Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.The most widely held stocks are <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US), </a><a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, with the trio accounting for 40.6% of total China allocations.  If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> , <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> as stocks lightly held by Global managers but well invested by EM active funds.

China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.The most widely held stocks are Alibaba Group (BABA US), AIA Group Ltd (1299 HK) and Tencent (700 HK), with the trio accounting for 40.6% of total China allocations.  If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight Ping An Insurance (H) (2318 HK) , Meituan (3690 HK) and JD.com Inc (ADR) (JD US) as stocks lightly held by Global managers but well invested by EM active funds.

Global Funds China Fall:  Gap to US Largest in History

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. Then we wait. And things get a little weird and possibly a little bumpy this week. And into the week after...But we wait anyway. More below the fold. <hr><table class="table table-striped">
<colgroup>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr><td colspan="3" style="text-align: left; width: 535pt;"><h3>Insights on This WH Group Event To Date</h3></td></tr>
<tr>
<td style="text-align: center;">Date</td>
<td style="text-align: center;">Author</td>
<td>Title</td>
</tr>
<tr>
<td style="text-align: center;">02-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" rel="noopener">David B</a></td>
<td><a href="https://www.smartkarma.com/insights/wh-group-288-hk-today-s-pig-is-tomorrow-s-bacon" target="_blank" data-smartkarma-citation="insights:52429" rel="noopener">WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? </a></td>
</tr>
<tr>
<td style="text-align: center;">06-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/travis-lundy/insights" target="_blank" rel="noopener">myself</a></td>
<td><a href="https://www.smartkarma.com/insights/wh-group-buyback-offer-announced-strong-accretion-creates-accretion-risk" target="_blank" data-smartkarma-citation="insights:52613" rel="noopener">WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk </a></td>
</tr>
<tr>
<td style="text-align: center;">20-Jun-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-vs-peers-too-many-piggies-going-to-market" target="_blank" data-smartkarma-citation="insights:53217" rel="noopener">WH Group Vs Peers - Too Many Piggies Going to Market? </a></td>
</tr>
<tr>
<td style="text-align: center;">05-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-trading-opportunities-abound" target="_blank" data-smartkarma-citation="insights:54016" rel="noopener">WH Group - Trading Opportunities Abound </a></td>
</tr>
<tr>
<td style="text-align: center;">10-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-long-only-fundamental-investors-can-take-advantage-too" target="_blank" data-smartkarma-citation="insights:54223" rel="noopener">WH Group - Long-Only Fundamental Investors Can Take Advantage Too </a></td>
</tr>
<tr>
<td style="text-align: center;">30-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-offer-doc-out-this-little-piggy-went-to-market" target="_blank" data-smartkarma-citation="insights:55210" rel="noopener">WH Group Offer Doc Out - This Little Piggy Went To Market </a></td>
</tr>
<tr>
<td style="text-align: center;">17-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-partial-buyback-offer-now-unconditional" target="_blank" data-smartkarma-citation="insights:56210" rel="noopener">WH Group Partial Buyback Offer Now Unconditional </a></td>
</tr>
<tr>
<td style="text-align: center;">18-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud </a></td>
</tr>
</tbody>
</table>

WH Group (288 HK) will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. Then we wait. And things get a little weird and possibly a little bumpy this week. And into the week after...But we wait anyway. More below the fold. 






Insights on This WH Group Event To Date

Date
Author
Title


02-Jun-21
David B
WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? 


06-Jun-21
myself
WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk 


20-Jun-21
myself
WH Group Vs Peers - Too Many Piggies Going to Market? 


05-Jul-21
myself
WH Group - Trading Opportunities Abound 


10-Jul-21
myself
WH Group - Long-Only Fundamental Investors Can Take Advantage Too 


