Daily Brief China: Nws Holdings, Dali Foods Group, Poly Culture Group Corp H, J&T Express , New World Development, Guangzhou Baiyunshan Phar-A, Sino-Ocean Group and more

• Nws Holdings (659 HK) announced a pre-conditional voluntary general offer from the Cheng family at HK$9.15 or HK$9.47 per share (with a potential 2HFY2023 dividend of HK$0.32 per share).
• The pre-condition related to regulatory approval from the Insurance Authority of Hong Kong and the Bermuda Monetary Authority is a formality due to the Cheng family’s current sway over NWS.
• The key condition is approval by independent New World Development (17 HK) shareholders which is likely as the offer is attractive, reduces NWD’s gearing and results in a special dividend.  

• Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
• Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal. 

• Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation offer from Poly Group at HK$8.88 per H Share, a 77.6% premium to the undisturbed price of HK$5.00.
• The pre-condition of regulatory approvals is a formality as Poly Group is an SOE. The key condition is approval by at least 75% of independent H Shareholders (<10% rejection). 
• The offer price is final. There is no minimum acceptance condition. No independent H Shareholder holds a blocking stake. The offer is attractive, waving the way to success.  

• J&T Express, a global logistics service provider, is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• In this note, we talk about the positive aspects of the deal.

• Late last night (27 June), Dali Foods Group (3799 HK) a leading branded F&B play, announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.
• The cancellation price, which has been declared final, is HK$3.75/share, is a respectable 37.87% premium to undisturbed, but… 
• Xu and concert parties control 88.89%, with disinterested shareholders holding 11.11%, therefore a blocking stake at the Scheme meeting is just 1.11% of shares out. 

• In this note, we looked at the privatization offer from Chow Tai Fook, and its impact on NWD 17 HK
• The proposed transaction will help NWD unlock its value and reduce gearing, which has been investor’s major concern
• It is only the beginning of part of strategic review of NWD group.  We view more positive catalysts are coming

• J&T Express, a global logistics service provider, is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• In this note, we talk about the not-so-positive aspects of the deal.

• Baiyunshan is not a typical TCM company. As Great Commerce accounts for the majority of revenue, it clearly drags down the quality of total assets and growth expectation for valuation.
• As Jin Ge and Wang Lao Ji are facing different challenges, the overall growth/profitability of Baiyunshan is under pressure.Due to uncompetitive product line, Baiyunshan’s future growth appears to lack momentum.
• The valuation of Baiyunshan-A share is still expensive, but Baiyunshan-H share is attractive. After all, the future consumption recovery would be beneficial for boosting Baiyunshan’s valuation. Then, trading opportunity occurs. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Central China Securities
• China Vanke
• Sino-Ocean Service