Perennial China Retail Trust

[cfa]

So far Nan Fung sold 29.6m shares.

[Boon]

http://infopub.sgx.com/FileOpen/Pre_Cond...eID=288498

Page 12 and 13 of Appendix 1,

At completion of target asset acquisition and share consolidation, the "Vendors" will own about 99.27% of the enlarged share capital - a situation not in compliance with listing requirement - it is not mentioned in their rationale but it seems obvious - sure there are other means but it seems that they have opted for the VGO way.

(not vested)

I might miss it, but this is what I got from the document

"Following Closing, the Company shall issue and allot such number of new shares in the Company as may be required to fulfill the relevant shareholding and distribution requirement of the SGX-ST" - last para of page 13.

I found nothing on they have opted for the VGO way?

http://infopub.sgx.com/FileOpen/Unity_Su...eID=288960

Look at item 3 (Share Capital of the Company) - if one tracks and compute the changes in share capital with the corresponding number of shares to be issued at each steps, it appears that :

After 1,176,199,000 shares have been issued, majority of the shares (> 99%) would be still in the hands of the "Vendors"

After 1,306,285,000 shares have been issued (at 50.1% acceptance of PCRT offer) - about 10% of the issued shares would be free-float shares.

The figures depict only the VGO route - no other ways have been shown - right or wrong - this is how I read it.

(not vested)

The announcement is for the RTO proposal, and VGO is part of the proposal. Detail of VGO on shareholding in the document, is reasonable. It might not mean anything more than that, IMO.

"Following Closing, the Company shall issue and allot such number of new shares in the Company as may be required to fulfill the relevant shareholding and distribution requirement of the SGX-ST"

The above statement is “consistent” with the VGO route - as the Company would need to issue new shares to acquire PCRT shares.

To do it any other ways (non-VGO-ways that require issuing of new shares) – the current “offer price” for PCRT shares in the VGO would have been “diluted”.

(not vested)

[Lancelot]

All in all , is this deal fair to the existing shareholders with today's market cap ?
IPO of 0.70 should be something of the past.
People sell for many reasons , but people buy for only one reason ; ie, fair value to enter and believe there is upside from this level, and money to be made.
Despite official announcement, the deal still ambiguous to the investment public.

[MINX]

Anyway, we will see if Pua will put on his super salesman jacket to find another anchor to bail out Nan Fung.

i seriously doubt Pua is very much concerned abt the takeup rate for the PCRT swap - he has made his goodwill offer for blokes who subscribed during the IPO and still willing to believe in him - take it or leave it.

What is interesting to me is that Tong JinQuan of Summit seems to have sold all his stakes (can't find his name in the 2012AR).

Wonder if he is going to do the same eventually in Viva Industrial as well.

If the big boys are all bailing out, maybe it's because they don't think it's a good deal, no?

[Andrewgoh]

Mr Tong JinQuan sold off his units after the ipo, i guess you could guess the few reasons why he would want to do it, either he swap his longemont assets into the trust for shares in PCRT (PRC asset) and after that dispose off the shares on sgx (Get SGD) if u get my drift and park the cash somewhere....

For Nan Fung, the decision was probably made Mr Chen Din-hwa (chairman and founder) whom passed away, and shares now are in control under one of his daughter iirc, and might have a differing view.

if you think big boys are bailing out and its not a good deal then just hands off the stock lo

Positives I see: What i see is most of its assets are slowly turning operational now, iirc the last asset will be up and running in 2016 and 1 more chengdu mall is starting fitting out nxt month and will be generating cashflow. The set of results now might not be truly reflective as you polly need to have some time to stabilize the asset, changing some tenant mix, marketing to try to get footfall etc. Theres also enough earnout for 2014. With the pipeline of quite solid PRC assets (tier 1, 1.5 city assets) Chengdu, Xian HSR, Beijing assets etc, it sits quite well with me.

Negatives: Given the current and uncertain future yield of the stock, CRCT offers more stability.

The deal is an optionality and conditional upon >50% acceptance, I just got in at .555 to chope a seat while thinking whether to do the swap if unconditional.

[opmi]

Mr Tong JinQuan sold off his units after the ipo, i guess you could guess the few reasons why he would want to do it, either he swap his longemont assets into the trust for shares in PCRT (PRC asset) and after that dispose off the shares on sgx (Get SGD) if u get my drift and park the cash somewhere....

