Unlocking Value

On 22 May 2024, Hong Kong Technology Venture (1137 HK, “HKTV”) announced that it will offer to buy back 11.25% of its outstanding shares.

HKTV is the operator of HKTVmall, the popular online shopping platform.

We, Argyle Street Management, believe that this is an excellent example for China Merchants China Direct Investments (133 HK, “CMCDI”).

The buyback price is at 20.8% premium over the share price immediately before the announcement, and 10.8% discount to its net asset value on 31 December 2023. (When CMCDI did its own buyback in 2013, it was also done at 10% discount to net asset value.)

HKTV said that the #1 reason of the buyback is “the current share price does not reflect the intrinsic value and business prospects of [HKTV]“. They might as well be talking about CMCDI.

The market reacted to the buyback favorably. On the first trading day after the announcement, share price was up by 7.3%.

Whitewash waiver

Notably, the largest shareholder of HKTV (and parties acting in concert with it) currently own 45.75% shares. The buyback might result in them increasing their interests to over 50% in aggregate.

To avoid triggering a mandatory offer under the Takeovers Code, a “whitewash waiver” application will be made to the Securities and Futures Commission. That will also require approval by independent shareholders.

Given the opportunity to exit some of their investments at a price close to net asset value, we believe that HKTV shareholders will strongly support the whitewash waiver.

Visit us:  UnlockValueChinaMerchants.com

Write to us:  ChinaMerchants@asmhk.com

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2024年5月22日，香港科技探索有限公司（1137 HK，简称”HKTV”）宣布将要约回购其已发行股份的11.25%。

HKTV是香港电视购物网络（HKTVmall）的运营商，HKTV Mall是一个很受欢迎的网上购物平台。

我们Argyle Street Management认为这对于招商局中国基金（“中国基金”，133HK）来说是一个很好的例子。

HKTV本次回购价格比公告前一日交易价格高出20.8%，比2023年12月31日的净资产价值低10.8%。（当中国基金2013年进行股票回购时，也是以比净资产价值低10%进行的。）

HKTV表示此次回购的首要原因是”当前股价未能反映[HKTV]的内在价值和业务前景“。這簡直就是招商局中国基金的情況。

市场对回购作出了积极的反应。公告后的第一个交易日，HKTV股价上涨了7.3%。

清洗豁免

值得注意的是，HKTV的最大股东（及与一致行动人）目前拥有45.75%的股份。回购可能导致他们的持股比例总计超过50%。

为避免触发《公司收購、合併及股份回購守則》下的强制要约，HKTV大股东将向香港证监会申请”清洗豁免”。这同时还需要独立股东的批准。

考虑到有机会以接近净资产价值的价格退出部分投资，我们相信HKTV股东将强烈支持本次清洗豁免。

Visit us 访问我们:  UnlockValueChinaMerchants.com

Write to us 电邮我们:  ChinaMerchants@asmhk.com