Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

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<p>Last Wednesday, Nordgold <a href="https://www.asx.com.au/asxpdf/20200902/pdf/44m7p0lx0p11z0.pdf" target="_blank" rel="noopener">bumped</a> its Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd" target="_blank" data-smartkarma-citation="entities:12256:1" rel="noopener">Cardinal Resources (CDV AU)</a> by 36.4% to A$0.90/share from A$0.66/share. This was an unconditional on-market takeover Offer; and will remain open to acceptance until the close of trading on the 10 September - unless extended. Nordgold increased its stake to <a href="https://www.asx.com.au/asxpdf/20200903/pdf/44m8y5qsvdhhlf.pdf" target="_blank" rel="noopener">28.39%</a> (from 18.71% previously) as at 2 September. </p>
<p>Under the Bid Implementation Agreement, <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> had the <a href="https://www.asx.com.au/asxpdf/20200903/pdf/44m8xnxdz73rfh.pdf" target="_blank" rel="noopener">opportunity</a> (but not the obligation) to match or provide a superior proposal to Nordgold by today. </p>
<p>This morning CDV <a href="https://www.asx.com.au/asxpdf/20200907/pdf/44md5nxqtpr7sz.pdf" target="_blank" rel="noopener">announced</a> that Shandong intends to increase its Offer Price to A$1.00/share. This Offer remains subject to a minimum acceptance condition of 50.1%. </p>
<p>Shandong's offer is a 118% premium to Nordgold's initial proposal back in March, and 300% above the one-day undisturbed price. The price of gold is up ~30% since Nordgold's March Offer.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/514/original/image_51673227451599469081750.png?1599469083" class="editor-image img-responsive" data-smartkarma-image-id="157514"></figure>
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<div style="text-align: left;" class="content-caption">Source: CapIQ, ASX</div>
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<p>What now?  Shandong immediately responded to Nordgold's punchy proposal, but Shandong also had the benefit of two and a half months since its last offer to crunch numbers.</p>
<p>Currently trading through terms. My back-of-the-napkin calculation suggests there <em>is</em> upside, based on the current gold price and estimated IRR. Neither Shandong nor Nordgold declared their offers "final". And the price of gold remains high. </p>
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<p>As always, more below the fold.</p>
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<p><em>Past insights on Cardinal:</em></p>
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<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">22-Jun-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/sVxVB" target="_blank" rel="noopener">Shandong's Competing Offer For Cardinal</a></td>
</tr>
<tr>
<td style="width: 218.75px;">15-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/E1Wgv" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Nordgold Reloads</a></td>
</tr>
<tr>
<td style="width: 218.75px;">23-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/tVkqj" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer</a></td>
</tr>
<tr>
<td style="width: 218.75px;">2-Sep-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/eGXfx" target="_blank" rel="noopener">Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more: </a></td>
</tr>
</tbody>
</table>
</div>
</div>


Last Wednesday, Nordgold bumped its Offer for Cardinal Resources (CDV AU) by 36.4% to A$0.90/share from A$0.66/share. This was an unconditional on-market takeover Offer; and will remain open to acceptance until the close of trading on the 10 September - unless extended. Nordgold increased its stake to 28.39% (from 18.71% previously) as at 2 September. 
Under the Bid Implementation Agreement, Shandong Gold Mining Co., Ltd. (1787 HK) had the opportunity (but not the obligation) to match or provide a superior proposal to Nordgold by today. 
This morning CDV announced that Shandong intends to increase its Offer Price to A$1.00/share. This Offer remains subject to a minimum acceptance condition of 50.1%. 
Shandong's offer is a 118% premium to Nordgold's initial proposal back in March, and 300% above the one-day undisturbed price. The price of gold is up ~30% since Nordgold's March Offer.


Source: CapIQ, ASX

What now?  Shandong immediately responded to Nordgold's punchy proposal, but Shandong also had the benefit of two and a half months since its last offer to crunch numbers.
Currently trading through terms. My back-of-the-napkin calculation suggests there is upside, based on the current gold price and estimated IRR. Neither Shandong nor Nordgold declared their offers "final". And the price of gold remains high. 

As always, more below the fold.