For Nan Fung, the decision was probably made Mr Chen Din-hwa (chairman and founder) whom passed away, and shares now are in control under one of his daughter iirc, and might have a differing view.

if you think big boys are bailing out and its not a good deal then just hands off the stock lo

Positives I see: What i see is most of its assets are slowly turning operational now, iirc the last asset will be up and running in 2016 and 1 more chengdu mall is starting fitting out nxt month and will be generating cashflow. The set of results now might not be truly reflective as you polly need to have some time to stabilize the asset, changing some tenant mix, marketing to try to get footfall etc. Theres also enough earnout for 2014. With the pipeline of quite solid PRC assets (tier 1, 1.5 city assets) Chengdu, Xian HSR, Beijing assets etc, it sits quite well with me.

Negatives: Given the current and uncertain future yield of the stock, CRCT offers more stability.

The deal is an optionality and conditional upon >50% acceptance, I just got in at .555 to chope a seat while thinking whether to do the swap if unconditional.

"For Nan Fung, the decision was probably made Mr Chen Din-hwa (chairman and founder) whom passed away, and shares now are in control under one of his daughter iirc, and might have a differing view."

Maybe under estate. So Trustees may be the one deciding. Anyway, 2 daughters and wife are fighting over the estate...

[Boon]

Looking from another perspective

NTA per share of PCRT = SGD 0.77 per share
The market price of PCRT = SGD 0.54 per share (=0.54/0.77 = 70% of NTA)

“PREHL" offers to buy PCRT at SGD 0.70 per share (to be paid with 0.5242 PREHL share, with Nominal Value of SGD 1.3353)

To break even for shareholders of PCRT, post "back-door-listing", PREHL would have to trade at (0.54/0.5242) = SGD 1.03 per share = 1.03/1.62 = 64% of NTA

(note: NTA of PREHL at 100% acceptance of Offer = SGD 1.62 per share, from presentation slide)

(not vested)

To explore further:

The “Offer Price” for PCRT is SGD 0.70 per share, which sounds very attractive, as it is at premium to PCRT’s current share price of SGD 0.54 – unfortunately, the offer is not in cash.

To enable PCRT shareholders to “cash-in” at SGD 0.70 with each PCRT share owned, the post-listing market price of PREHL share would have to be at (0.70/0.5242) = SGD 1.3353 (= 82% of NTA), which is the “Nominal Value” of PREHL share price.

Question remains – What is the “price” that Mr. Market is willing to pay – in exchange for one PREHL share with a “Nominal Value” of SGD 1.3353 ?

Instead of “valuing” PCRT share at SGD 0.70 relative to PREHL share with “Nominal Value” of SGD 1.3353, the deal could be structured to “pay” SGD 1.00 per PCRT share relative to PREHL share but of course, with a different “Nominal Value”

It is all RELATIVE.

(Not Vested)

[cfa]

The effect of the research report of CIMB has been subdued and sellers are taking a break.
Base on calculation with available info, , taking a swap for the newco shares cannot be that far wrong.
Added some at 0.535 yesterday.

[greengiraffe]

Good luck mate, NanFung probably has a cut loss limit since they have lost their marbles on the IPO levels even though it could be a legacy stake left behind by the deceased old man.

Anyway, with the future trio of who's who and a real estate veteran Pua who is staking his entire platform into a listed entity, this is probably a new dawn for Pua unless he really call it a day.

As Pua is in his early 50s, the RTO exercise should be viewed as a new dawn rather than a sunset.

Vested
GG

The effect of the research report of CIMB has been subdued and sellers are taking a break.
Base on calculation with available info, , taking a swap for the newco shares cannot be that far wrong.
Added some at 0.535 yesterday.

[Boon]

I post this on Forterra thread, it would be interesting to see what is the ratio for PREH's China portfolio - this would have great implications on NAV or NTA .
_______________________________________________________________________________________________________________________________________________
Interesting figures/ratios :

All 3 entities are China pure-play property counters, but the ratio of (DFL / Capital Value of properties) seems to vary a great deal among them – What are the potential explanations and implications?

SGD million
( Deferred Tax Liability / Capital Value of Properties Owned ) Ratio :
Forterra = 393.6 / 2,438 =16.1%
CRCT = 159.6 / 2,058 = 7.8%
PCRT = 41.6 / 1,501 = 2.8%

(not vested)