In today’s briefing:
- Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
- Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough
- Beijing Capital Grand (1329 HK): Scheme Vote on 10 January
- EQD | Hang Seng (HSI Index) – Popular Option Strategies and Top Trades, Soaring with the Iron Condor
- Shenzhen Dobot IPO (2432.HK): Global Offering, The Rising Star of Collaborative Robotics
- China Tobacco Intl (6055 HK): A Bullish Expectation
- Beijing Capital (1329 HK): Done Deal As Shareholder Vote On 10th Jan
- China Consumption Weekly (16 Dec 2024): NEV Industry Nov., Baidu, Hisense, Boss Zhipin,
- KE (BEKE): New Home Decline Narrowed, The Top Agent Needed by Landlords and Developers
- ECM Weekly (16th Dec 2024) – LG CNS, Mao Geping, Digico, Kioxia, Vishal Mega, IGI, Sai Life, Quantum
Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Nishimoto (9260 JP).
Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough
- Fosun Tourism has emerged from its difficulties and started an upward trend.If it remains listed, it’s only a matter of time before its share price returns to the IPO price.
- Temasek was once in talks to buy a minority stake in Club Med from Fosun International for €500 million, based on which reasonable valuation for Fosun Tourism is RMB12.6 billion.
- Fosun has continued its style- When performance recovery hasn’t been reflected in stock price, it’s the right time to privatize valuable assets at cheap price. A share alternative is expected.
Beijing Capital Grand (1329 HK): Scheme Vote on 10 January
- Beijing Capital Grand (1329 HK)’s IFA opines that Beijing Capital Land Ltd H (2868 HK)’s HK$0.85 privatisation offer is fair and reasonable. The vote is on 10 January.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
- The Sino-Ocean Group (3377 HK) receivers, which hold a blocking stake, should support the transaction. At the last close and for the 6 February payment, the gross/annualised spread was 3.7%/22.2%.
EQD | Hang Seng (HSI Index) – Popular Option Strategies and Top Trades, Soaring with the Iron Condor
- This Insight analyzes Hang Seng Index (HSI INDEX) tailor-made option strategies traded between December 9-13, covering strategy analysis, trends, highlights, and volatility context.
- Last week saw high activity with over 5,000 option contracts traded as combinations; the Iron Condor was notably popular, particularly on Monday and Tuesday.
- The highest premium earned was for a January ’25 Iron Condor. The largest trade was a December ’24 Bull Call Spread, reflecting the popularity of bullish and long volatility strategies.
Shenzhen Dobot IPO (2432.HK): Global Offering, The Rising Star of Collaborative Robotics
- Shenzhen Dobot, a CICC-backed robotics unicorn, aims to raise up to HK$830M (~$107M) in the initial public offering in Hong Kong.
- The offering is expected to be between HK$18.80 and HK$20.80, implying a market cap of ~HK$8B or ~$1B at the midpoint of the price range.
- Given Shenzhen Dobot’s long-term growth opportunities and high TAM, they are likely to get a premium valuation, and the company could trade like UBTech Robotics and Doosan Robotics.
China Tobacco Intl (6055 HK): A Bullish Expectation
- Management of China Tobacco International (HK) (6055 HK) is bullish on earnings in the next two years, with tobacco leaf import and cigarette export being the key drivers.
- Elevated tobacco leaf price is positive to CTI while more re-opening of duty-free shops (currently only 50% of pre-COVID level) will add to revenue momentum.
- A light gearing of just 2% and potentially more parent asset injection are CTI’s strengths. The company plans to maintain a steady uptrend on absolute DPS annually.
Beijing Capital (1329 HK): Done Deal As Shareholder Vote On 10th Jan
- Back on the 28th October, SOE Beijing Capital Group launched an Offer by way of a Scheme for Beijing Capital Grand (1329 HK) (BCG), a commercial property developer in China.
- The Cancellation Price of HK$0.85/Share (best & final) was a 46.55% premium to undisturbed. Irrevocables were secured from 8.13% of the 37.92% held by disinterested shareholders. This looked done.
- The Scheme Document is now out, with a Court Meeting to be held on the 10th Jan. Expected payment on or before the 6th Feb. IFA says fair & reasonable.
China Consumption Weekly (16 Dec 2024): NEV Industry Nov., Baidu, Hisense, Boss Zhipin,
- NEV retail volume increased by 51% YoY in November and 41% YoY for first eleven months.
- Jiyue Auto, as a car maker subsidiary of Baidu, is dismissing employees.
- Hisense, a home appliance producer, lays off 30,000 employees of its total 110,000.
KE (BEKE): New Home Decline Narrowed, The Top Agent Needed by Landlords and Developers
- The decline of new home sales was narrowed in the past ten months.
- New home, rental, and furnishing businesses grew strongly in 3Q24.
- We believe the operating margin will improve in 2025 and 2026.
ECM Weekly (16th Dec 2024) – LG CNS, Mao Geping, Digico, Kioxia, Vishal Mega, IGI, Sai Life, Quantum
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, a number of offerings were live in India, in a bid to beat the year-end lull.
- On the placements front, there was a large placement for SenseTime Group (20 HK) and a number of smaller deals in India.
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