Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>As discussed in <a href="https://skr.ma/yuVj4" target="_blank" rel="noopener">PA Gooddoctor (1833 HK) - The Arb Is To Take The Stock</a>, Ping An increased its stake in <a href="https://www.smartkarma.com/entities/lufax-holding-ltd-b751749a-8feb-4b4d-85a7-d99ac0308fe7" target="_blank" data-smartkarma-citation="entities:40067:1" rel="noopener">Lufax (6623 HK)</a> to 56.82% via a scrip dividend.</li>
<li>This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.</li>
<li>Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It's worth understanding how Ping An has taken its stake &gt;50% and beyond. </li>
</ul>


As discussed in PA Gooddoctor (1833 HK) - The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It's worth understanding how Ping An has taken its stake &gt;50% and beyond. 


Lufax (6623 HK): On Ping An's Stake Increases

Independent Research, Turtles all the way down

Turtles all the way down

Independent Research

Writing short articles about mis-priced boring stocks around the world.

Equity Bottom-Up

<ul><li>It has come to my attention that Lufax management has recently altered the terms of their convertible debt: Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.</li><li>Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.76 per Share as at the date of this circular to US$2.32 per Share upon settlement of the Special Dividend, and thus, upon full conversion, the Ping An Convertible Promissory Notes can be converted into a maximum number of 421,077,586 Shares (the “Conversion Shares”).</li><li>The Company considers that the adjustment formula is in line with market practice for anti-dilution provisions in convertible securities.</li></ul>

It has come to my attention that Lufax management has recently altered the terms of their convertible debt: Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.76 per Share as at the date of this circular to US$2.32 per Share upon settlement of the Special Dividend, and thus, upon full conversion, the Ping An Convertible Promissory Notes can be converted into a maximum number of 421,077,586 Shares (the “Conversion Shares”).The Company considers that the adjustment formula is in line with market practice for anti-dilution provisions in convertible securities.

Ping An Healthcare and Technology / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare (1833 HK)</a> (PA Gooddoctor), which was spun off from <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-c2975d60-47cd-4246-a7a6-25297586242b" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance (601318 CH)</a> and listed in May 2018, has announced a<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1114/2024111400573.pdf" target="_blank" rel="noopener"> change in use of proceeds</a>.</li>
<li>Part of that change includes the payment of a punchy HK$9.70/share special dividend.</li>
<li>The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.</li>
</ul>



Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
Part of that change includes the payment of a punchy HK$9.70/share special dividend.
The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.


2025 High Conviction: PA Gooddoctor (1833 HK) - The Arb Is To Take The Stock

Nec Networks & System Integr / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks (1973 JP)</a>'s own FA didn't include any measure of transaction synergies to be created about which NEC and NESIC were so sure. This is not being done right.</li>
<li>
<a href="https://www.smartkarma.com/entities/singapore-post-ltd" target="_blank" data-smartkarma-citation="entities:150:1" rel="noopener">Singapore Post (SPOST SP)</a>'s muted price action after announcing the ~S$900mn FMH sale is illustrative. But expect more value to be unlocked from divesting non-core ops going forward. </li>
<li>The FTC' blocking the giant grocery merger of <a href="https://www.smartkarma.com/entities/kroger-co" target="_blank" data-smartkarma-citation="entities:20824:1" rel="noopener">Kroger Co (KR US)</a> and <a href="https://www.smartkarma.com/entities/albertsons-cos-inc" target="_blank" data-smartkarma-citation="entities:33026:1" rel="noopener">Albertsons Cos (ACI US)</a> spells trouble for ACT and <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>.</li>
</ul>



Nec Networks (1973 JP)'s own FA didn't include any measure of transaction synergies to be created about which NEC and NESIC were so sure. This is not being done right.

Singapore Post (SPOST SP)'s muted price action after announcing the ~S$900mn FMH sale is illustrative. But expect more value to be unlocked from divesting non-core ops going forward. 
The FTC' blocking the giant grocery merger of Kroger Co (KR US) and Albertsons Cos (ACI US) spells trouble for ACT and Seven &amp; I Holdings (3382 JP).


Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy

<ul>
<li>Reportedly, Ito Junro's MBO for <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 (3382 JP)</a> includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.</li>
<li>Starwood/Warburg Pincus' firm Offer for <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a> secures support from 30.79% of the register.</li>
<li>We may be wrong on <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.</li>
</ul>


Reportedly, Ito Junro's MBO for Seven &amp; I (3382 JP) includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.
Starwood/Warburg Pincus' firm Offer for ESR Group (1821 HK) secures support from 30.79% of the register.
We may be wrong on Sanrio (8136 JP) by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.


Last Week in Event SPACE: Seven & I Holdings, ESR Group, Sanrio, HKBN

China

Lufax Holding Ltd operates technology-empowered personal financial services platform. The Company connects financial institutions to facilitate lending and wealth management products tailored to individual customer's needs and risk appetites.

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Lufax Holding (6623 HK)

Lufax (6623 HK): On Ping An's Stake Increases

I view Ping An's stake increases as a positive development. I'd tilt positive here; but it's not a strong conviction trade. Plus Lufax is not...

David Blennerhassett

Closing Lufax

The Company considers that the adjustment formula is in line with market practice for anti-dilution provisions in convertible securities.

Turtles all the way down

2025 High Conviction: PA Gooddoctor (1833 HK) - The Arb Is To Take The Stock

IF you like PA Gooddoctor, buy here. Or just buy irrespectively. Then either opt for the scrip dividend. Or perhaps take the dividend on 50% of...

David Blennerhassett

Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Last Week in Event SPACE: Seven & I Holdings, ESR Group, Sanrio, HKBN

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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