In today’s briefing:
- Hutch Tel (215 HK): Something’s Brewing
- Giordano’s Conditional Offer at HK$1.88
- Tianqi Lithium H Share Listing: Riding the Wave
- Water Oasis: Lockdown Affected H1 FY22, Improving H2
- Tencent Sells Down Its Stake in Koolearn – Divestments to Continue Further
- Giordano (709 HK): Cheng Family’s Underwhelming Offer
Hutch Tel (215 HK): Something’s Brewing
- Hutchison Telecommunications (215 HK)‘s share price is up 33% month to date.
- The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months.
- Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month.
Giordano’s Conditional Offer at HK$1.88
- Giordano International (709 HK) announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.
- The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.
- David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.
Tianqi Lithium H Share Listing: Riding the Wave
- Sichuan Tianqi Lithium Industries, Inc. (TIANQI HK) is pre-marketing an H Share listing to raise US$1.0-1.5 billion. It was listed on the Shenzhen Stock Exchange in 2010.
- The H Share proceeds will be used to repay the outstanding Quimica Y Minera Chil-Sp Adr (SQM US) related debt, fund construction costs and working capital
- The fundamentals are strong as Sichuan Tianqi Lithium Industries, Inc (002466 CH) is well-placed to leverage the high lithium prices to deliver growth, margin and cash generation.
Water Oasis: Lockdown Affected H1 FY22, Improving H2
- Water Oasis (1161 HK) reported a tepid H1 with profits coming in at 26 mn HKD, down 56.2% YoY. This was below our expectations as the company received no subsidies.
- No interim dividend was paid as the profit in H1 was minuscule, and business had commenced on the 21st of April, impacting a month of H2.
- Save for another lockdown in HK, we see a substantial improvement in profitability for Water Oasis (1161 HK) in H2, along with subsidies that are being paid retrospectively.
Tencent Sells Down Its Stake in Koolearn – Divestments to Continue Further
- Tencent has been actively divesting its investments (mainly in China) given the ongoing regulatory challenges faced by tech platforms in China. Moreover, macroeconomic conditions also have led to these sell-downs.
- The company has explicitly mentioned that it would restructure its investment portfolio to manage risk, this includes divestments and distribution to shareholders.
- The latest sell-down was Tencent (700 HK) stake in online education platform Koolearn, whose share price more-than tripled this month following its venture into livestreaming.
Giordano (709 HK): Cheng Family’s Underwhelming Offer
- The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK).
- The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering.
- The intention is to maintain Giordano’s listing. The Offer Price has not been declared final.
Before it’s here, it’s on Smartkarma
