Singapore

• Hong Kong is – very gradually – rolling back Covid restrictions
• That’s a welcome relief for tourists, and for hospitality companies dependent on tourism. 
• Mandarin Oriental International (MAND SP) is trading cheap at 0.7x P/B against 1.8x on average (five years) pre-Covid.

• For Asia Pacific, there are 2 adds to the FTSE All-World Index, 2 adds to the FTSE All-Cap Index and 2 deletions from the FTSE All-World Index.
• All changes are on expected lines. The one surprise is the non-inclusion of Rainbow Children’s Hospital (RAINBOW IN) to the All-Cap Index where it likely just failed investable market cap.
• Sungeel Hitech (365340 KS) is also an add to the KOSDAQ 150 Index at the close on 8 December, while there is a huge lock-up expiry for Delhivery (DELHIVER IN).

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Perpetual Ltd (PPT AU).
• Lowest spreads – Tyro Payments (TYR AU), Warrego Energy (WGO AU), Jinke Smart Services (9666 HK), Nitro Software Ltd (NTO AU), Uzabase Inc (3966 JP), PTB Group Ltd (PTB AU).

• REIT Watch – Hospitality S-Reits ride on pent-up travel demand and the return of events in Q3 2022 All hospitality trusts with Singapore assets observed significant improvements in occupancy and RevPAR (revenue per available room) in the last quarter, driven by the return of large-scale events and the Mice (meetings, incentives, conventions and exhibitions) industry, alongside pent-up demand for overseas travels.
• Far East Hospitality Trust recorded that its Q3 2022 gross revenue increased 2.0 per cent yoy, led by growth from the hotel segment which increased 4.7 per cent.
• Income available for distribution grew 12.0 per cent yoy from higher NPI and interest income.

• There are 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
• Three new deals were discussed on Smartkarma: Beach Energy’s tilt for Warrego (WGO AU), Sumitomo’s offer for Sumitomo Precision (6355 JP), and Hainan Rubber’s offer for Halcyon (HACL SP).
• Key updates took place for: Perpetual Ltd (PPT AU) / Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), and OZ Minerals Ltd (OZL AU).

• Halcyon Agri (HACL SP) has announced Sinochem, its largest shareholder with 65.2%, has entered into a SPA to sell 36% of shares out to China Hainan Rubber Industry (601118 CH).
• Upon completion of the SPA, Hainan Rubber will make an MGO, conditional on a 50% tendering acceptance.  Sinochem has provided an undertaking not to tender its remaining 29.2% stake. 
• The Offer Price? The SPA price is US$0.315/share and the Offer Price will be the SGD equivalent at the close of the SPA.

• After distributing over 450m of JD.com Inc. (9618 HK) shares to its shareholders late last year, Tencent (700 HK) took a short break from the downsizing of its public investments.
• Downsizing seems to have restarted with yesterday’s announcement of the distribution of more than 950m Meituan (3690 HK) shares to Tencent shareholders.
• Having already met Tencent’s soft self-sustainability criteria, Pinduoduo (PDD US) and Sea Ltd (SE US) could be lined up as Tencent’s next portfolio downsizing targets.

• Grab (GRAB US)  reported 3Q2022 results yesterday. 3Q revenue increased 143% YoY to $382m (vs consensus $348m) while reported an adjusted EBITDA (negative) of $161m (vs consensus $202m).
• The highlight of 3Q2022 earnings was the break-even of deliveries business as well as improvement in Mobilities financials driven by reduction in incentives (as % of GMV).
• Though the company called it a strong set of results, Grab’s share price moved up by 0.64% could be an indication that the profitability may not be sustainable.

• Singapore private market exchange ADDX has secured US$20 million in a pre-series B extension round.

• The new capital injection comes on top of the US$58 million that ADDX initially raised in May, the company said in a release.

• Regulated by the Monetary Authority of Singapore, ADDX uses blockchain and smart contract tech to automate the manual processes in private market investing.

• MOGUL.sg’s 3D map supports searches with an immersive experience to help prospective buyers visualise the properties and their surrounding areas better.

• MOGUL.sg, an AI-driven property search portal in Singapore, has raised S$9 (US$6.5) million in its first-ever funding round.
• Launched in 2018, MOGUL.sg aims to make property searches easy with smart keywords, property tagging, and a specially curated agent concierge team to assist homeowners.