30-Jul-21
myself
WH Group Offer Doc Out - This Little Piggy Went To Market 


17-Aug-21
myself
WH Group Partial Buyback Offer Now Unconditional 


18-Aug-21
myself
WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud 




WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations

David Blennerhassett

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...<blockquote>“Never wrestle with pigs. You both get dirty and the pig likes it.”</blockquote>An <a href="https://m.21jingji.com/article/20210818/herald/4a9608d9f5f5c7989d30c32968022298.html" target="_blank" rel="noopener">article</a> out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> Chairman Wan Long].WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/496/original/Screenshot+2021-08-18+at+11.13.20+AM.png?1629256485" class="editor-image img-responsive" data-smartkarma-image-id="224496"></figure></section>It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0617/2021061700420.pdf" target="_blank" rel="noopener">release</a>, "The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." Wan Hongjian recounted in a newspaper interview (reference link <a href="https://www.foodprocessing.com/industrynews/2021/ceo-of-smithfield-parent-steps-down/" target="_blank" rel="noopener">here</a>) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one <a href="https://www.feedstrategy.com/business-markets/wh-group-removes-executive-director-over-embezzlement/" target="_blank" rel="noopener">here</a>) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. A somewhat strange <a href="https://www.yicaiglobal.com/news/exclusive-wh-group-ex-vp-wan-hongjian-talks-about-the-bust-up-with-his-father-smithfield-takeover--" target="_blank" rel="noopener">article</a> showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/509/original/Screenshot+2021-08-18+at+11.36.52+AM.png?1629257931" class="editor-image img-responsive" data-smartkarma-image-id="224509"></figure></section><div class="content-highlight">That appears to have triggered things.</div>But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to "I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!").The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.<h3>The NEW Article</h3>There are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that<ul>
<li>Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary <a href="https://www.smartkarma.com/entities/henan-shuanghui-investment-development" target="_blank" data-smartkarma-citation="entities:20515:1" rel="noopener">Henan Shuanghui Investment &amp; Development (000895 CH)</a> (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. </li>
<li>Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")</li>
<li>Wan Hongjian appears to object vociferously to the choice of Guo Lijun as CEO. </li>
<li>There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.</li>
</ul>It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com <a href="https://finance.sina.com.cn/chanjing/gsnews/2021-08-18/doc-ikqciyzm2080209.shtml" target="_blank" rel="noopener">here</a>. That letter is much more detailed and very clearly says "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."As I hit the "publish" button, the company has just released a "<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800225.pdf" target="_blank" rel="noopener">clarification</a>" which says<blockquote>
The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). 
The Board would like to clarify that the Allegations are untrue and misleading. 
Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). 
The Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.
</blockquote>More below the fold.

Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...“Never wrestle with pigs. You both get dirty and the pig likes it.”An article out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is WH Group (288 HK) Chairman Wan Long].WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its release, "The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." Wan Hongjian recounted in a newspaper interview (reference link here) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one here) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. A somewhat strange article showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. That appears to have triggered things.But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to "I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!").The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.The NEW ArticleThere are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that
Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary Henan Shuanghui Investment &amp; Development (000895 CH) (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. 
Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")
Wan Hongjian appears to object vociferously to the choice of Guo Lijun as CEO. 
There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.
It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com here. That letter is much more detailed and very clearly says "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."As I hit the "publish" button, the company has just released a "clarification" which says
The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). 
The Board would like to clarify that the Allegations are untrue and misleading. 
Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). 
The Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.
More below the fold. 

WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud

The <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> Partial Offer to buy back 13% of shares outstanding at HK$7.80/share (a 15.9% premium to yesterday's close) went Unconditional yesterday as yesterday's EGM <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0816/2021081601150.pdf" target="_blank" rel="noopener">passed</a> the proposal and the Whitewash Waiver. This deal is live, and closes on 30 August. Unlike other partial offers where one looks at spot price, potential participation/pro-ration, and prices a breakeven against peers, this deal also creates 15% EPS accretion compared to pre-deal. I'd note that despite the premium to the buyback, and the IFA saying fair value is lower, the Controlling Shareholders are not tendering anything.The unaudited <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0812/2021081201179.pdf" target="_blank" rel="noopener">results</a> of 70.3%-owned Chinese unit Henan Shuanghui were out 12 August.  OP was down in H1 to 30 June vs 2020 as live hog prices plummeted and the relative ratio of feed to pork was up, and other costs were down but not as much, and EPS was down 20.0% year-on-year in H1 2021. Unaudited <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0812/2021081200442.pdf" target="_blank" rel="noopener">results</a> of WH Group as a whole were out the same day. Sales volume of packaged meats and pork increased by 2.5% and 10.1% respectively; revenue was up by 6.8%. Operating Profit decreased by 0.5%. Profit attributable to owners of the Company, before biological fair value adjustments, decreased by 2.0%. After adjustments it was up, despite live hog prices falling. US cash prices continue to outpace futures (strong spot demand against weaker forward exports to China and increased supply on seasonal weight gain).We now come down to the wire. Investors should have a long, hard look at where they sit, and why. In the very big picture, WH Group does not look out of place given the 15% EPS accretion and diversified sources and sales markets. But near-term, one could be forgiven for thinking it is nearly priced in. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/264/original/Screenshot+2021-08-17+at+3.08.58+PM.png?1629184157" class="editor-image img-responsive" data-smartkarma-image-id="224264"></figure></section><section class="figure"><div class="content-highlight">With about ten days to make a decision, and onshore pork and hog prices perhaps reaching something of an inflection point, the relative merits are less easy than they were as the ratio of the WH Group Back End to its Asia Peer Basket is now at its highest in more than a year and it is only a little bit off its high vs its non-HK/CH Global Peer Basket.</div></section>Much more below the fold.<hr>The series of insights on this event are:<table class="table table-striped">
<colgroup>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="text-align: center; width: 95pt;">Date</td>
<td style="width: 94pt;">Relative Direction</td>
<td style="width: 400pt;">Title</td>
</tr>
<tr>
<td style="text-align: center;">2-Jun-21</td>
<td>Bullish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-288-hk-today-s-pig-is-tomorrow-s-bacon" target="_blank" rel="noopener">WH Group (288 HK): Today’s Pig Is Tomorrow’s Bacon?</a></td>
</tr>
<tr>
<td style="text-align: center;">6-Jun-21</td>
<td>Bullish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-buyback-offer-announced-strong-accretion-creates-accretion-risk" target="_blank" rel="noopener">WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk</a></td>
</tr>
<tr>
<td style="text-align: center;">20-Jun-21</td>
<td>Bullish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-vs-peers-too-many-piggies-going-to-market" target="_blank" rel="noopener">WH Group Vs Peers - Too Many Piggies Going to Market?</a></td>
</tr>
<tr>
<td style="text-align: center;">5-Jul-21</td>
<td>Bearish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-trading-opportunities-abound" target="_blank" rel="noopener">WH Group - Trading Opportunities Abound</a></td>
</tr>
<tr>
<td style="text-align: center;">10-Jul-21</td>
<td>Bullish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-long-only-fundamental-investors-can-take-advantage-too" target="_blank" rel="noopener">WH Group - Long-Only Fundamental Investors Can Take Advantage Too</a></td>
</tr>
<tr>
<td style="text-align: center;">30-Jul-21</td>
<td>Bullish</td>
<td><a href="https://www.smartkarma.com/insights/wh-group-offer-doc-out-this-little-piggy-went-to-market" target="_blank" rel="noopener">WH Group Offer Doc Out - This Little Piggy Went To Market</a></td>
</tr>
</tbody>
</table>

The WH Group (288 HK) Partial Offer to buy back 13% of shares outstanding at HK$7.80/share (a 15.9% premium to yesterday's close) went Unconditional yesterday as yesterday's EGM passed the proposal and the Whitewash Waiver. This deal is live, and closes on 30 August. Unlike other partial offers where one looks at spot price, potential participation/pro-ration, and prices a breakeven against peers, this deal also creates 15% EPS accretion compared to pre-deal. I'd note that despite the premium to the buyback, and the IFA saying fair value is lower, the Controlling Shareholders are not tendering anything.The unaudited results of 70.3%-owned Chinese unit Henan Shuanghui were out 12 August.  OP was down in H1 to 30 June vs 2020 as live hog prices plummeted and the relative ratio of feed to pork was up, and other costs were down but not as much, and EPS was down 20.0% year-on-year in H1 2021. Unaudited results of WH Group as a whole were out the same day. Sales volume of packaged meats and pork increased by 2.5% and 10.1% respectively; revenue was up by 6.8%. Operating Profit decreased by 0.5%. Profit attributable to owners of the Company, before biological fair value adjustments, decreased by 2.0%. After adjustments it was up, despite live hog prices falling. US cash prices continue to outpace futures (strong spot demand against weaker forward exports to China and increased supply on seasonal weight gain).We now come down to the wire. Investors should have a long, hard look at where they sit, and why. In the very big picture, WH Group does not look out of place given the 15% EPS accretion and diversified sources and sales markets. But near-term, one could be forgiven for thinking it is nearly priced in. With about ten days to make a decision, and onshore pork and hog prices perhaps reaching something of an inflection point, the relative merits are less easy than they were as the ratio of the WH Group Back End to its Asia Peer Basket is now at its highest in more than a year and it is only a little bit off its high vs its non-HK/CH Global Peer Basket.Much more below the fold.The series of insights on this event are:







Date
Relative Direction
Title


2-Jun-21
Bullish
WH Group (288 HK): Today’s Pig Is Tomorrow’s Bacon?


6-Jun-21
Bullish
WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk


20-Jun-21
Bullish
WH Group Vs Peers - Too Many Piggies Going to Market?


5-Jul-21
Bearish
WH Group - Trading Opportunities Abound


10-Jul-21
Bullish
WH Group - Long-Only Fundamental Investors Can Take Advantage Too


30-Jul-21
Bullish
WH Group Offer Doc Out - This Little Piggy Went To Market




WH Group Partial Buyback Offer Now Unconditional

Hong Kong

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

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WH Group (288 HK)

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