That’s why I buy Global Brands (787.HK)

I saw a lot of people inquiring about the reasons for buying a brand of profitable brands. Therefore, I will briefly talk about the detailed analysis. I will wait until the net is removed in March, because the length will be slightly longer.

The reason why I bought the target is very simple. It is only for the “incidents” that may occur. I am not gambling on the reversal of my performance. I do not believe that the business of the target can be reversed in the next one or two years. Therefore, the purchase of the target is pure. It is an event-driven event that may occur. The main reason for the trigger event is that the company announced a special interest of 0.28 yuan per share, which can be used to scrip dividends, while the major shareholder has disclosed the intention to choose to use the stock to scrip. Assume that most of the minority shareholders will choose cash dividends. If only the majority shareholder chooses to scrip dividends, then the current shareholder will calculate the dividends of up to 810 million yuan, which will be converted into shares at a price of about 9 cents per share. After the completion of the scrip dividend, the major shareholder can exchange about 9 billion new shares, and its shareholding will be greatly increased from the original 33.88% to nearly 68%!

The major shareholder chooses to use the stock to scrip, for two potential reasons:

1. Familiar with the value of the profit standard, convinced that the profit mark is underestimated by the market, so the stock is used to increase interest;

2. The substantial increase in equity is often accompanied by the occurrence of “incidents”, which are nothing more than privatization or selling.

Perhaps the third shareholder feels that the third reason is that the major shareholder hopes that the profit can retain more cash to cope with adversity, but if the real reason is this, there is no need to promise to use 25% of the cash from the sale at the beginning. In order to distribute special interest, even if only 15% of cash is distributed as special interest, the minority shareholders will not object to the sale, only because the company does need cash to pay off the debt.

I am a big shareholder for gambling because I chose to scrip dividends for the second reason. I think the biggest possibility of potential events is selling. The chances of privatization are very small. This is based on some objective factors and events that have occurred. You may wish to study what objective factors and events have occurred.

I have seen many snowball players call for voting against the scrip dividend option, so as to avoid the dilution of minority shareholders’ equity, which is correct from the perspective of value investment, but if it is from an event-driven perspective, once the stock dividends option Was rejected, major shareholders can not significantly increase their holdings at low prices, then the event drive no longer exists.

Secondly, there is no need for everyone to jump because of my thoughts, and to buy the target first. It is estimated that before the completion of the distribution of dividends, the stock price will only be mostly at the current price, because the big fund The Capital Group announced the stock in Libiao. After the interest option, in order to avoid the substantial dilution of its rights, it has already sold a lot of goods, and it still holds more than 400 million shares, which is estimated to be cleared before the special interest rate is removed. In addition, domestic investors who buy through the Hong Kong Stock Connect will receive a 20% dividend tax, which is calculated at a special interest rate of 0.28 yuan per share. The dividend payable is 5.6 cents per share, and the stock price after the net price is 9 In the calculation of dividends, the dividend tax is equivalent to 62% of the stock price after the net. Unless it is believed that the stock price will rise by more than 60% after the net removal, otherwise any rational domestic investor should make a profit before the special interest rate. I would rather wait for the net to buy back. At present, Beishui holds about 470 million shares, plus 424 million shares of the fund’s big family, The Capital Group. That is to say, before the net removal in early March, the potential to sell up to 900 million shares, the stock price is difficult to rise. . Of course, if you pay attention, the target has close to 440 million short-selling shares as of the end of January, and most of the shares are estimated to be closed before the special dividend.

If the stock scrip option is passed on the EGM, the price of the conversion price will be calculated as 95% of the average closing price of the five trading days after the net, and then the shareholder has about half a month to consider receiving cash or shares. During the scrip dividend, it is difficult for the stock price to deviate significantly from the stock price during the period. What are the reasons? Secondly, it is estimated that most of the minority shareholders will not choose to scrip dividends, then the major shareholders will smoothly increase their shareholdings to more than 50%, and an unconditional offer is required. The offer price is the price of the new shares, that is, during the offer period. The stock price will have a reserve price and the stock price will not fall.

The stock price will only be offered after the completion of the special interest and major shareholders. After the offer period, there will be large fluctuations. The hope is that the “incident” will rise, not because of the disappointment of performance.

UPDATED: Globe Brand (787.HK) — Why is Feng’s reincarnation and potential behind?