Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>This past weekend, David Webb flagged <a href="https://www.smartkarma.com/entities/artgo-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15150:1" rel="noopener">Artgo Holdings (3313 HK)</a> as a bubble stock with a P/B of ~24x after gaining 2,276% YTD.</p>
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<a href="http://www.artgo.cn/" target="_blank" rel="noopener">Artgo</a> (the website does not offer an English version) was listed on 30 December 2013 at <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2013/1227/03313_1805637/e102.pdf" target="_blank" rel="noopener">$2.65/share</a>. The company is involved in the mining, processing, trading, and sale of marble stones. </div>
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<div>After two years of profit, Artgo has generated losses in three of the last four years - and the last two years - with a loss in FY18 of RMB396mn after an impairment loss. The company has not paid a dividend since listing.</div>
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<div>Since the close of its 1H19 results, Artgo <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0702/ltn201907022960.pdf" target="_blank" rel="noopener">issued 63.1m shares</a> @ $0.81/share to acquire a company with net assets of RMB10.7mn plus a shareholder loan of RMB20.6mn.  The company is principally engaged in the manufacturing and sale of calcium carbonate, which is mainly produced from marble residues, to be used for industrial production.</div>
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<div>An additional 1<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0829/ltn20190829984.pdf" target="_blank" rel="noopener">64.2mn shares</a>, also at $0.81/share, were issued to acquire a company owning 2 residential properties in Shanghai. The transaction value of RMB121mn equates to RMB153k/square metre of GFA. Two <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0613/ltn20190613996.pdf" target="_blank" rel="noopener">additional properties</a>, with a similar size to the two properties purchased, are also under discussion.</div>
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<div>The seller of the properties now holds 5.3% of shares out - and is <a href="https://di.hkex.com.hk/di/NSNoticeSSList.aspx?sa2=ns&amp;sid=96116&amp;corpn=ArtGo+Holdings+Ltd.&amp;sd=18/09/2018&amp;ed=18/09/2019&amp;cid=0&amp;sa1=cl&amp;scsd=18%2f09%2f2018&amp;sced=18%2f09%2f2019&amp;sc=3313&amp;src=MAIN&amp;lang=EN&amp;" target="_blank" rel="noopener">still holding</a>.   </div>
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<p>Of interest, Artgo was added to the designated short-selling list last month. Only 1.8mn short sold at last count, however with ~84% of shares out held among the top ten shareholders, this is not altogether surprising.</p>
<p>This insight is more an exercise in filtering through the short-selling information provided by the SFC to flesh out additional companies which probably deserve a second look, for one reason or another.</p>

This past weekend, David Webb flagged Artgo Holdings (3313 HK) as a bubble stock with a P/B of ~24x after gaining 2,276% YTD.

Artgo (the website does not offer an English version) was listed on 30 December 2013 at $2.65/share. The company is involved in the mining, processing, trading, and sale of marble stones. 

After two years of profit, Artgo has generated losses in three of the last four years - and the last two years - with a loss in FY18 of RMB396mn after an impairment loss. The company has not paid a dividend since listing.

Since the close of its 1H19 results, Artgo issued 63.1m shares @ $0.81/share to acquire a company with net assets of RMB10.7mn plus a shareholder loan of RMB20.6mn.  The company is principally engaged in the manufacturing and sale of calcium carbonate, which is mainly produced from marble residues, to be used for industrial production.

An additional 164.2mn shares, also at $0.81/share, were issued to acquire a company owning 2 residential properties in Shanghai. The transaction value of RMB121mn equates to RMB153k/square metre of GFA. Two additional properties, with a similar size to the two properties purchased, are also under discussion.

The seller of the properties now holds 5.3% of shares out - and is still holding.   
 
Of interest, Artgo was added to the designated short-selling list last month. Only 1.8mn short sold at last count, however with ~84% of shares out held among the top ten shareholders, this is not altogether surprising.
This insight is more an exercise in filtering through the short-selling information provided by the SFC to flesh out additional companies which probably deserve a second look, for one reason or another.

Artgo Holdings

Artgo And Other Short Sell Ideas