Shanghai Jahwa Alert:Ping An offers to increase 31%stake in SJ at RMB40/share

It resumes trading on 2 Nov 2015; the price was limited up at HK$37.91.

    Deutsche Bank’s view. We are neutral on this announcement at this stage aswe have yet to understand the rationale behind the pricing and the stakeinvolved (which involves an exemption of a general offer). That said, the majorshareholder’s move to increase its stake is a positive move. To gain moreclarity, we would require the following information from management.

    Pricing and procedure. Will there be a circular detailing how the offer ispriced (which deals are the benchmarks)? and the timing and procedure ofthe offer (a pro rata basis of every 3.2 shares to 1, for instance)Anychance that Ping An will raise the price? Under what conditions will PingAn get an exemption from the stock exchange to avoid a general offer

    Ping An’s stake in Jahwa. After the deal, Ping An will own 58.87% ofJahwa, relative to only 5-15% of its other investments, according to theannouncement. What is the rationale behind owing a controlling stake?And why 31%? What are Ping An’s plans for the cosmetic segment

    The new entity. Is the set-up of Tia Fu Xiang Er just for the sake of holding31% of Jahwa? Will there be any expiry date on the fund? What is thefund-raising process for this company?