Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Jardine Matheson Holdings / Equity Bottom-Up

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<p>On the 6th September, <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a> <a href="https://links.sgx.com/FileOpen/HKLH0906.ashx?App=Announcement&amp;FileID=682657" target="_blank" rel="noopener">announced</a> a US$500mn share buyback program, which will run until 31st December 2022. Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. Pretty punchy.</p>
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<p>In <em><a href="https://skr.ma/aFS5q" target="_blank" rel="noopener">Hongkong Land's (HKL SP) Big Buyback</a></em>, I said the Jardine's group evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.</p>
<p>Now it's <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>'s turn to buy back its own shares. </p>
<p>Yesterday the conglomerate <a href="https://links.sgx.com/FileOpen/JMH.ashx?App=Announcement&amp;FileID=685150" target="_blank" rel="noopener">announced</a> a US$250mn buyback which will run through to 30 June next year.</p>
<p>As with HKL, the holding of treasury shares is not permitted in JMH's constitution, therefore any shares repurchased will be cancelled.</p>
<p>I see JMH's discount to NAV at ~30%, around its lowest level since taking <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> private.</p>
<p>We now have some indication as to what the Keswick family considers a cheap entry-level. </p>
<p>More below the fold.</p>
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On the 6th September, Hongkong Land (HKL SP) announced a US$500mn share buyback program, which will run until 31st December 2022. Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. Pretty punchy.


In Hongkong Land's (HKL SP) Big Buyback, I said the Jardine's group evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.
Now it's Jardine Matheson Holdings (JM SP)'s turn to buy back its own shares. 
Yesterday the conglomerate announced a US$250mn buyback which will run through to 30 June next year.
As with HKL, the holding of treasury shares is not permitted in JMH's constitution, therefore any shares repurchased will be cancelled.
I see JMH's discount to NAV at ~30%, around its lowest level since taking Jardine Strategic Holdings (JS SP) private.
We now have some indication as to what the Keswick family considers a cheap entry-level. 
More below the fold.






Jardine Matheson's (JM SP) Turn To Buy Back Shares

Event-Driven

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<p><em><strong>This week in StubWorld ...</strong></em></p>
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<p><a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a>, relative to <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>, is around record-lows outside the Covid-affect low last year. This is occurring amid recent corporate developments within the Jardine stable of companies.</p>
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<p>Preceding my comments on JCNC 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 ...



Jardine Cycle &amp; Carriage (JCNC SP), relative to Astra International (ASII IJ), is around record-lows outside the Covid-affect low last year. This is occurring amid recent corporate developments within the Jardine stable of companies.



Preceding my comments on JCNC 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%.


<p>In my prior insight <em><a href="https://skr.ma/h4f6C" target="_blank" rel="noopener">Jardine Matheson: Lessons in Dissent</a></em> on the 29 April, I thought <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> was unattractive at a 13% discount to NAV, plus near-term news may focus on <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a>'s dissension rights, and Matheson's potential exposure thereon.</p>
<p>Matheson is down ~15% since that note (while the Straits Times Index is down ~4%). </p>
<p>Since that insight, Matheson released its <a href="https://www.jardines.com/assets/files/NewsAndEvents/corporate-press-releases/jardine-matheson/int21.pdf" target="_blank" rel="noopener">interim results</a>, which not only provided clarity on the net debt at the parent level, which was largely guesswork amid the Matheson/<a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> circularity; but also unlisted stub ops - especially Jardine Motors - performed exceptionally in the 1H21.</p>
<p>At a ~23% discount to NAV on adjusted historical NAVs, value <em>is</em> emerging. Yet Matheson is not an obvious buy here.</p>
<p>More below the fold. </p>

In my prior insight Jardine Matheson: Lessons in Dissent on the 29 April, I thought Jardine Matheson Holdings (JM SP) was unattractive at a 13% discount to NAV, plus near-term news may focus on Jardine Strategic Holdings (JS SP)'s dissension rights, and Matheson's potential exposure thereon.
Matheson is down ~15% since that note (while the Straits Times Index is down ~4%). 
Since that insight, Matheson released its interim results, which not only provided clarity on the net debt at the parent level, which was largely guesswork amid the Matheson/Jardine Strategic Holdings (JS SP) circularity; but also unlisted stub ops - especially Jardine Motors - performed exceptionally in the 1H21.
At a ~23% discount to NAV on adjusted historical NAVs, value is emerging. Yet Matheson is not an obvious buy here.
More below the fold. 

