Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a>'s (SFP) "Merger by Absorption" <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0624/2024062401217.pdf" target="_blank" rel="noopener">HK$24.60/share cash Offer</a> for H-shares not held in <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>, tentatively includes a scrip alternative.</li>
<li>The first hurdle for the share option - valid letters of interest from those shareholders wishing to rollover - was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0711/2024071100831.pdf" target="_blank" rel="noopener">secured yesterday</a>. SCP still has the discretion on providing scrip.</li>
<li>But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.</li>
</ul>



Shanghai Fosun Pharmaceutical (Group) (2196 HK)'s (SFP) "Merger by Absorption" HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
The first hurdle for the share option - valid letters of interest from those shareholders wishing to rollover - was secured yesterday. SCP still has the discretion on providing scrip.
But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.


Henlius (2696 HK): Here Comes The Scrip Option

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Fosun's preferred arrangement for Henlius is to list the Company in A-shares.Since IPO in A-shares failed and Henlius has begun to generate profits, Fosun finally feels the need for privatization.</li>
<li>Due to its "flaws", undervaluation of Henlius in the Hong Kong stock market is difficult to fundamentally change. So, for conservative/cautious investors, Fosun's one-time acquisition at a 30% premium is attractive.</li>
<li>The Potential Share Alternative Offer seems a good option, but it is uncertain whether investors are still willing to believe in Fosun's "good story" - the future re-listing is uncertain.</li>
</ul>


Fosun's preferred arrangement for Henlius is to list the Company in A-shares.Since IPO in A-shares failed and Henlius has begun to generate profits, Fosun finally feels the need for privatization.
Due to its "flaws", undervaluation of Henlius in the Hong Kong stock market is difficult to fundamentally change. So, for conservative/cautious investors, Fosun's one-time acquisition at a 30% premium is attractive.
The Potential Share Alternative Offer seems a good option, but it is uncertain whether investors are still willing to believe in Fosun's "good story" - the future re-listing is uncertain.


Shanghai Henlius Biotech Update (2696.HK) - The Story Behind Privatization

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a>’s discretion. </li>
<li>Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.</li>
<li>The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC. </li>
</ul>



Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion. 
Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC. 


Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads: <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a>, <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>, <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>, <a href="https://www.smartkarma.com/entities/ansarada-group-ltd" target="_blank" data-smartkarma-citation="entities:30718:1" rel="noopener">Ansarada Group Ltd (AND AU)</a>, <a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a>. 
</li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/great-eastern-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern Holdings (GE SP)</a>, <a href="https://www.smartkarma.com/entities/tatsuta-electric-wire-cable-co-ltd" target="_blank" data-smartkarma-citation="entities:12509:1" rel="noopener">Tatsuta Electric Wire &amp; Cable (5809 JP)</a>, <a href="https://www.smartkarma.com/entities/infocom-corp" target="_blank" data-smartkarma-citation="entities:8412:1" rel="noopener">Infocom Corp (4348 JP)</a>, <a href="https://www.smartkarma.com/entities/kfc-holdings-japan-ltd" target="_blank" data-smartkarma-citation="entities:12358:1" rel="noopener">Kfc Holdings Japan (9873 JP)</a>.
</li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK). 

Lowest spreads: Fancl Corp (4921 JP), Great Eastern Holdings (GE SP), Tatsuta Electric Wire &amp; Cable (5809 JP), Infocom Corp (4348 JP), Kfc Holdings Japan (9873 JP).



Merger Arb Mondays (01 Jul) - Henlius, China TCM, GA Pack, CPMC, Asia Cement, Great Eastern

<ul>
<li>The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.</li>
<li>Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.</li>
<li>As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.</li>
</ul>


The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.


Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

China

Yantai Dongcheng Pharmaceutical Co Ltd is an enterprise group that combines pharmaceutical R&D, production, marketing, and capital operations across the fields of biochemical API, chemical synthetic drugs, and modern Chinese medicine.

Yantai Dongcheng Pharmaceuticl Gp (002675 CH)

Shanghai Junshi Biosciences Co., Ltd. operates as a biopharmaceutical company. The Company develops and sells small molecule drugs, antibody drug conjugates, and other products. Shanghai Junshi Biosciences markets its products worldwide.

3SBio, Inc. is a biotechnology company located in China. The Company focuses on mammalian cell-based biopharmaceuticals in the biotechnology industry. 3SBio also develops, manufactures and markets biopharmaceutical products globally.

Chengzhi Company Limited manufactures and sells household chemical products, biotechnology products, pharmaceuticals, and information technology products. The Company's products include detergents, toothpastes, D-ribose, L-glutamine, Chinese traditional medicines, computer memory devices, and other related products.

Beijing Strong Biotechnologies, Inc. operates in the IVD industry, where they specialize in the manufacturing of clinical chemistry liquid reagents.

Zai Lab Limited operates as a bio-pharmaceutical company. The Company researches and develops therapeutic technology for antibody-based oncology, autoimmune, and infectious diseases treatments. Zai Lab also manufactures drugs in the form of capsules, injections, and liquids. Zai Lab serves patients worldwide.

BGI Genomics Co., Ltd offers researching and testing services. The Company provides deoxyribonucleic acid sequencing, food science, health care researching, cancer prevention, drug discovery, and DNA sequencing. BGI Genomics offers services to medical and scientific research institutions worldwide.