• Haw Par Corp (HPAR SP) is trading around multi-year trough levels on an implied stub valuation, and on an HPAR/UOL Group (UOL SP) ratio.
• Preceding my comments on HPAR are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Natural rubber play Halcyon Agri (HACL SP) was suspended ahead of trading on the 14 November.
• Word on the street is that a privatisation will be announced shortly. 
• The benefit of hindsight … Halcyon’s largest shareholder, SOE-backed Sinochem, recently increased its stake, paying ~S$0.45/share. 

• Sea Ltd (SE US) shares were up 36% yesterday following a relatively small top-line beat of 4.8% and a narrower-than-expected operating loss of $495.6m (consensus: $581.9) through rigorous cost-cutting.
• The share price move sets-up nicely to make gains on the short-side, as e-commerce and fintech remain unprofitable after cutting-down necessary expenses such as logistics and senior management cash compensation.
• We estimate the fair value of Sea Ltd at around $10.0bn EV compared to the current EV of $33.1bn, which implies a downside of 66% to Sea’s post-3Q22 price.

• China Hainan Rubber Industry (601118 CH) has entered a conditional SPA with Sinochem International Corporation A (600500 CH) to acquire a 36.00% stake in Halcyon Agri (HACL SP) at US$0.315/share.
• The SPA completion will trigger an MGO at US$0.315 (S$0.436) per share. The pre-conditions mainly relate to Chinese regulatory approvals which should be a formality due to SOE links.
• The MGO has a 50%+ minimum acceptance condition which requires around a 40% minorities acceptance rate. We think that this is achievable as the offer is attractive.

• The last leg of Sea Ltd (SE US)’s original bull thesis is about to break with Shopee’s revenue expected to start declining from 3Q22 onwards.
• However, a lower-than-expected operating loss, driven by cost-cutting could get the bulls excited for a short while following the 3Q22 results due later this week.
• With the business remaining unprofitable after cost-cutting, we think 3Q22 results could be another opportunity to profit on the short-side as the FV of Sea could be around $10bn EV.

In the upcoming webinar, Harmeet Bedi, Deputy CEO and CFO of PRIME US REIT, will share a short company presentation. After which, he will engage in a fireside chat with Smartkarma Insight Provider, Sumeet Singh. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Tuesday, 29 November 2022, 17:00 SGT/HKT.

• There are 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
• Four new deal were discussed on Smartkarma this week: Origin Energy (ORG AU), Totoku Electric (5807 JP), Uzabase Inc (3966 JP), and Golden Energy & Resources (GER SP) 
• Key updates took place for: Perpetual Ltd (PPT AU)/Pendal Group (PDL AU), Jinke Smart Services (9666 HK), Toshiba Corp (6502 JP), and Eagle Cement Corp (EAGLE PM).

• Golden Energy & Resources (GER SP) has proposed in-specie-ing its holding in Golden Energy Mines (GEMS IJ), subsequent to which the Widjaja family will undertake an Exit Offer.
• Ex-GEMS, the family is Offering S$0.16/share. That’s insulting. And the Offer was announced after GEAR’s share price had fallen 26%.  The Exit Offer has been declared final.
• GEAR’s jewel is the stake in GEMS, and shareholders are afforded future exposure. However, the stub ops are worth considerably more than S$0.16/share. 

• FTSE has announced that it will be changing Golden Agri Resources (GGR SP)‘s nationality from Singapore to Ineligible at the close on 16 December. 
• This means the stock will be deleted from the FTSE All-World Index at the close on 16 December. We estimate passive trackers will need to sell multiple days ADV.
• Golden Agri Resources (GGR SP) trades cheaper than a lot of its peers but has outperformed them over the last year. There could be a short-term reversal.

• Speedoc, a virtual clinic and healthcare solutions platform that brings advanced medical care to homes in Singapore and Malaysia, has announced closing its US$28 million pre-series B funding round.
• Founded in 2017, Speedoc is a virtual clinic and healthcare solutions platform enabling users access to home-based medical care and services. 
• It aims to drive medical care needs out of hospitals and clinics by delivering a full suite of healthcare services to homes.