Jardine Matheson: Value Gradually Emerging Four Months On

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p>Nexteer's share price was plagued by the auto chip shortage that causes its share price to fall from HKD 14to 7, a fall of 50% in the span of 3 months, presenting an excellent opportunity to add or initiate a position in the portfolio due to 1) the ending of the chip shortage is near thus auto-related stocks will benefit from the positive sentiment thus multiples will be higher and 2) the management has confirmed that 2H 2021 will have much bigger revenue <strong>(around 9x)</strong> although the reality could be different, nevertheless, it presents growth potential for <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> .</p>

Nexteer's share price was plagued by the auto chip shortage that causes its share price to fall from HKD 14to 7, a fall of 50% in the span of 3 months, presenting an excellent opportunity to add or initiate a position in the portfolio due to 1) the ending of the chip shortage is near thus auto-related stocks will benefit from the positive sentiment thus multiples will be higher and 2) the management has confirmed that 2H 2021 will have much bigger revenue (around 9x) although the reality could be different, nevertheless, it presents growth potential for Nexteer Automotive (1316 HK) .

Nexteer (1316): Positive Sentiment and Exciting 2H 2021

Fuyao Glass Industry Group / Equity Bottom-Up

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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/904/original/image_62803801921622698789619.png?1622698789" class="editor-image img-responsive" data-smartkarma-image-id="210904"></figure><p>source: Reuters</p>
</div><p>The above chart indicates that the correlation between Fuyao and Xinyi Glass broke in Q1 2021 as the former hit a break while the latter kept on accelerating further. The initial reaction is that Fuyao Glass will surely play catch up to Xinyi Glass and the trade is to go Long Fuyao Glass and Short Xinyi Glass. </p><p>However, the fundamental tells a different story. Xinyi Glass has a small part of their business in the energy-saving architectural glass that ticked the ESG box while Fuyao Glass's largest exposure is in auto glass, which has suffered due to the chip shortage but may soon bounce if the semiconductors ramp up their production activities. </p>


source: Reuters
The above chart indicates that the correlation between Fuyao and Xinyi Glass broke in Q1 2021 as the former hit a break while the latter kept on accelerating further. The initial reaction is that Fuyao Glass will surely play catch up to Xinyi Glass and the trade is to go Long Fuyao Glass and Short Xinyi Glass. However, the fundamental tells a different story. Xinyi Glass has a small part of their business in the energy-saving architectural glass that ticked the ESG box while Fuyao Glass's largest exposure is in auto glass, which has suffered due to the chip shortage but may soon bounce if the semiconductors ramp up their production activities. 

China

Zhongsheng Group Holdings Ltd. retails automobiles.  The Company imports and retails primarily luxury and mid- to high-end automobile brands.

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Zhongsheng Group (881 HK)

Jardine Matheson's (JM SP) Turn To Buy Back Shares

The Keswick's believe at current levels, there is better value to be had buying its own shares rather than investing elsewhere. As with HKL, JMH is...

David Blennerhassett

StubWorld: JCNC Is A Set-Up Here

Jardines appear to be increasingly more proactive on the corporate front of late. Not being a UK listing, JCNC is unlikely to be tabled a derisory...

David Blennerhassett

Jardine Matheson: Value Gradually Emerging Four Months On

Collapsing the circularity and removing its complexity should drive interest in Matheson. And holdings like HKL are cheap at 0.3x P/B. The pushback...

David Blennerhassett

Nexteer (1316): Positive Sentiment and Exciting 2H 2021

Nexteer's share price was plagued by the auto chip shortage as its share price fell 50% in the span of 3 months, presenting an excellent...

Henry Soediarko

Fuyao Glass Vs Xinyi Glass: Which One?

The short-term outlook for Fuyao Glass Industry Group (3606 HK)is much more positive compared to Xinyi Glass as it has exposure to the auto sector,...

Henry Soediarko

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