Daily Brief China: Samson Holding, PC Partner, Cambricon Technologies Lt, Bloks Group, Lenovo and more

• Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively. 
• The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
• The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.

• Back on the 18th June, personal computer parts and accessories play PC Partner (1263 HK)  announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
• This development was discussed in PC Partner (1263 HK) Muses SGX Listing & HKEx Withdrawal.  PC Partner subsequently announced a privatisation would not accompany any proposed withdrawal (should it happens).
• My recent discussions with SFC confirms this is possible. And there was a recent precedent. But there may be caveats.

• With 70% of the review period complete, 4 non-constituents are in inclusion zone and 5 constituents are in deletion zone.
• We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 8.8bn (US$1.2bn). Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes. With multiple days ADV to trade on the changes and the recent short selling clampdown, there could be further outperformance.

• The key for high growth in 2023/24Q1 lies in its assembly character toys with renowned IPs,which may not be sustainable or even collapse if Bloks fails to renew license agreements.
• The advantages of Bloks in development prospects, self-developed IPs, brand stickiness are not obvious. The latest valuation reached RMB7.2 billion, but the founder has already cashed out before IPO. 
• Hong Kong stock market has been “lukewarm” to toy companies. Except Pop Mart, valuation/share price of peers are quite weak.How to gain investor/market’s recognition for Bloks is a question mark.

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.

• Lenovo