Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Yesterday <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> (and <a href="https://www.smartkarma.com/entities/swire-pacific-ltd" target="_blank" data-smartkarma-citation="entities:23726:1" rel="noopener">Swire Pacific Ltd-Cl B (87 HK)</a>) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. </li>
<li>A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. </li>
<li>The conclusions are surprising, and lead to one clear trading idea. </li>
</ul>


Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. 
A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. 
The conclusions are surprising, and lead to one clear trading idea. 


Swire A Vs Swire B - Regulatory Nuances REALLY Matter

David Blennerhassett

<ul>
<li>The BIG Risk is that <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu Ltd (6702 JP)</a> sells its stake in <a href="https://www.smartkarma.com/entities/fujitsu-general-ltd" target="_blank" data-smartkarma-citation="entities:2025:1" rel="noopener">Fujitsu General (6755 JP)</a> to someone in a below-market tender offer.</li>
<li>
<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> may still see more outperformance from its  latest buyback. But it's up ~29% since the company announced it was buying both the As and Bs. </li>
<li>
<a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning (2331 HK)</a>'s shares continue to edge up after its founder recently increased its stake. </li>
</ul>


The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.

Swire Pacific (A) (19 HK) may still see more outperformance from its  latest buyback. But it's up ~29% since the company announced it was buying both the As and Bs. 

Li Ning (2331 HK)'s shares continue to edge up after its founder recently increased its stake. 


Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

<ul>
<li>
<a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (19 HK)</a>'s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, <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> flagged a HK$4.5bn writedown on its investment property.</li>
<li>Preceding my comments on Swire 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>



Swire Pacific (19 HK)'s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
Preceding my comments on Swire 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: Swire Pac Trading "Rich" As Props Announces Big Write-Down

<ul>
<li>Yesterday afternoon (5th Dec), <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> (and <a href="https://www.smartkarma.com/entities/swire-pacific-ltd" target="_blank" data-smartkarma-citation="entities:23726:1" rel="noopener">Swire Pacific (B) (87 HK)</a>) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/1205/2023120501177.pdf" target="_blank" rel="noopener">announced</a> a large (HK$6bn) buyback.</li>
<li>The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.</li>
<li>I still like the idea of buying Swire A and Swire B outright here.</li>
</ul>


Yesterday afternoon (5th Dec), Swire Pacific (A) (19 HK) (and Swire Pacific (B) (87 HK)) announced a large (HK$6bn) buyback.
The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.
I still like the idea of buying Swire A and Swire B outright here.


<ul>
<li>Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.</li>
<li>I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.</li>
<li>This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.</li>
</ul>


Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.


Swire Coke Sale Special Div Impacts B/A Ratio

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)

Swire A Vs Swire B - Regulatory Nuances REALLY Matter

Swire announced a share buyback. The regulatory nuances described in the Announcement and the Appendix to the 2022 AGM Convocation don't cover...

Travis Lundy

Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: Swire Pac Trading "Rich" As Props Announces Big Write-Down

If you had set up the stub, look to unwind here. Pac may still see more outperformance from this latest buyback. But it's up 29% as I type since...

David Blennerhassett

StubWorld: Swire's Latest Buyback

Swire Pac is cheap at 0.28x P/B, prior to this latest buyback announcement. The conglomerate may get a boost from recent property tweaks. On...

David Blennerhassett

Swire Coke Sale Special Div Impacts B/A Ratio

Swire Pacific announced the sale of its US Coca-Cola distribution business. That means cash inflow, improving the "quality" of the NAV, and there's...

Travis Lundy

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