

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Huangshan Novel Co Ltd A (002014 CH)

CPMC Holdings (906.HK) Privatization Update - Will ORG Withdraw Midway?

ORG want 100% equity and kick SOE out because even if 50% acceptance hurdle can be cleared, the effect of acquisition is lower-than-expected if ORG...

Xinyao (Criss) Wang

CPMC Holdings (906.HK) Privatization Update - ORG Is Pushing Baosteel to Raise Its Offer

Baosteel failed to hit the 50% minimum acceptance condition and let the Offer lapse without taking any further actions. Now it's time to see ORG's...

Xinyao (Criss) Wang

Shift Exposure From EAFE to EM

We are recommending a shift from developed international markets (EAFE) to emerging market equities, as the MSCI EM index is breaking topside...

Vermilion Research

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