Thematic visits
Written by: Lin Leqian
2020-06-16 07:51
Date of last update: 2020-06-16 07:53The century-old British-funded foreign trade union Defeng (0020) will conduct a privatization vote today (16th). Although the latest total price has been "shrinked" to 61.44 yuan per share, it is only a premium of less than 4% compared to the closing price of Huidefeng yesterday, but there are Retail investors indicated that they voted in favor of privatization as an attractive price, and expressly stated that there is “no reason to be against the money!”; there are also shareholders who hold the opposite opinion and believe that the swapped shares of Wharf (0004) and Jiuzhi (1997) are not attractive.
Wheelock, one of Hong Kong's four major ocean lines in its early years, took root in Hong Kong for nearly 80 years. It was acquired by "Ship King" Bao Yugang in 1985 and is mainly engaged in real estate business. Due to the long-term discount of Wheelock's share price, Wu Guangzheng, the major shareholder and "Ship King Son-in-Law", continued to increase its holdings, and finally proposed privatization, intending to end its 57-year listing status.
Wu Guangzheng, a major shareholder of Wheelock Group, proposed to privatize the group at a price of 1 share of Wharf (0004), 1 share of Wharf Real Estate (1997) and RMB 12 in cash. (Profile picture)
The latest total price premium is less than 4%
On February 27 this year, the Wu Guangzheng family, the majority shareholder holding nearly 70% of Wheelock’s equity, proposed to privatize the group at a price of 1 share of Wharf, 1 share of Wharf home plus 12 yuan in cash, and the total price 71.9 yuan (the stock price of Wharf before the suspension was 19.7 yuan, and Wharf Real Estate was 40.2 yuan, plus 12 yuan in cash), compared with 47.25 yuan before the suspension of Huifeng at the time, a premium of about 52.2%.
As of yesterday (15th), the stock prices of Wharf and Jiuzhi have dropped a lot, closing at 15.14 yuan and 34.3 yuan respectively, together with 12 yuan of cash, the shot is equal to 61.44 yuan per share, which is 59.3 yuan higher than the closing price of Wheelock on the same day. It has "shrunken" to only 3.6%; if compared with Wheelock's net asset value per share of RMB 130.81 at the end of last year, there is a 53% discount.
This privatization is carried out using a scheme of arrangement (Scheme of Arrangement), which requires at least 75% of the independent shareholders who attended and voted at the shareholders' meeting and all independent shareholders (holding approximately 626 million shares, accounting for 30.5%) less than 10% % Objection, only to pass. If Wheelock is privatized, its shares will be finally traded on June 18 and will be delisted on July 27, meaning that this century-old British foreign investment bank has "closed" the Hong Kong stock market.
Chen Zhongxiang expressly agreed with the privatization plan, arguing that privatization is attractive as a price. "Generally, shareholders who have bought shares in the past 10 years have made a profit, and there is no reason to fight against the money." (Provided by the interviewee)
Support small shareholders: no reason to fight against money
Wheelock's minority shareholder and convener of investor rights concern group Chen Zhongxiang expressly agreed with the privatization plan. He revealed that he bought the stock at an average price of about 46 yuan two years ago, which is still "water level" from the closing price of 59.3 yuan yesterday. I think that privatization is attractive and the arrangement is fair. "Generally, shareholders have made a profit when buying shares in the past 10 years. There is no reason to fight against the money. It is not the same as Lifeng’s privatization. If you earn all your own money, small shareholders must lose. Seventy to eighty percent!"
This plan can be exchanged for Wharf and Jiuzhi. He believes that the stock prices of the two companies are at a low level, which has reflected social events, pneumonia epidemics and the impact of the Hong Kong version of the National Security Law. The current low valuation is an opportunity to absorb potential investment value It is expected that after the economic rebound and negative sentiment, the stock price will record a good increase, which is "more favorable" than the current selling of stocks.
In recent years, "Ship King Son-in-Law" Wu Guangzheng has increased its shareholding in Wheelock's stock, and has also privatized the company, intending to end its 57-year listing status. (Profile picture)
Against Small Shareholders: Carrying Two "Rotten Orange" Exchanges
However, there are also retail investors opposed. As Wheelock's privatization premium has shrunk sharply, retailer Winnie has clearly voted against it. She disclosed that she bought the stock at about 59 to 60 yuan as early as 2017, which is still a loss compared to yesterday's closing price of 59.3 yuan. She believes that the privatization arrangement is not cost-effective. "It is only a matter of spending less money, and then handing over the right hand with the most valuable assets (Wheelock Properties) for two "rotten oranges" (Jiuzhi and Jiucang). "
She continued that, not optimistic about the prospects of real estate stocks, the current stock prices of Wharf and Jiuzhi are also at a low level. Taking the most valuable harbor city and Times Square of Jiuzhi as examples, under the influence of the economic environment, it is expected that "the mall will only become worse and worse. , At least another few more years." However, if privatization is finally passed, she will consider continuing to hold dividends.
Glass Lewis, an independent voting consultant, believes that Wheelock's distribution of Wharf and Jiuzhi's shares will be directly held by Wharf and Jiuzhi, which will help to release the company's value and give shareholders a better investment increase. (Profile picture)
Shareholder voting advisor: reasonable pricing advice to accept privatization
Independent voting advisors Glass Lewis and Institutional Shareholder Services (ISS) both issued reports suggesting that shareholders approve of the privatization plan. Glass Lewis believes that after Wheelock’s distribution of Wharf and Jiuzhi’s shares, it will be directly held in Wharf and Jiuzhi, which will help release the company’s value and allow shareholders to obtain a better investment increase. In addition, the stock price soared 39.7% on the day of the announcement of privatization, reflecting the market's recognition that privatization can help unlock potential value.
ISS said that the distribution of Wharf and Jiuzhi shares can release the value of the two companies, and some shareholders get a better investment valuation, and the cash consideration is 12 yuan per share, reflecting a higher price-to-book ratio than similar companies. Think the price is reasonable. However, Glass Lewis also mentioned that Wheelock has not fully explained the company's future strategy and cannot assess the long-term investor's profitability.
Wu Guangzheng's privatization of Huifeng in the past four oceans and the Wharf King "Abandoned Boat Landing"
Wheelock Wu Guangzheng privatized
