In today’s briefing:
- Canvest (1381 HK): Evaluating A Privatisation
- Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
- Saint Bella Pre-IPO Tearsheet
- The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)
- China Communications Services Corp. (552.HK)-Riding the AI Wave…
- Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play
- Henlius (2696): Here Comes The Scrip Option
Canvest (1381 HK): Evaluating A Privatisation
- Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
- There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
- But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.
Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
- Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion.
- Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
- The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC.
Saint Bella Pre-IPO Tearsheet
- Saint Bella (SAINT HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by UBS and Citic Securities.
- Saint Bella (SB) is a comprehensive family care group in China, focusing on premium services and products that addresses demand from the lifestyle-minded younger generation.
- It is the largest postpartum care and recovery group in terms of revenue from ultra-premium postpartum centers in 2023, according to F&S.
The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)
- Onshore Equity ETF flows in China continued to be positive for 8th week. Southbound Connect flows in July are lower than June.
- Baidu, Bilibili and GDS have had positive share price moves on the back of news flow.
- The container shipping segment has had a sharp pullback on positive Middle East news and cement maker CNBM flags a loss in the first half.
China Communications Services Corp. (552.HK)-Riding the AI Wave…
- Stable, Steady, State-owned Enterprise with upside from policy push on AI
- Lowly rated company with a new cyclical growth story in a strategic sector
- Good balance sheet with the opportunity to raise payouts and yields.
Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play
- On 5th July 2024, Taste Gourmet (8371 HK) submitted an application to Hkex to transfer the listing of all its issued Shares from GEM to the Main Board.
- The company’s case is strong as it meets all the criteria proposed by the exchange, but there is no assurance that it will obtain relevant approval from the exchange.
- Trading at 6.4x/5.2x PE FY24/25e with 25% of the market cap in net cash and a trailing yield of 8.5%, we believe a mainboard listing would provide incremental visibility.
Henlius (2696): Here Comes The Scrip Option
- Shanghai Fosun Pharmaceutical (Group) (2196 HK)‘s (SFP) “Merger by Absorption” HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
- The first hurdle for the share option – valid letters of interest from those shareholders wishing to rollover – was secured yesterday. SCP still has the discretion on providing scrip.
- But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.
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