Past insights on Cardinal:







Date


Insight



22-Jun-20
Shandong's Competing Offer For Cardinal


15-Jul-20
Cardinal Resource (CDV AU): Nordgold Reloads


23-Jul-20
Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer


2-Sep-20
Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more: 






Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer

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<p>Don't always believe what you hear (&amp; read).</p>
<p>Many in the market felt the agreement and placement of shares with <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> in early July could be construed that Nordgold was not interested in lifting its then Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd" target="_blank" data-smartkarma-citation="entities:12256:1" rel="noopener">Cardinal Resources (CDV AU)</a> of A$0.45775/share. Nordgold subsequently bumped its Offer to A$0.66, then Shandong came over the top with A$0.70/share.</p>
<p>That was how things stood until last week when media articles appeared saying Nordgold was still keen, but A$0.70/share - where <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> has tabled a revised Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd-9e1d58d4-8d9b-48dd-a059-3f04f896e3ee" target="_blank" data-smartkarma-citation="entities:28182:1" rel="noopener">Cardinal Resources Ltd (CDV CN)</a>  - would be challenging to justify for IRR reasons.</p>
<p>I chose to ignore the news. Archie Koimtsidis, Cardinal's CEO, is quite the negotiator and I thought there was still considerable upside compared to Shandong's revised Offer.</p>
<hr>
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<div>
<h2>The New News</h2>
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<div>
<p>Nordgold has <a href="https://www.asx.com.au/asxpdf/20200902/pdf/44m7p0lx0p11z0.pdf" target="_blank" rel="noopener">bumped</a> its Offer by 36.4% to A$0.90/share from A$0.66/share. This is an unconditional on-market takeover Offer.</p>
<p>Its Offer will remain open to acceptance until the close of trading on the 10 September - unless extended.</p>
<p>That's a full Offer. If you were already in - then now's the time to cash out. If you are just coming to this, one could probably find an excuse to buy a spread or two above Nordgold's terms on the expectation Shandong comes in over the top, and Nordgold hasn't declared it "final" but that's still a pretty full offer. That said, the price of gold remains high. </p>
<p>As always, more below the fold.</p>
<hr>
<p><em>Past insights on Cardinal</em></p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">22-Jun-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/sVxVB" target="_blank" rel="noopener">Shandong's Competing Offer For Cardinal</a></td>
</tr>
<tr>
<td style="width: 218.75px;">15-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/E1Wgv" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Nordgold Reloads</a></td>
</tr>
<tr>
<td style="width: 218.75px;">23-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/tVkqj" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer</a></td>
</tr>
</tbody>
</table>
</div>


Don't always believe what you hear (&amp; read).
Many in the market felt the agreement and placement of shares with Shandong Gold Mining Co., Ltd. (1787 HK) in early July could be construed that Nordgold was not interested in lifting its then Offer for Cardinal Resources (CDV AU) of A$0.45775/share. Nordgold subsequently bumped its Offer to A$0.66, then Shandong came over the top with A$0.70/share.
That was how things stood until last week when media articles appeared saying Nordgold was still keen, but A$0.70/share - where Shandong Gold Mining Co., Ltd. (1787 HK) has tabled a revised Offer for Cardinal Resources Ltd (CDV CN)  - would be challenging to justify for IRR reasons.
I chose to ignore the news. Archie Koimtsidis, Cardinal's CEO, is quite the negotiator and I thought there was still considerable upside compared to Shandong's revised Offer.




The New News



Nordgold has bumped its Offer by 36.4% to A$0.90/share from A$0.66/share. This is an unconditional on-market takeover Offer.
Its Offer will remain open to acceptance until the close of trading on the 10 September - unless extended.
That's a full Offer. If you were already in - then now's the time to cash out. If you are just coming to this, one could probably find an excuse to buy a spread or two above Nordgold's terms on the expectation Shandong comes in over the top, and Nordgold hasn't declared it "final" but that's still a pretty full offer. That said, the price of gold remains high. 
As always, more below the fold.

Past insights on Cardinal




Date


Insight



22-Jun-20
Shandong's Competing Offer For Cardinal


15-Jul-20
Cardinal Resource (CDV AU): Nordgold Reloads


23-Jul-20
Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer





Cardinal Resources (CDV AU): Nordgold's Knockout Offer

Last Week In Event SPACE: Line Corp, Esprit, Sembcorp Ind, Car Inc, Accordia Golf, Skyworth, JCNC

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<p>The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.</p><p>The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.</p><p>With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.</p><p>In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.</p>

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.

China AH Premium: Trade Ideas As We Near Previous Highs

China

Shandong Gold Mining Co., Ltd. operates gold mining and production businesses. The Company provides gold exploration, processing, and outsourcing gold smelting services. Shandong Gold Mining also conducts gold jewelry purification and non-ferrous metal production businesses.

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Shandong Gold Mining (1787 HK)

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer

Don't always believe what you hear (& read). Many in the market felt the agreement and placement of shares with Shandong Gold Mining Co.,...

David Blennerhassett

Cardinal Resources (CDV AU): Nordgold's Knockout Offer

There have been numerous developments in Cardinal Resources Ltd (CDV CN) over the past year, not just the competing Offers from Nordgold...

David Blennerhassett

Last Week In Event SPACE: Line Corp, Esprit, Sembcorp Ind, Car Inc, Accordia Golf, Skyworth, JCNC

Last Week in Event SPACE ... There is a built-in ability, nay prerogative, for the companies involved in LINE Corp (3938 JP) to go get a...

David Blennerhassett

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)