Shanghai Haohai Biological Technology Company Limited manufactures absorbable biomedical materials. The Company targets therapeutic areas such as orthopedics, anti-adhesion and hemostasis, ophthalmology, and wound care and tissue filling.

Shanghai Haohai Biological Technology (6826 HK)

Zhongyuan Union Cell & Gene Engineering Corp Ltd, mainly operates in the stem cell inspection and storage business and other stem cell related business.

Zhongyuan Union Cell & Gene Eng Corp (600645 CH)

Beijing SL Pharmaceutical Co., Ltd. develops, manufactures and markets genetic engineering drugs, biological drugs, chemical drugs and medicine preparations.

BioCryst Pharmaceuticals, Inc. designs, optimizes and develops small-molecule novel pharmaceuticals that block key enzymes involved in infectious diseases, inflammatory diseases & cancer.  The Company has late-stage compounds in development & continues to discover additional compounds & to progress them  to meet the unmet medical needs of patients and physicians.

Dynavax Technologies Corporation discovers, develops, and is seeking to commercialize products based on immunostimulatory sequences.  The Company is developing products to treat and prevent allergies, infectious diseases, and chronic inflammatory diseases using approaches that alter immune system responses in specific ways.

Ligand Pharmaceuticals Incorporated develops drugs which regulate hormone activated intracellular receptors.  These receptors play a role in regulating the genetic processes affecting diseases such as gynecological disorders, certain cancers, as well as cardiovascular, inflammatory, and skin diseases.

Ardelyx, Inc. develops minimally absorbed small molecule drugs. The Company offers pharmaceuticals to correct mineral metabolism imbalance and metabolic disorders by modulating the function of specific transporters, channels, and receptors located on the epithelia of the gastrointestinal tract.

Galapagos NV operates as a clinical stage biotech company. The Company develops and commercializes novel medicines and progressing pipelines in biotech with phase 2 programs, phase 1 programs, pre-clinical, and discovery programs.

Biotest AG is a provider of plasma proteins and biological drugs. The Company has specialized primarily in the areas of clinical immunology, haematology and intensive medicine with a focus on treating diseases of the immune and haematopoietic systems. Biotest AG has production operations mainly in Europe and the US, and sells its products worldwide.

Genus plc provides cattle breeding and agricultural consultancy services.  The Group, through its own domestic production and contracts with breeding companies worldwide, supplies dairy and beef semen used for artificial insemination.  They also provide laboratory services, including soil analysis and pregnancy testing, in addition to a variety of farm consultancy and advisory services.

Hugel, Inc. is a Bio-pharmaceutical company that focuses on developing beauty/cosmetics related products.  The Company's main products include botulinum toxin and fillers.

Kura Oncology, Inc. operates as a clinical stage biopharmaceutical company. The Company focuses on discovery and development of personalized therapeutics for the treatment of tumors and blood cancers. Kura Oncology offers development programs for cancers with high unmet need, including lung, colorectal, thyroid, blood, and pancreatic cancers.

Kiniksa Pharmaceuticals, Ltd. operates as a clinical-stage biopharmaceutical company. The Company focuses on discovering, acquiring, developing, and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need. Kiniksa Pharmaceuticals serves patients worldwide.

Shanghai Henlius Biotech, Inc develops and produces drugs. The Company develops and produces monoclonal antibody biosimilar drugs, bio betters, novel monoclonal antibodys, and other drugs. Shanghai Henlius Biotech throughout China.

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Shanghai Henlius Biotech (2696 HK)

Henlius (2696 HK): Here Comes The Scrip Option

This is trading wide-ish at 8.8%/28.8% currently (assuming mid-Nov payment), ostensibly due to the timing on the regulatory approvals - TCM (570...

David Blennerhassett

Shanghai Henlius Biotech Update (2696.HK) - The Story Behind Privatization

Henlius has met the pre-condition for a potential Share Alternative Offer. Since HK$24.60 Offer Price (50% lower than HK$49.6/share IPO price) is...

Xinyao (Criss) Wang

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is...

Arun George

Merger Arb Mondays (01 Jul) - Henlius, China TCM, GA Pack, CPMC, Asia Cement, Great Eastern

This week, the highest gross spreads are HEC Pharma (121.3%), China TCM (26.7%), Hollysys (22.5%), Ansarada (13.1%), Asia Cement China (12.6%), A8...

Arun George

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Henlius (2696 HK): Here Comes The Scrip Option

This is trading wide-ish at 8.8%/28.8% currently (assuming mid-Nov payment), ostensibly due to the timing on the regulatory approvals - TCM (570...

David Blennerhassett

Shanghai Henlius Biotech Update (2696.HK) - The Story Behind Privatization

Henlius has met the pre-condition for a potential Share Alternative Offer. Since HK$24.60 Offer Price (50% lower than HK$49.6/share IPO price) is...

Xinyao (Criss) Wang

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is...

Arun George

Merger Arb Mondays (01 Jul) - Henlius, China TCM, GA Pack, CPMC, Asia Cement, Great Eastern

This week, the highest gross spreads are HEC Pharma (121.3%), China TCM (26.7%), Hollysys (22.5%), Ansarada (13.1%), Asia Cement China (12.6%), A8...

Arun George

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The ​Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....