Perennial China Retail Trust

[cfa]

Market very efficient or inefficient ?
For those who bought the IPO at 0.69 is definitely a bad deal.

[opmi]

Market very efficient or inefficient ?
For those who bought the IPO at 0.69 is definitely a bad deal.

i think the market generally efficient.....so there must be some risk factors for the discount.

[opmi]

Market very efficient or inefficient ?
For those who bought the IPO at 0.69 is definitely a bad deal.

i think the market generally efficient.....so there must be some risk factors for the discount.

[cfa]

More like many are not so clear about the deal and dislike uncertainty and choose to sell and get out.
Why the big premium ? No difference even if they say the value is 0.80 .

[opmi]

More like many are not so clear about the deal and dislike uncertainty and choose to sell and get out.
Why the big premium ? No difference even if they say the value is 0.80 .

maybe the div income holders not happy with the deal and sold out in protest..

[cfa]

The whole biz model will be changed since the day of IPO by few rich guys.
There should be an EGM for shareholders to vote , otherwise it is like a deal of bulldozer.

[opmi]

The whole biz model will be changed since the day of IPO by few rich guys.
There should be an EGM for shareholders to vote , otherwise it is like a deal of bulldozer.

not really. the choice is given to PCRT shareholders. St James or keep PCRT. No coercion.
No change in business model for PCRT unless 100% privatised.

[MINX]

The whole biz model will be changed since the day of IPO by few rich guys.
There should be an EGM for shareholders to vote , otherwise it is like a deal of bulldozer.

not really. the choice is given to PCRT shareholders. St James or keep PCRT. No coercion.
No change in business model for PCRT unless 100% privatised.

There is no mention of a choice for PCRT holders in the offer as far as i recall? Anyway, you can see from the share price today that it's a lousy deal for PCRT holders.

[opmi]

The whole biz model will be changed since the day of IPO by few rich guys.
There should be an EGM for shareholders to vote , otherwise it is like a deal of bulldozer.

not really. the choice is given to PCRT shareholders. St James or keep PCRT. No coercion.
No change in business model for PCRT unless 100% privatised.

There is no mention of a choice for PCRT holders in the offer as far as i recall? Anyway, you can see from the share price today that it's a lousy deal for PCRT holders.

The choice is take or reject the Offer. If dont take the Offer, then your PCRT is still the same PCRT..

those in collecting div income segment may perceive the deal as a lousy deal..

[greengiraffe]

PCRT on its current state is likely to be a deadend. The problems of cranking up occupancy post its rental guaranteed period remains a challenge. My prior knowledge was that PCRT bought malls from SM Summit Tong with rental guarantees in return for cornerstone stakes. However, the cornerstone stake was sold (Please correct me if I am wrong). Fortunately, Pua managed to rope in Wilmar Kuok to his rescue. Credit must also be given to Pua to assemble a portfolio of quality assets both in China and in Singapore. I personally think that the private entity could have reach a critical junction where a listing will take it further and hence the RTO.

Notwithstanding the change in swap ratios (due to cancellation of 52m placement @ $0.05), the effective swap value remains intact. Lesser shares higher NTA for the restructured newco. At $1.335 acceptance price for newco by the trio of towkays, it is the price that they are "underwriting" in a sense for the new entity. At $1.335, it is priced at a 20% discount to baseline NTA of $1.66 (can be higher @ $2.20 and $1.79 based on 50.1% and 100% acceptance for PCRT)

The freefloat of newco based on the acceptance of PCRT is as follows:

i) 28.44% - 1% free float
ii) 50.1% - 10.95% free float
iii) 100% - 27.76% free float

The commitment of the trio is demonstrated via their combine majority stakes in the newco vs minority stakes in PCRT.

The market pricing is likely due to the following:

i) lack of understanding of the whole deal;
ii) risks that swap deal may not go through;
iii) possible loss cutting by funds that may not be able to hold non-yield based investments.

i) it is indeed confusing trying to digest the pile of information not help by this morning's revision;
ii) further analysis of the 2012 annual report allays the fears of failure to meet 50.1%. As it is, newco already obtain 28.44% of PCRT. Fund manager Asdew controls 10.8% while another deceased holdings Chen (rumoured to be linked to Nanfung) owns 11.8%. Collectively they own >50.1% and hence swap deal is almost done.
iii) we can't help if these funds have little mandate.

Further analysis on the choice of St James is also interesting - James Foo used to be Peter Lim's right hand man and the shell being so clean is ideal. Remember Peter Lim also made a lot from Wilmar. Anyway this linkage is besides the point.

The main question now - Is $1.335 a fair price to participate in the eventual float of newco with its portfolio of assets at various stages of development? That I think is the main risks even though its priced at least a 20% discount.

Personally, being vested and hence biased I would think that the trio of towkay will not assume majority stake without further adding value to newco especially after they had first hand experience that Mr Mkt is never wrong about quality of assets as seen in PCRT post listing. RTO is a big exercise though it simply involved monopoly $ but why go through such an exercise only to have it worse off than when it is in private hands?

I am trying to flow along what are their game plans and all these are guesstimates. In any event buying in newco @ $1.068 (PCRT $0.56/0.5242) is definitely another margin of safety to the towkay trio's acceptance price of $1.335.

Vested & Biased
GG