In today’s briefing:
- Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Midea Real Estate (3990 HK): Divesting Property Development Business (Cash Option At 57% Premium)
- Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers
- Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: Expected ADDs Could Outperform Expected DELs
- Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- China Gas Holdings (384 HK): Still Warrants a Look
- China Oilfield Services 2883.HK – Capitalising on the Boom in Offshore Exploration
- Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated
Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is no minimum acceptance condition.
- Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.
Midea Real Estate (3990 HK): Divesting Property Development Business (Cash Option At 57% Premium)
- Midea Real Estate Holding (3990 HK) announced last night a proposal for distribution in specie of the property development business to shareholders.
- The proposal allows shareholders to select between receiving pro rata shares in the PrivateCo, or the cash alternative at HKD5.90 per share, a 57% premium to last close at HKD3.75.
- I believe this is a good deal for minority shareholders. The company (ex. property development business) will continue to be listed on the HKSE after the distribution.
Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers
- SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
- We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.
Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: Expected ADDs Could Outperform Expected DELs
- The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
- The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
- We see seven change for the ChiNext index and five changes for the ChiNext 50 index.
Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- Shanghai Fosun Pharmaceutical (2196 HK) has made a HK$24.60/share Offer (best & final), in cash, for H-shares not held in Shanghai Henlius Biotech (2696 HK). A scrip alternative may be afforded.
- As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.
- Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That’s way too conservative. This should be wrapped up around mid 4Q24.
China Gas Holdings (384 HK): Still Warrants a Look
- China Gas Holdings (384 HK)‘s FY24 result is distorted by non-recurring items and provisions. Adjusted net profit, however, has declined by only 4.3%, and is only 2.6% below consensus.
- FY25 guidance looks positive as a 6% increase in dollar margin and a 5% increase in gas volume are expected. The Apr-May operating figures support such projections.
- China Gas maintained its DPS despite a drop in reported profit, showcasing its confidence. Assuming the same dividend in FY25 and FY26, it will sit on a yield of 7%.
China Oilfield Services 2883.HK – Capitalising on the Boom in Offshore Exploration
- The largest player in Asia in the offshore oil services sector with limited competition
- Business dynamics trending up as offshore exploration is the focus of many energy majors
- Recent sell-off due to concerns over Aramco drilling delays provide a good entry point
Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated
- Dong-E-E-Jiao’s performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team’s confidence in the future development of the Company. There’s potential for another leap in valuation.
- Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.
- Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.
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