In today’s briefing:
- Merger Arb Mondays (02 Sep) – Canvest, China TCM, GA Pack, CPMC, Shinko, Arvida, SilverLake
- Sinotrans (598 HK): Attracted by the Yield
- China Comm Const (1800 HK): The Preferred Infrastructure Play
- Chinese Express H124 Earnings | Worst of Price Competition Over | Look for Bargains | BUY SF, Yunda
- Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop
Merger Arb Mondays (02 Sep) – Canvest, China TCM, GA Pack, CPMC, Shinko, Arvida, SilverLake
- 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: Yichang HEC Changjiang Pharma (1558 HK), Canvest Environmental Protection Group (1381 HK), China Traditional Chinese Medicine (570 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK).
- Lowest spreads: Tohokushinsha Film (2329 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP), Second Chance Properties (SCE SP), Fancl Corp (4921 JP), Alps Logistics (9055 JP).
Sinotrans (598 HK): Attracted by the Yield
- Despite an 11% drop in profit in 1H24, Sinotrans (598 HK) has maintained interim DPS at Rmb0.145. This is a sign that the full-year dividend will stay intact, yielding 8.9%.
- The logistics segment has experienced pressure, but strategies are in place to boost revenue and reduce costs. Forwarding and e-commerce segments, meanwhile, are resilient.
- We were too early in turning bearish in 2023. With US rate heads lower, the near-term market focus is that it is a solid yield play.
China Comm Const (1800 HK): The Preferred Infrastructure Play
- Despite a 3.1% drop in profit, China Communications Construction (1800 HK) is the best-performing infrastructure play in 1H24 as peers have logged a 15-19% profit decline.
- High taxation and lower exchange gains are drags on earnings. However, margins have expanded and new contracts increased by 8.4%, suggesting healthy fundamentals.
- Reduction in BOT capex investments is welcomed and it has also declared first-time interim DPS. We expect new contract momentum to accelerate in 2H24.
Chinese Express H124 Earnings | Worst of Price Competition Over | Look for Bargains | BUY SF, Yunda
- We compare H1 revenue growth and Adjusted EBITDA margins of six companies
- We then add needed context to aid understanding of each company’s results
- We think it’s time to look for bargains in express; focus on SF Holding, Yunda
Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop
- Premier Energies Limited (0377949D IN) raised around US$337m after pricing the deal at the top end of the range at INR450 / share.
- It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.
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