Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Early yesterday, <a href="https://www.smartkarma.com/entities/5175" target="_blank" data-smartkarma-citation="entities:5175:1">Lai Sun Development (488 HK)</a> ("LSD") <a href="http://www.hkexnews.hk/listedco/listconews/sehk/2018/0528/LTN20180528053.pdf" target="_blank">announced</a> a voluntary general offer of $1.30/share (in cash) for <a href="https://www.smartkarma.com/entities/17768" target="_blank" data-smartkarma-citation="entities:17768:1">eSun Holdings Ltd (571 HK)</a> for all shares not currently owned. Should the offer turn unconditional, LSD would be required under the Takeovers Code to make a downstream offer for <a href="https://www.smartkarma.com/entities/17239" target="_blank" data-smartkarma-citation="entities:17239:1">Lai Fung Holdings Ltd (1125 HK)</a>, with an offer price of $5.22/share.Both offers are at a discount to last close: eSun's at a 3.7% discount and Lai Fung's 58.2%. The Group's intention is to maintain the listing of Lai Fung, but no such wording is assigned to eSun. If a compulsory acquisition is afforded to either offer, LSD will exercise such option. Both companies traded flat on the announcement.<div class="content-caption"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/053/681/original/org.PNG?1527535506" class="editor-image img-responsive" data-smartkarma-image-id="53681"></figure>Source: Announcement, Bloomberg (all figures in US$mn), The offer is being made via Transtrend</div>As viewed in the chart above, all companies in the Lai Sun Group are illiquid. If that's a turn-off, read no further.

Early yesterday, Lai Sun Development (488 HK) ("LSD") announced a voluntary general offer of $1.30/share (in cash) for eSun Holdings Ltd (571 HK) for all shares not currently owned. Should the offer turn unconditional, LSD would be required under the Takeovers Code to make a downstream offer for Lai Fung Holdings Ltd (1125 HK), with an offer price of $5.22/share.Both offers are at a discount to last close: eSun's at a 3.7% discount and Lai Fung's 58.2%. The Group's intention is to maintain the listing of Lai Fung, but no such wording is assigned to eSun. If a compulsory acquisition is afforded to either offer, LSD will exercise such option. Both companies traded flat on the announcement.Source: Announcement, Bloomberg (all figures in US$mn), The offer is being made via TranstrendAs viewed in the chart above, all companies in the Lai Sun Group are illiquid. If that's a turn-off, read no further.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Thematic (Sector/Industry)

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.We believe <a href="https://www.smartkarma.com/entities/111" target="_blank" data-smartkarma-citation="entities:111:1">Sun Hung Kai Properties (16 HK)</a>, or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe <a href="https://www.smartkarma.com/entities/22650" target="_blank" data-smartkarma-citation="entities:22650:1">Cheung Kong Property Holding (1113 HK)</a>, or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both <a href="https://www.smartkarma.com/entities/376" target="_blank" data-smartkarma-citation="entities:376:1">Henderson Land Development (12 HK)</a> and <a href="https://www.smartkarma.com/entities/3320" target="_blank" data-smartkarma-citation="entities:3320:1">Kerry Properties Ltd (683 HK)</a>, the impact on our fair value estimates is expected to be minor.Analyst: Phillip Zhong

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.We believe Sun Hung Kai Properties (16 HK), or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe Cheung Kong Property Holding (1113 HK), or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both Henderson Land Development (12 HK) and Kerry Properties Ltd (683 HK), the impact on our fair value estimates is expected to be minor.Analyst: Phillip Zhong

New Stamp Duty Negative on Transaction Volume in the NearTerm

Hong Kong

Lai Sun Development Company Limited, through its subsidiaries, develops and invests in properties.  The Company also operates hotels and restaurants.

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Lai Sun Development (488 HK)

Lai Sun Group's Double Takeunders

Early yesterday, Lai Sun Development (488 HK) ("LSD") announced a voluntary general offer of $1.30/share (in cash) for eSun Holdings Ltd (571 HK)...

David Blennerhassett

New Stamp Duty Negative on Transaction Volume in the NearTerm

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are...

Morningstar, Inc.

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