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.

Equity Capital Markets

JL Mag Rare-Earth   / Equity Capital Markets

<ul>
<li>JL Mag Rare-earth Co. Ltd (JLM) aims to raise around US$300m via its H-shares listing.  </li>
<li>JLM is a producer of high-performance REPMs. It ranked first in the world by high-performance REPM production volume in 2020 with a market share of approximately 14.5%.</li>
<li>In this note, we look at the company’s past performance, and try to gauge a suitable A/H premium.</li>
</ul>


JL Mag Rare-earth Co. Ltd (JLM) aims to raise around US$300m via its H-shares listing.  
JLM is a producer of high-performance REPMs. It ranked first in the world by high-performance REPM production volume in 2020 with a market share of approximately 14.5%.
In this note, we look at the company’s past performance, and try to gauge a suitable A/H premium.


JL Mag Rare-Earth A/H Listing - Ticks the Right EV and Clean Energy Boxes, Thoughts on Valuation

Research on Tech Companies

Evelyn Zhang

Thematic (Sector/Industry)

<ul>
<li>The competition between Alibaba and JD has been heating up after Alibaba abandoned its "exclusivity requirement”, JD sale GMV increased by 28.4% vs Alibaba only increased by 8.4% YoY.  </li>
<li>Live streaming has become a mainstream sales channel, Douyin and Kuaishou both achieved more than 200% sales increase YoY.  </li>
<li>Influencers and brands are fighting over price setting power. Many brands have opened their own official livestreaming channels this year.</li>
</ul>


The competition between Alibaba and JD has been heating up after Alibaba abandoned its "exclusivity requirement”, JD sale GMV increased by 28.4% vs Alibaba only increased by 8.4% YoY.  
Live streaming has become a mainstream sales channel, Douyin and Kuaishou both achieved more than 200% sales increase YoY.  
Influencers and brands are fighting over price setting power. Many brands have opened their own official livestreaming channels this year.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On the 31 July this year, <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> (HEG) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101131.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Scheme such that HEG shareholders would receive 1.6 new <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> (HSH) H shares plus HK$1.95 in cash. </p>
<p>HEG's shares were suspended on the 11 December subsequent to its privatisation, with an implied look-through discount for HSH's H shares to the As of  30.4%.</p>
<p>The Hs received by HEG shareholders commenced trading under the code <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> on the 23 December with a closing discount to the As of 22.1%. It is 21.6% as I type. This is not sustainable. This compares to a basket of liquid H/As of 44%.</p>
<p>More below the fold.</p>

On the 31 July this year, Haier Electronics Group Co (1169 HK) (HEG) announced a pre-conditional Scheme such that HEG shareholders would receive 1.6 new Haier Smart Home (600690 CH) (HSH) H shares plus HK$1.95 in cash. 
HEG's shares were suspended on the 11 December subsequent to its privatisation, with an implied look-through discount for HSH's H shares to the As of  30.4%.
The Hs received by HEG shareholders commenced trading under the code Haier Smart Home Co Ltd (6690 HK) on the 23 December with a closing discount to the As of 22.1%. It is 21.6% as I type. This is not sustainable. This compares to a basket of liquid H/As of 44%.
More below the fold.

Haier Smart Homes (6690 HK): H-Shares Trading Tight To A-Shares

Haier Electronics Group Co / Event-Driven

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div class="content-highlight">
<p>Yesterday, 99.9% of shareholders present and via proxy <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1209/2020120900740.pdf" target="_blank" rel="noopener">voted for</a> the privatisation of <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a>. Shares will be suspended at the close of trading tomorrow (11 December), with <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a>'s H-shares to commence trading on the 23 December.</p>
</div>
</div>
<div>
<p>More below the fold.</p>
</div>
<div>
<p>Preceding my comments on Haier are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>
</div>


This week in StubWorld ...



Yesterday, 99.9% of shareholders present and via proxy voted for the privatisation of Haier Electronics Group Co (1169 HK). Shares will be suspended at the close of trading tomorrow (11 December), with Haier Smart Home (600690 CH)'s H-shares to commence trading on the 23 December.



More below the fold.


Preceding my comments on Haier are the weekly setup/unwind tables for Asia-Pacific Holdcos.



