Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Continued stub losses are one thing. Ballooning <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> parent debt is another. </li>
<li>Preceding my comments on PCCW and <a href="https://www.smartkarma.com/entities/hkt-ltd" target="_blank" data-smartkarma-citation="entities:874:1" rel="noopener">HKT Ltd (6823 HK)</a> are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>.These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Continued stub losses are one thing. Ballooning PCCW Ltd (8 HK) parent debt is another. 
Preceding my comments on PCCW and HKT Ltd (6823 HK) are the current setup/unwind tables for Asia-Pacific Holdcos.
.These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: PCCW's Premium To NAV Is Unsustainable

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>On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their <a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a> shareholdings. Previous privatisation rumours have fizzled out.</li>
<li>The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>) were approached.</li>
<li>The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage. </li>
</ul>


On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage. 


HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

<ul>
<li>Reportedly, Chinese investors, as well as Middle Eastern sovereign wealth funds, have expressed interest in acquiring a "significant " minority stake in <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a>'s fibre ops. </li>
<li>Preceding my comments on PCCW are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Reportedly, Chinese investors, as well as Middle Eastern sovereign wealth funds, have expressed interest in acquiring a "significant " minority stake in PCCW Ltd (8 HK)'s fibre ops. 
Preceding my comments on PCCW are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Rumoured Interest In PCCW's Fibre

Hutchison Telecommunications Hong Kong Holdings / Event-Driven

Hutchison Telecommunications Hong Kong Holdings

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hutchison-telecomm-hong-kong" target="_blank" data-smartkarma-citation="entities:141:1" rel="noopener">Hutchison Telecommunications (215 HK)</a>'s share price is up 33% month to date.</li>
<li>The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months. </li>
<li>Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month. </li>
</ul>



Hutchison Telecommunications (215 HK)'s share price is up 33% month to date.
The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months. 
Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month. 


<ul>
<li>
<a href="https://www.bloomberg.com/news/articles/2022-05-18/hong-kong-telco-hkbn-said-to-draw-interest-from-stonepeak-pag" target="_blank" rel="noopener">Bloomberg reported</a><a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a> and PAG are carrying out due diligence on <a href="https://www.smartkarma.com/entities/hkbn-ltd" target="_blank" data-smartkarma-citation="entities:289:1" rel="noopener">HKBN Ltd (1310 HK)</a>, with a view to launching a privatisation bid.</li>
<li>HKBN has a relatively concentrated shareholder register which suggests a requirement for a high takeover premium.</li>
<li>Precedent transactions suggest a privatisation forward EV/EBITDA multiple of at least 10x, implying a minimum offer price of HK$11.80 per share, a 23% premium to the last close. </li>
</ul>



Bloomberg reportedKKR &amp; Co Inc (KKR US) and PAG are carrying out due diligence on HKBN Ltd (1310 HK), with a view to launching a privatisation bid.
HKBN has a relatively concentrated shareholder register which suggests a requirement for a high takeover premium.
Precedent transactions suggest a privatisation forward EV/EBITDA multiple of at least 10x, implying a minimum offer price of HK$11.80 per share, a 23% premium to the last close. 


Hong Kong

SmarTone Telecommunications Holdings Limited, through its subsidiaries, provides mobile telecommunication and related services and sells mobile telephones and accessories.

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Smartone Telecommunications (315 HK)

StubWorld: PCCW's Premium To NAV Is Unsustainable

PCCW has an attractive yield. But that's about it. A 4% premium to NAV is unsustainable. I'd reverse the stub here - short PCCW, long HKT.

David Blennerhassett

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

The probability of a takeover offer is low, which explains TPG/MBK's exploration of other options. An attractive dividend yield continues to...

Arun George

StubWorld: Rumoured Interest In PCCW's Fibre

A 7% premium is unsustainable for this holding company structure. Reverse the stub here. If Hong Kong fibre is in vogue. perhaps it might be...

David Blennerhassett

Hutch Tel (215 HK): Something's Brewing

Hutch Tel appears to be in play. And Hong Kong has had a tendency for news leakage ahead of events. Even after the recent run-up, Hutch Tel does...

David Blennerhassett

HKBN in the Crosshairs of KKR and PAG

Bloomberg reported that KKR and PAG could launch a privatisation bid. Precedent transactions suggest a privatisation forward EV/EBITDA multiple of...

Arun George

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