In today’s briefing:
- China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
- TCM (570 HK): Sinopharm’s $4.60/Share Offer
- HSBC – The Narrative Seems to Be Missing Many Points of the Reality
- Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain
China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
- China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
- The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final.
- Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn.
TCM (570 HK): Sinopharm’s $4.60/Share Offer
- $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
- As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
- Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.
HSBC – The Narrative Seems to Be Missing Many Points of the Reality
- In the most recent quarters HSBC saw its NIM decline from around 1.7% to 1.5%
- As the bank de-risks its CRE lending it is left with a greater proportion of bad CRE loans
- There can be more significant impairment charges on BoCom, the USD3bn done was small
Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain
- Numans values light asset model, which helps reduce cost/expenditures, and thereby increase profits. However, such business model has flaws – no R&D/production, only terminal sales/brand operation, no control over upstream.
- Revenue growth of core business Algal oil DHA products declined.Numans attempts to change its monotonous product line and enter milk powder industry, but the results weren’t ideal. Numans suffered losses.
- If Numans only plays the role of a “porter” of finished products from abroad and lacks core competitiveness/technological content, it will face multiple challenges to achieve sustained high performance growth.
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