IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Haier Electronics Group Co / Event-Driven

<p>After market close on Friday, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a>/HEG announced a pre-conditional privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/qingdao-haier-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Qingdao Haier Co Ltd A (600690 CH)</a>/HSH. The offeror will offer 1.60 new HSH H shares and a HK$1.95 cash payment per scheme share. In connection with the privatisation proposal, HSH is seeking a listing of the HSH H shares by way of introduction on the Main Board of the HKEX. Based on the independent valuer’s HSH H shares value range of RMB16.45-16.90 (HK$18.23-18.72), the privatisation proposal values each scheme share at a theoretical mid-point of HK$31.51. At this theoretical mid-point, the bid represents a premium of 44.20% over the closing price of HK$21.85 per share on the last trading day (12 December 2019). </p><div class="content-highlight">
<p>As the share exchange accounts for the majority of the consideration (around 94%), the attractiveness of the proposal hinges on the robustness of the HSH H share valuation. On the assumption that the HSH H shares value range is reasonable and fair, the privatisation proposal is attractive for scheme shareholders due to several factors. </p>
<p>However, the independent valuer’s HSH H shares value range looks generous. The valuation range was based on three methodologies, all of which have issues in our view. While the independent valuer’s HSH H shares value range is flawed, on balance, we think that the privatisation proposal will likely succeed due to HEG’s shareholder register. </p>
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After market close on Friday, Haier Electronics Group Co (1169 HK)/HEG announced a pre-conditional privatisation offer by way of a scheme of arrangement from Qingdao Haier Co Ltd A (600690 CH)/HSH. The offeror will offer 1.60 new HSH H shares and a HK$1.95 cash payment per scheme share. In connection with the privatisation proposal, HSH is seeking a listing of the HSH H shares by way of introduction on the Main Board of the HKEX. Based on the independent valuer’s HSH H shares value range of RMB16.45-16.90 (HK$18.23-18.72), the privatisation proposal values each scheme share at a theoretical mid-point of HK$31.51. At this theoretical mid-point, the bid represents a premium of 44.20% over the closing price of HK$21.85 per share on the last trading day (12 December 2019). 
As the share exchange accounts for the majority of the consideration (around 94%), the attractiveness of the proposal hinges on the robustness of the HSH H share valuation. On the assumption that the HSH H shares value range is reasonable and fair, the privatisation proposal is attractive for scheme shareholders due to several factors. 
However, the independent valuer’s HSH H shares value range looks generous. The valuation range was based on three methodologies, all of which have issues in our view. While the independent valuer’s HSH H shares value range is flawed, on balance, we think that the privatisation proposal will likely succeed due to HEG’s shareholder register. 


Hisense Home Appliances Group Co., Ltd. H (921 HK)

Hisense Home Appliances Group Co., Ltd. H

Shenzhen HepaLink Pharmaceutical (H) (9989 HK)

Haier Electronics’ Privatisation Bid from Haier Smart Home