Joy City (207 HK): Minorities Should Take The Cash

• Chinese property play Joy City (207 HK) has announced a Scheme buyback, with a price of $0.62/share (declared final), a 67.57% premium; but more like a 158% premium to undisturbed.

• Yes, this is a 70% discount to NAV. Yet Joy City has traded at P/B of 0.14x, on average, the past five years. Earnings have trended south in that timeframe.

• The IFA will likely cite liquidity and Joy City's historical discount to NAV, and opine "reasonable", and probably even "fair". It is what it is for long-suffering shareholders.

Joy City is illiquid - look away now if this is not your bag.

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Conclusions First

• Illiquid arbs with questionable Offer premiums/pricing have not ben an ideal place to park money of late. Especially in Hong Kong.

• The trifecta of failures in Hong Kong (Dickson Concept (113 HK): More Minority Teeth Bared As Another Scheme Fails) is illustrative.

• But whereas these three arbs were pitched at levels very clearly mispriced, the Offer for Joy City Property (207 HK) is not quite so obvious.

• Optically, pricing is not awesome.

• Then again, this whole PRC property space has been tragic for many years. A basket of peers are down 76% since Covid. Joy City was down 71% - before the Offer.