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In today’s briefing:
- Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90
- BUY/SELL/HOLD: Hong Kong Stock Updates (July 22)
- China A50 ETFs Rebalance Preview: Two Changes in September
- Bloks Group Pre-IPO – The Positives – Wide Portfolio of Established IPs
- Bloks Group Pre-IPO – The Negatives – Concentration Risk Is Concerning, and Limited Overseas Reach
- Pre-IPO Saint Bella – The Outlook for Future Performance Growth Is Highly Uncertain
- Morning Views Asia: Powerlong Commercial Management Holdings, Reliance Industries, Sino-Ocean Service
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Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90
- Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
- The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
- While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.
BUY/SELL/HOLD: Hong Kong Stock Updates (July 22)
- The Hong Kong market trades about 30% below analysts’ estimated 12 month target price.
- Analysts are raising forecasts forXiaomi Corp (1810 HK) as it meets success with new phone rollouts and its EV business.
- Sunny Optical Technology Group (2382 HK) had a positive profit alert and Minth Group Ltd (425 HK) is showing growth in its international business. Both are rated BUY from analysts.
China A50 ETFs Rebalance Preview: Two Changes in September
- Based on the close of 22 July, there could be two changes for the iShares A50 China (2823 HK) / CSOP China A50 (2822 HK) ETFs in June.
- China National Nuclear Power and Huaneng Lancang River Hydropower could replace China Tourism Group Duty Free Corp Ltd and Yihai Kerry Arawana Holdings in the ETFs.
- China Tourism Group Duty Free (1880 HK) could be deleted from a global index in August, so there could be selling in the A-shares and H-shares.
Bloks Group Pre-IPO – The Positives – Wide Portfolio of Established IPs
- Bloks Group (1850960D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In this note, we will talk about the positive aspects of the deal.
Bloks Group Pre-IPO – The Negatives – Concentration Risk Is Concerning, and Limited Overseas Reach
- Bloks Group (1850960D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In this note, we will talk about the not so positive aspects of the deal.
Pre-IPO Saint Bella – The Outlook for Future Performance Growth Is Highly Uncertain
- SAINT BELLA’s revenue growth fluctuated because the pandemic led to the delay in the pregnancy plan of many families and an increase in the rate of abortion or miscarriage.
- The increasing contract liabilities indicate that short-term performance growth of SAINT BELLA is guaranteed, but the declining fertility rates in China will bring challenges to SAINT BELLA’s long-term growth momentum.
- After Series B round financing in 2020, post-investment valuation was already about US$100 million. Valuation of SAINT BELLA should be higher than Aidigong Maternal & Child Health Limited (286 HK).
Morning Views Asia: Powerlong Commercial Management Holdings, Reliance Industries, Sino-Ocean Service
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.