In today’s briefing:
- 2023 High Conviction: Haw Par Is Cheap
- Halcyon Agri Suspended Ahead Of Possible Offer
- Sea Ltd 3Q22 Results – Set up Nicely To Make Big Gains On The Short Side
- Halcyon Agri (HACL SP)’s Potential MGO
2023 High Conviction: Haw Par Is Cheap
- Haw Par Corp (HPAR SP) is trading around multi-year trough levels on an implied stub valuation, and on an HPAR/UOL Group (UOL SP) ratio.
- Preceding my comments on HPAR are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Halcyon Agri Suspended Ahead Of Possible Offer
- Natural rubber play Halcyon Agri (HACL SP) was suspended ahead of trading on the 14 November.
- Word on the street is that a privatisation will be announced shortly.
- The benefit of hindsight … Halcyon’s largest shareholder, SOE-backed Sinochem, recently increased its stake, paying ~S$0.45/share.
Sea Ltd 3Q22 Results – Set up Nicely To Make Big Gains On The Short Side
- Sea Ltd (SE US) shares were up 36% yesterday following a relatively small top-line beat of 4.8% and a narrower-than-expected operating loss of $495.6m (consensus: $581.9) through rigorous cost-cutting.
- The share price move sets-up nicely to make gains on the short-side, as e-commerce and fintech remain unprofitable after cutting-down necessary expenses such as logistics and senior management cash compensation.
- We estimate the fair value of Sea Ltd at around $10.0bn EV compared to the current EV of $33.1bn, which implies a downside of 66% to Sea’s post-3Q22 price.
Halcyon Agri (HACL SP)’s Potential MGO
- China Hainan Rubber Industry (601118 CH) has entered a conditional SPA with Sinochem International Corporation A (600500 CH) to acquire a 36.00% stake in Halcyon Agri (HACL SP) at US$0.315/share.
- The SPA completion will trigger an MGO at US$0.315 (S$0.436) per share. The pre-conditions mainly relate to Chinese regulatory approvals which should be a formality due to SOE links.
- The MGO has a 50%+ minimum acceptance condition which requires around a 40% minorities acceptance rate. We think that this is achievable as the offer is attractive.
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