Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names. </li>
<li>Of these companies, only two are expected to be EBITDA positive in FY22. </li>
<li>They are <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> and <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com (SOHU US)</a>. This insight looks at both names. </li>
</ul>


Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names. 
Of these companies, only two are expected to be EBITDA positive in FY22. 
They are JOYY (YY US) and Sohu.com (SOHU US). This insight looks at both names. 


Negative EVs: JOYY & Sohu's Steep Discount To Net Cash

Event-Driven

Glory Star New Media Group Holdings / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/glory-star-new-media-group-h" target="_blank" data-smartkarma-citation="entities:33080:1" rel="noopener">Glory Star New Media Group H (GSMG US)</a> (GSMG), a leading digital media platform and content-driven e-commerce company in China, has <a href="https://www.sec.gov/Archives/edgar/data/0001738758/000121390022038380/ea162668ex99-1_glorystar.htm" target="_blank" rel="noopener">entered</a> a definitive privatisation transaction with Cheers Inc.</li>
<li>Cheers is offering US$1.55/share, in cash, a 76% premium to GSMG's undisturbed price, and a 22% premium to the US$1.27/share proposal from GSMG's CEO Bing Zhang. </li>
<li>The buyer consortium owns ~72.8% of shares out and this Offer requires a two-thirds vote from shareholders. This looks done with expected completion this year. But it's a low-balled Offer.</li>
</ul>



Glory Star New Media Group H (GSMG US) (GSMG), a leading digital media platform and content-driven e-commerce company in China, has entered a definitive privatisation transaction with Cheers Inc.
Cheers is offering US$1.55/share, in cash, a 76% premium to GSMG's undisturbed price, and a 22% premium to the US$1.27/share proposal from GSMG's CEO Bing Zhang. 
The buyer consortium owns ~72.8% of shares out and this Offer requires a two-thirds vote from shareholders. This looks done with expected completion this year. But it's a low-balled Offer.


Offensively Cheap Homecoming For Glory Star New Media

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

<ul>
<li>Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.</li>
<li>Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.</li>
<li>Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.</li>
</ul>


Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.
Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.
Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/111-inc" target="_blank" data-smartkarma-citation="entities:27412:1" rel="noopener">111 Inc (YI US)</a>, an online healthcare platform operator in China, announced an unsolicited preliminary non-binding proposal from Gang Yu and Junling Liu - both co-founders and co-chairmans.</li>
<li>Yu and Liu are offering US$3.66/ADS, a 20% premium to the undisturbed price. </li>
<li>Yu and Liu control 92.1% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.</li>
</ul>



111 Inc (YI US), an online healthcare platform operator in China, announced an unsolicited preliminary non-binding proposal from Gang Yu and Junling Liu - both co-founders and co-chairmans.
Yu and Liu are offering US$3.66/ADS, a 20% premium to the undisturbed price. 
Yu and Liu control 92.1% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.


111 Inc's Low-Balled Homecoming Is A Done Deal

Bright Scholar Education Holdi / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-scholar-education" target="_blank" data-smartkarma-citation="entities:24126:1" rel="noopener">Bright Scholar Education (BEDU US)</a> (BSE), an operator of schools across China, the UK, and the US, received an Offer earlier this year from Huiyan Yang, the chairperson.</li>
<li>Yang is offering US$3.32/ADS - adjusted for the recent reverse split - a 44% premium to the undisturbed price. </li>
<li>Yang controls 92.5% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.</li>
</ul>



Bright Scholar Education (BEDU US) (BSE), an operator of schools across China, the UK, and the US, received an Offer earlier this year from Huiyan Yang, the chairperson.
Yang is offering US$3.32/ADS - adjusted for the recent reverse split - a 44% premium to the undisturbed price. 
Yang controls 92.5% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.


Bright Scholar: Cheap Homecoming, Yet Limited Downside

United States

Sogou Inc. operates as a Chinese online search engine. The Company develops Internet applications such as map, voice search, and smart phone assistant, as well as web directory and browser. Sogou serves clients in China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Sogou Inc (SOGO US)

Negative EVs: JOYY & Sohu's Steep Discount To Net Cash

I'd tilt slightly towards Sohu. It did successfully sell Sogou; whereas Joyy failed to sell YY live. That may provide some insight as to how the...

David Blennerhassett

Offensively Cheap Homecoming For Glory Star New Media

Trading at a 17.4%/40.9% gross/annualised spread, assuming late December completion. That's attractive. Get involved if you've read this far.

David Blennerhassett

Baidu: Priced to Fail

In this insight, we analyse Baidu’s search query and digital advertising revenue market share trends, revenue growth outlook, margin expansion...

Wium Malan, CFA

111 Inc's Low-Balled Homecoming Is A Done Deal

Trading at a 9.3% gross spread to terms. That's okay for an illiquid arb. One that is neither firm, nor optically reasonable. The downside is...

David Blennerhassett

Bright Scholar: Cheap Homecoming, Yet Limited Downside

Trading tight at a 1.8% gross spread to terms. However, your downside is probably limited here as operations recover. And Yang may still bump terms.

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)