In today’s briefing:
- ESR Group (1821 HK): Offer Musings
- ESR Group (1821 HK): Starwood Capital and SSW Partners Gauging a Privatisation Bid
- Cafe De Coral (341 HK): Immediate Upside
- CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains
- China Consumption Weekly (13 May 2024): Guangzhou Auto, NIO, CALT, Kuaishou, Trip.com, Seres
- Breton Technology Pre-IPO Tearsheet
- China National Medicines (600511.CH) – After Restructuring, Performance Growth Is Guaranteed
- Chongho Bridge Pre-IPO – Broad Offering Catered to Rural Consumers, However, Market Is Fragmented
ESR Group (1821 HK): Offer Musings
- Back in February this year, various media sources reported that the key shareholders of warehouse/fund management play ESR Group (1821 HK), were exploring options, including a privatisation.
- Long-Term holders Warburg Pincus and Canadian pension fund OMERS hold 14% and 10.7% respectively. ESR co-founders/directors Jeffrey Shen, Stuart Gibson, Charles de Portes, and Hwee Chiang collectively hold another ~23%.
- Shares in ESR were suspended this morning “pursuant to the Hong Kong Code on Takeovers and Mergers“.
ESR Group (1821 HK): Starwood Capital and SSW Partners Gauging a Privatisation Bid
- ESR Group (1821 HK) is on a trading halt. Press reports suggest a consortium featuring Starwood Capital Group and SSW Partners is considering a buyout.
- Starwood and SSW are approaching other shareholders to join the consortium. The other members are likely Warburg Pincus, OMERS, Jinchu Shen, and Hwee Chiang Lim.
- The offer is likely to be structured as a Cayman privatisation scheme. Our best guess is that an offer of at least HK$14.00 per share would be needed.
Cafe De Coral (341 HK): Immediate Upside
- Cafe De Coral Holdings (341 HK) share price never really rebounded post COVID despite its operating numbers gradually improving.
- Haidilao International Holding (6862 HK) share price has rallied along with the Hang Seng Index (HSI INDEX) and Hang Seng China Enterprises Index (HSCEI INDEX) but not Cafe de Coral.
- Recent profit alert that, excluding pandemic subsidies, the group’s net profit will rise 470% YoY.
CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains
- The review period ended on 30 April, there are just over 2 weeks to announcement of the changes, and implementation will be done at the close on 14 June.
- We forecast 5 potential changes for the index in June where there could be buying of 1.6-2.6x ADV on the adds and selling of 0.7-2.6x ADV on the deletes.
- At the December 2023 rebalance, the adds outperformed the deletes in the weeks prior to announcement of the changes and then spiked post-announcement. Repeat this time?
China Consumption Weekly (13 May 2024): Guangzhou Auto, NIO, CALT, Kuaishou, Trip.com, Seres
- The new energy vehicle producers’ ranks changed a lot in April.
- GAC began to sell batteries to outside new energy vehicle producers.
- Kuaishou’s GMV (Gross Merchandise Value) increased by 420% YoY during the Labor Day.
Breton Technology Pre-IPO Tearsheet
- Breton Technology (1884270D CH) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by CICC and CMB International.
- Breton Technology is a clean energy solution provider in China, focusing on the design, development and commercialization of engineering machinery powered by new energy sources.
- Such engineering machinery includes battery-electric loaders and wide-body dump trucks, each offering a variety of payload and battery capacities.
China National Medicines (600511.CH) – After Restructuring, Performance Growth Is Guaranteed
- The “Entrusted Management Agreement” indicates that horizontal competition issue will be completely solved within three years.This could pave the way for a future merger between Guorui and Shanghai Shyndec Pharmaceutical.
- The spin-off of Guorui won’t have material impact on China National Medicines Corporation (CNMC). After restructuring, CNMC will focus on “Beijing area pharmaceutical distribution + nationwide distribution of anesthesia/psychotropic drugs”.
- Based on strong/stable fundamentals as well as the dominant position in anesthesia and psychotropic drug business, CNMC’s future growth potential is promising. We share our views on the Company’s valuation.
Chongho Bridge Pre-IPO – Broad Offering Catered to Rural Consumers, However, Market Is Fragmented
- Chongho Bridge (2314866D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO.
- Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.
- In this note, we look at the firm’s past performance.
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