Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Melco International Development / Event-Driven

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<p>This week in StubWorld ...</p>
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<p>Encouraging data about a potential coronavirus vaccine from <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> gives a boost to Nevada-gaming stocks, which now trade "rich" to their Macau gaming holdings.</p>
<p>Conversely, <a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco International Development (200 HK)</a> is trading cheap to <a href="https://www.smartkarma.com/entities/melco-crown-entertainme-adr" target="_blank" data-smartkarma-citation="entities:810:1" rel="noopener">Melco Resorts &amp; Entertainment (MLCO US)</a>, as Lawrence Ho continues to add to his holding - plus there are large movements in CCASS.</p>
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<p>Preceding my comments on Melco and <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>  are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Encouraging data about a potential coronavirus vaccine from Pfizer Inc (PFE US) gives a boost to Nevada-gaming stocks, which now trade "rich" to their Macau gaming holdings.
Conversely, Melco International Development (200 HK) is trading cheap to Melco Resorts &amp; Entertainment (MLCO US), as Lawrence Ho continues to add to his holding - plus there are large movements in CCASS.



Preceding my comments on Melco and Swire Pacific (A) (19 HK)  are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: A Shot In The Arm For Gaming Stocks

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<p>A Double Dose of StubWorld this week...</p>
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<p>After fourteen consecutive months of total leased office space declining, major Hong Kong property-owners have scant alternatives but to negotiate leases. And like <a href="https://www.smartkarma.com/entities/swire-properties-ltd" target="_blank" data-smartkarma-citation="entities:5775:1" rel="noopener">Swire Properties (1972 HK)</a>, sell non-core assets.</p>
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<p>Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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A Double Dose of StubWorld this week...



After fourteen consecutive months of total leased office space declining, major Hong Kong property-owners have scant alternatives but to negotiate leases. And like Swire Properties (1972 HK), sell non-core assets.



Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.





These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Swire Shedding Property Amidst Leasing Funk

<p>On the 9 June, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> disclosed in its massive recapitalisation proposal <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0609/2020060900356.pdf" target="_blank" rel="noopener">announcement</a>, that:</p>
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<p>By the fourth quarter of 2020, Cathay Pacific’s management team will recommend to the Board the optimum size and shape of the Cathay Pacific Group to meet the air travel needs of Hong Kong while keeping Cathay Pacific’s financial status at a healthy level and meeting its responsibilities to Shareholder - <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0609/2020060900356.pdf" target="_blank" rel="noopener">page 6</a></p>
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<p>This morning, Cathay <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1021/2020102100213.pdf" target="_blank" rel="noopener">announced</a> its board had approved the following restructuring plan:</p>
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<li>Its wholly-owned Cathay Dragon, will cease its operations with effect from today. It is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by the Company and wholly-owned subsidiary low-cost carrier, Hong Kong Express Airways.</li>
<li>Approximately 8,500 positions across the Cathay Pacific Group (including Cathay Dragon) will be eliminated, accounting for around 24% of the Cathay Pacific Group’s headcount of 35,000.</li>
<li>Hong Kong-based cabin and cockpit crew of Cathay Pacific will be asked to agree to changes in their conditions of service which are designed, inter alia, to match remuneration more closely to productivity and to enhance market competitiveness.</li>
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<p>This restructuring will cost HK$2.2bn, to be funded internally. </p>
<p>Cathay is still running at a HK$1.5-HK$2bn/monthly loss. This restructuring is expected to save HK$500mn/month once fully implemented in 2021.</p>
<p>Separately <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s discount to NAV appears to have met support at around the current NAV discount.</p>
<p>As always, more below the fold.</p>

On the 9 June, Cathay Pacific Airways (293 HK) disclosed in its massive recapitalisation proposal announcement, that:

By the fourth quarter of 2020, Cathay Pacific’s management team will recommend to the Board the optimum size and shape of the Cathay Pacific Group to meet the air travel needs of Hong Kong while keeping Cathay Pacific’s financial status at a healthy level and meeting its responsibilities to Shareholder - page 6

This morning, Cathay announced its board had approved the following restructuring plan:

Its wholly-owned Cathay Dragon, will cease its operations with effect from today. It is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by the Company and wholly-owned subsidiary low-cost carrier, Hong Kong Express Airways.
Approximately 8,500 positions across the Cathay Pacific Group (including Cathay Dragon) will be eliminated, accounting for around 24% of the Cathay Pacific Group’s headcount of 35,000.
Hong Kong-based cabin and cockpit crew of Cathay Pacific will be asked to agree to changes in their conditions of service which are designed, inter alia, to match remuneration more closely to productivity and to enhance market competitiveness.

