Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>On 2nd Dec 2021, Securities Exchange Commission (SEC) issued Final amendments to implement the Holding Foreign Companies Accountable Act (HFCAA).</li>
<li>On 24th Mar 2021, SEC had issued Amendments, Seeks Public Comment on HFCAA. This was a follow up on the HFCAA.</li>
<li>In this note, we'll talk about the final amendments and its possible timelines and implications, and a possible trade setup.</li>
</ul>


On 2nd Dec 2021, Securities Exchange Commission (SEC) issued Final amendments to implement the Holding Foreign Companies Accountable Act (HFCAA).
On 24th Mar 2021, SEC had issued Amendments, Seeks Public Comment on HFCAA. This was a follow up on the HFCAA.
In this note, we'll talk about the final amendments and its possible timelines and implications, and a possible trade setup.


China ADRs Delisting - US Tightens and HK Loosens Requirements - Long/Short Basket Trade

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>The CSRC has approved <a href="https://www.smartkarma.com/entities/midea-group-co-ltd-a" target="_blank" data-smartkarma-citation="entities:16185:1" rel="noopener">Midea Group Co Ltd A (000333 CH)</a>'s application to issue H-shares to be listed on the <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>. </li>
<li>Under the approval, <a href="https://www.smartkarma.com/entities/midea-group-co-ltd-a" target="_blank" data-smartkarma-citation="entities:16185:1" rel="noopener">Midea Group Co Ltd A (000333 CH)</a> can issue up to 650.85m shares. Depending on the H-share discount, that could raise up to HK$43.6bn (US$5.6bn).</li>
<li>The IPO is likely to be smaller and will depend on market conditions and the discount demanded on the H-shares. That in turn will determine index inclusion for the H-shares.</li>
</ul>


The CSRC has approved Midea Group Co Ltd A (000333 CH)'s application to issue H-shares to be listed on the HKEX (388 HK). 
Under the approval, Midea Group Co Ltd A (000333 CH) can issue up to 650.85m shares. Depending on the H-share discount, that could raise up to HK$43.6bn (US$5.6bn).
The IPO is likely to be smaller and will depend on market conditions and the discount demanded on the H-shares. That in turn will determine index inclusion for the H-shares.


Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Elpiscience Biopharmaceuticals / Equity Capital Markets

<ul>
<li>Elpiscience is incubated by LAV from the very beginning.The Company has strong capital operation capabilities, but the story of "founding team's decent background + star cornerstone investors" doesn't work anymore.</li>
<li>Elpiscience’s pipelines are still in early stage. However, investors are rational. They will no longer believe in those "good stories", but focus more on cash flow and drug sales revenue.</li>
<li>Elpiscience’s business model has raised concerns about its future product sales scale and profits.The market may not recognize the post-investment valuation of US$599 million if check the valuation of peers.</li>
</ul>


Elpiscience is incubated by LAV from the very beginning.The Company has strong capital operation capabilities, but the story of "founding team's decent background + star cornerstone investors" doesn't work anymore.
Elpiscience’s pipelines are still in early stage. However, investors are rational. They will no longer believe in those "good stories", but focus more on cash flow and drug sales revenue.
Elpiscience’s business model has raised concerns about its future product sales scale and profits.The market may not recognize the post-investment valuation of US$599 million if check the valuation of peers.


Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

<ul>
<li>Legend Biotech received takeover interest and hired Centerview Partners to review the offer. Due to the satisfactory clinical results/promising commercialization outlook of Carvykti, Legend Bio is an attractive M&amp;A candidate.</li>
<li>Peak sales of Carvykti could exceed US$5 billion. After Carvykti is approved by the FDA/EC for 2L treatment of MM, future valuation leap of legend Bio is becoming more certain.</li>
<li>Legend Bio is clearly undervalued. We think reasonable market value range for Legend Bio is about US$12.5 – 15 billion, which means there is decent upward potential for share price.</li>
</ul>


Legend Biotech received takeover interest and hired Centerview Partners to review the offer. Due to the satisfactory clinical results/promising commercialization outlook of Carvykti, Legend Bio is an attractive M&amp;A candidate.
Peak sales of Carvykti could exceed US$5 billion. After Carvykti is approved by the FDA/EC for 2L treatment of MM, future valuation leap of legend Bio is becoming more certain.
Legend Bio is clearly undervalued. We think reasonable market value range for Legend Bio is about US$12.5 – 15 billion, which means there is decent upward potential for share price.


Legend Biotech (LEGN US) - A Takeover Offer?

Equity Bottom-Up

Shanghai Junshi Biosciences  / Equity Bottom-Up

<ul>
<li>For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.</li>
<li>Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.</li>
<li>Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.</li>
</ul>


For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.
Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.
Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.


China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

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BeiGene (6160 HK)

China ADRs Delisting - US Tightens and HK Loosens Requirements - Long/Short Basket Trade

On 2nd Dec 2021, SEC issued Final amendments to implement the Holding Foreign Companies Accountable Act. In this note we will talk about the final...

Sumeet Singh

Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

Xinyao (Criss) Wang

Legend Biotech (LEGN US) - A Takeover Offer?

Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China ADRs Delisting - US Tightens and HK Loosens Requirements - Long/Short Basket Trade

On 2nd Dec 2021, SEC issued Final amendments to implement the Holding Foreign Companies Accountable Act. In this note we will talk about the final...

Sumeet Singh

Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount

The CSRC has approved Midea Group's application to list H-shares on the HKEX. The amount raised will depend on market conditions, investor...

Brian Freitas

Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

​Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

Xinyao (Criss) Wang

Legend Biotech (LEGN US) - A Takeover Offer?

​Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

​Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...