Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a>.</li>
<li>Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  </li>
<li>Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. </li>
</ul>


According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for Vinda International (3331 HK).
Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  
Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. 


Vinda International (3331 HK):  Worst Is Likely Over

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.

Event-Driven

<ul>
<li>Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-11-10/asia-pulp-paper-is-said-to-bid-for-stake-in-tissue-maker-vinda#xj4y7vzkg" target="_blank" rel="noopener">reported</a> Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring <a href="https://www.smartkarma.com/entities/essity-ab" target="_blank" data-smartkarma-citation="entities:28203:1" rel="noopener">Essity (ESSITYB SS)</a>’s controlling <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> stake at more than HK$20 per share.</li>
<li>Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.</li>
<li>Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.</li>
</ul>


Bloomberg reported Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring Essity (ESSITYB SS)’s controlling Vinda International (3331 HK) stake at more than HK$20 per share.
Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.
Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.


Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

<ul>
<li>
<a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> announced 3Q23 results, with net profit up 37% yoy as margins started to recover. </li>
<li>Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). </li>
<li>More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.</li>
</ul>



Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover. 
Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). 
More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.


Vinda International (3331 HK):  Business Recovering As Expected

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On the 27 April, <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda (3331 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0427/2023042700007.pdf" target="_blank" rel="noopener">announced</a> its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See <a href="https://www.smartkarma.com/compose/insight/115530/Essity%20Mulls%20Holding%20In%20Vinda%20(3331%20HK).%20Read%20more:%20https:/skr.ma/nexgL" target="_blank" rel="noopener">Essity Mulls Holding In Vinda (3331 HK). </a>
</li>
<li>That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.</li>
<li>The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. </li>
</ul>


On the 27 April, Vinda (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See Essity Mulls Holding In Vinda (3331 HK). 

That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.
The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. 


<ul>
<li>PRC regulatory approvals were satisfied on the 4th March for the Tanoto family's HK$23.50 pre-conditional Offer for <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a>. </li>
<li>The <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0308/2024030800055.pdf" target="_blank" rel="noopener">Circular</a> has been dispatched, and the Offer is now open for acceptances.</li>
<li>With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto's 7.69% direct stake), this should turn unconditional on or before the 19th March</li>
</ul>


PRC regulatory approvals were satisfied on the 4th March for the Tanoto family's HK$23.50 pre-conditional Offer for Vinda International (3331 HK). 
The Circular has been dispatched, and the Offer is now open for acceptances.
With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto's 7.69% direct stake), this should turn unconditional on or before the 19th March


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Vinda International (3331 HK)