This restructuring will cost HK$2.2bn, to be funded internally. 
Cathay is still running at a HK$1.5-HK$2bn/monthly loss. This restructuring is expected to save HK$500mn/month once fully implemented in 2021.
Separately Swire Pacific (A) (19 HK)'s discount to NAV appears to have met support at around the current NAV discount.
As always, more below the fold.

<p><a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1008/2020100800907.pdf" target="_blank" rel="noopener">announced</a> it intends to list its wholly-owned <a href="https://www.swireblueocean.com/en/activities/what-we-do/" target="_blank" rel="noopener">Swire Blue Ocean A/S</a> (to be renamed Cadeler A/S) on the Oslo Stock Exchange.</p>
<p>Cadeler’s principal business is the "<em>installation of wind turbines and foundations for offshore windfarms and the provision of operation and maintenance services, accommodation, met mast installation and removal and decommissioning services to the offshore windfarm industry in northern European waters</em>".</p>
<p>Swire intends to remain a significant shareholder in Cadeler following completion of the proposed spin-off.</p>
<p>What would be the market cap for Cadeler? It currently operates two windfarm installation vessels. My back of the napkin calculations suggests a market cap upwards of US$250mn. This is not a material transaction.</p>
<p>As always, more below the fold.</p>

Swire Pacific (A) (19 HK) has announced it intends to list its wholly-owned Swire Blue Ocean A/S (to be renamed Cadeler A/S) on the Oslo Stock Exchange.
Cadeler’s principal business is the "installation of wind turbines and foundations for offshore windfarms and the provision of operation and maintenance services, accommodation, met mast installation and removal and decommissioning services to the offshore windfarm industry in northern European waters".
Swire intends to remain a significant shareholder in Cadeler following completion of the proposed spin-off.
What would be the market cap for Cadeler? It currently operates two windfarm installation vessels. My back of the napkin calculations suggests a market cap upwards of US$250mn. This is not a material transaction.
As always, more below the fold.

Swire Pacific: Oslo Spin-Off For Windfarm Installation Ops

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<p>This week in StubWorld ...</p>
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<p>Commercial real estate (in the world's most expensive city) - check. Hotel exposure - check. Marine services - check. Airline exposure - extra big check.</p>
<p><a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> is trading cheap on a look-thru P/B of 0.2x - but a realistic restructuring plan is needed before entering.</p>
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<p>Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div><hr></div>
<div>
<div>
<div class="content-remarks">
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Commercial real estate (in the world's most expensive city) - check. Hotel exposure - check. Marine services - check. Airline exposure - extra big check.
Swire Pacific (A) (19 HK) is trading cheap on a look-thru P/B of 0.2x - but a realistic restructuring plan is needed before entering.



Preceding my comments on Swire are the weekly setup/unwind tables for Asia-Pacific Holdcos.





These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Swire's All-Time Low Stub, But ..

Hong Kong

Swire Pacific Limited, through its subsidiaries, operates in the real estate, aviation, beverage, industrial, marine services, trading, and industrial businesses.

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Swire Pacific (A) (19 HK)

StubWorld: A Shot In The Arm For Gaming Stocks

Melco International Development (200 HK) is trading cheap to Melco Resorts & Entertainment (MLCO US), as Lawrence Ho continues to add to his...

David Blennerhassett

StubWorld: Swire Shedding Property Amidst Leasing Funk

After fourteen consecutive months of total leased office space declining, major Hong Kong property-owners have scant alternatives but to negotiate...

David Blennerhassett

Cathay Pacific: Exit The Dragon

With passenger travel unlikely to return to pre-COVID-19 levels until 2024, the inevitable staff cut is announced, together with the cessation of...

David Blennerhassett

Swire Pacific: Oslo Spin-Off For Windfarm Installation Ops

Swire Pacific (A) (19 HK) has annoucndc igd Swire Pacific Offshore, a wholly-owned subsidiary of Swire Pacific Limited (“Swire Pacific”), is...

David Blennerhassett

StubWorld: Swire's All-Time Low Stub, But ..

This week in StubWorld ... Shareholders are the big loser as the US, UK and China turn HSBC Holdings (5 HK) into a political...

David Blennerhassett

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