Changhong Jiahua (3991 HK): What's Up (Or Down To Be Precise)?

• Back on the 22nd September 2025, SOE-backed Sichuan Changhong Electric Co, Ltd. (600839 CH) made an Offer, by way of a pre-conditional Scheme, for 60.13%-held Changhong Jiahua Holdings (3991 HK)

• Sichuan Changhong, plus provincial bodies, offered HK$1.223/share, a 32.93% premium to last close. The Offer Price is final. And optically is fair.

• City level SASAC has been squared away. Provincial reg clearances outstanding (& tardy), which may be due to governmental personnel changes, and the approval process straddling Chinese New Year.

Changhong Jiahua Holdings is super illiquid - look away now if this is not your bag.

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The Trade:

• My bet is that the reg delays are purely administrative, not any thorny issue.

• CJ is illiquid. If an arb investor - or investors - opt to kick out, this will push the stock down, as it appears this week.

• If small, illiquid arbs are your bag, I’d be taking advantage of the share price weakness here.