China Merchants Holdings Pacific

(25-07-2014, 01:49 PM)greengiraffe Wrote:

(25-07-2014, 09:36 AM)Jacmar Wrote:

(25-07-2014, 09:02 AM)greengiraffe Wrote:

(25-07-2014, 08:55 AM)Jacmar Wrote:

(25-07-2014, 07:50 AM)greengiraffe Wrote: I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Vested
GG

S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

There is no outright shorting... Its arbitrage by professional traders - once they manage to long 1.25% CB, they borrow scripts to short while waiting for conversion. The main thing here is with increased supply of CMP, there must be secret admirers accumulating CMP alongside with buddies here - that can only be good...

GG

Hi GG, u need to explain to me how this works. U borrow at >4% and yr CBs gives 1.25%. In the process u are in the hole for a few % while waiting for the conversion. They can convert at any time now but why pay the extra % to wait for conversion.

They have their trading system set up for riskless arbitrage hence the process would have factored in the borrowing costs of the scripts - ie once they get the cheaper CBs, they will sell borrowed shares immediately while waiting for the converted scripts to be credited for the return of the borrowed scripts.

Hope that clarifies...

GG

How long does it take for them to get their converted scripts, a few mths and counting??

(25-07-2014, 10:21 PM)Jacmar Wrote:

(25-07-2014, 01:49 PM)greengiraffe Wrote:

(25-07-2014, 09:36 AM)Jacmar Wrote:

(25-07-2014, 09:02 AM)greengiraffe Wrote:

(25-07-2014, 08:55 AM)Jacmar Wrote: S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

There is no outright shorting... Its arbitrage by professional traders - once they manage to long 1.25% CB, they borrow scripts to short while waiting for conversion. The main thing here is with increased supply of CMP, there must be secret admirers accumulating CMP alongside with buddies here - that can only be good...

GG

Hi GG, u need to explain to me how this works. U borrow at >4% and yr CBs gives 1.25%. In the process u are in the hole for a few % while waiting for the conversion. They can convert at any time now but why pay the extra % to wait for conversion.

They have their trading system set up for riskless arbitrage hence the process would have factored in the borrowing costs of the scripts - ie once they get the cheaper CBs, they will sell borrowed shares immediately while waiting for the converted scripts to be credited for the return of the borrowed scripts.

Hope that clarifies...

GG

How long does it take for them to get their converted scripts, a few mths and counting??

Sorry I m afraid I have no answers to your question - i did check on the possibilities of doing a riskless arbitrage. However, the costs and margins are so razor thin that I gave up. Moreover the problems associated with backroom can be a nightmare. That's why I say it is a professional game.

We can guess - buy bond takes 3 mkt days to settle, paperwork if you are familiar 2 mkt days, then its up to registrar of the CB and co to do the conversion and the announcement - debiting holdings of CBs from custodian? crediting to CDP - may be 2.5 - 3 weeks conservatively?

Guess Only
GG

There are highly interesting details in the 2013 EGM Circular - http://infopub.sgx.com/FileOpen/07305280...leID=15510 - which would support the idea this is an acquisition of a distressed asset.

The loans held by Jiurui Expressway is broken down in the above circular at pg 20:

Debt A
Loan Value: RMB 477.5 million
Interest: 5.8 - 6.4%
Maturity: 2020 - 2022
Lendor: Agri Bank of China

Debt B
Loan Value: RMB 872.5 million
Interest: 6.08%
Maturity: 2021 - 2022
Lendor: Bank of China

Debt C
Loan Value: RMB 200 million
Interest: RMB 55.2 million interest paid
Maturity: 2013
Lendor: Avic Trust

1) Note this refers to Jiurui liabilities in the previous year so it may not reflect current realities.

2) The Circular mentioned that Jiurui had already breached some provisions in the existing loan agreement.

3) It mentioned that Jiurui Expressway would require approximately RMB 389 million financial support from Sept 2012 to Dec 2013 to meet its repayment obligation.

4) The Avic Trust debt matured last year.

I am not certain how the Avic Trust loan was refinanced or repaid last year or if the existing lenders had increased the interest rate. Both scenarios may have exacted a toll on the existing Vendors hence the latest deal with CMP. In any case, like Beilun Expressway, CMP would reap substantial interest cost savings from refinancing expensive onshore debt with cheaper offshore debt. Again, this is just my speculations so I could be very wrong. Would welcome buddies opinion.

(Vested)

I have no idea how would they decide to refinance it using offshore loans as the interest rate environment might be difference since the acquisition of Beilun Port Expressway. As such, it might be difficult for them to refinance it using offshore loan. IMO about this deal, its seems that it is cheaper from the previous deal. Other than that, I must agree that there would be a short term pain due to dilution of EPS. However, as of now, I do believe that this acquisition should be good for CMHP in the long term.

I am now waiting for the circular for more information for this deal. Do correct me if I am wrong as this is my first time analysing an acquisition deal. ( I am still learning )

( Strongly vested )

I have nv been to an EGM b4, usually will there be any q&a session after the vote? Or is it different for every company? Any1 been to an EGM can share?

(28-07-2014, 09:59 PM)Jack31 Wrote: I have nv been to an EGM b4, usually will there be any q&a session after the vote? Or is it different for every company? Any1 been to an EGM can share?

A right procedure is Q&A before the voting. Of course, no issue to further your questions while waiting for the voting result.

Flashing back on the revived Jiurui deal, we can derive the implicit value that CMP board sees their "fair value" of CMP shares post the conclusion of the deal:

Around $1.015 (xd 1H14 estimated DPS of around 3 cents)

CMP has never traded actively around $0.985. The pricing of the new shares has been pegged that level though and the timing of the issue by the time EGM is being called could well be post the distribution of the upcoming interim dividends.

While many may view my posting as mere speculation and wishful thinking on my part, i view it as the price in which CMP's board that is signalling to the market.

Vested
GG

(31-07-2014, 01:09 PM)greengiraffe Wrote: While many may view my posting as mere speculation and wishful thinking on my part, i view it as the price in which CMP's board that is signalling to the market.

Vested
GG

I actually doubt many will doubt you.
In GG, I trust!

(31-07-2014, 01:24 PM)Jack31 Wrote:

(31-07-2014, 01:09 PM)greengiraffe Wrote: While many may view my posting as mere speculation and wishful thinking on my part, i view it as the price in which CMP's board that is signalling to the market.

Vested
GG

I actually doubt many will doubt you.
In GG, I trust!

Thanks for yr compliments.

I have fool's faith in the red army that is more capitalist and friendly than Putin.

In Comrades Mammoth Promises (CMP) we trust.

GG

Jiurui Expressway Shareholdings Hand-Over Signing Ceremony [Pardon my near literal translation]

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Click Here for Source