These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



StubWorld: Last Roll Of The Dice For Haier

<div>
<p>Back on the 19 December 2019, following a brief <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1213/2019121300104.pdf" target="_blank" rel="noopener">suspension</a> pursuant to the Takeovers Code,  <a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> (HEG) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1216/2019121600924.pdf" target="_blank" rel="noopener">announced</a> its parent, <a href="https://www.smartkarma.com/entities/qingdao-haier-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> (HSH) was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.</p>
<p>A little over seven months later, HEG <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101131.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. A 632-page Application Proof for the listing of HSH H-shares has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0911/2020091100023.pdf" target="_blank" rel="noopener">lodged</a>. This will be a <a href="https://en-rules.hkex.com.hk/entiresection/2269" target="_blank" rel="noopener">listing by introduction</a>.</p>
</div>
<div>
<p>The pre-condition (HSH's shareholders and CSRC approval) were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0901/2020090103529.pdf" target="_blank" rel="noopener">fulfilled</a> on the 1 September.</p>
<p>The Scheme Document has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1116/2020111600005.pdf" target="_blank" rel="noopener">despatched</a> - all 1,052 pages of it. The Court Meeting/SGM will be held on the 9 December, with the expected listing of the HSH H shares on the 22 December. The IFA (Somerley) considers the Offer to be fair &amp; reasonable.</p>
<p>The Valuation Advisor (Platinum Advisors) has bumped the mid-point of the Offer Consideration to $38.03, up from $31.51 in late July. That revised assessment covers global peers, SoTPs, and direct comparables. HSH is up 51%/73% since the deal transaction was floated in December, and confirmed in July. HEG is up 62%/36% during the same time frame.</p>
<p>This mid-point assessment is just a valuer's opinion. There is no guarantee this is where the Hs will trade. </p>
<p>And that is the key question: where will the unlisted HSH H-shares trade with respect to the HSH A-shares? </p>
<p>More below the fold.</p>
</div>
<div></div>
<div>
<p></p>
</div>


Back on the 19 December 2019, following a brief suspension pursuant to the Takeovers Code,  Haier Electronics Group Co (1169 HK) (HEG) announced its parent, Haier Smart Home (600690 CH) (HSH) was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.
A little over seven months later, HEG announced a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. A 632-page Application Proof for the listing of HSH H-shares has been lodged. This will be a listing by introduction.


The pre-condition (HSH's shareholders and CSRC approval) were fulfilled on the 1 September.
The Scheme Document has now been despatched - all 1,052 pages of it. The Court Meeting/SGM will be held on the 9 December, with the expected listing of the HSH H shares on the 22 December. The IFA (Somerley) considers the Offer to be fair &amp; reasonable.
The Valuation Advisor (Platinum Advisors) has bumped the mid-point of the Offer Consideration to $38.03, up from $31.51 in late July. That revised assessment covers global peers, SoTPs, and direct comparables. HSH is up 51%/73% since the deal transaction was floated in December, and confirmed in July. HEG is up 62%/36% during the same time frame.
This mid-point assessment is just a valuer's opinion. There is no guarantee this is where the Hs will trade. 
And that is the key question: where will the unlisted HSH H-shares trade with respect to the HSH A-shares? 
More below the fold.






Haier Electric (1169 HK): The "H-Share" Guessing Game

China

Haier Smart Home Co. Ltd. manufactures and distributes appliances. The Company produces air conditioners, refrigerators, freezers, small household electrical appliances, and other related products. Haier Smart Home markets its products domestically and internationally.

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Haier Smart Home (600690 CH)

JL Mag Rare-Earth A/H Listing - Ticks the Right EV and Clean Energy Boxes, Thoughts on Valuation

JL Mag Rare-earth Co. Ltd (JLM) aims to raise around US$300m via its H-shares listing. In this note, we look at the deal dynamics and provide our...

Sumeet Singh

A Quiet Single Day

Another year another Single's Day, but the pandemic has put a damper on this year's shopping bonanza. Faced with a shrinking pie, a new player is...

Evelyn Zhang

Haier Smart Homes (6690 HK): H-Shares Trading Tight To A-Shares

basket of liquid A/Hs trade at 44% discount and one of HSH's closest peers is at 37%. The trade here is to short Hs and go long the As, with a...

David Blennerhassett

StubWorld: Last Roll Of The Dice For Haier

A basket of liquid A/Hs trade at 44%+discount and a close peer is at 35%+. I think ~38-40% discount range is more appropriate. That gives a range...

David Blennerhassett

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

JL Mag Rare-Earth A/H Listing - Ticks the Right EV and Clean Energy Boxes, Thoughts on Valuation

JL Mag Rare-earth Co. Ltd (JLM) aims to raise around US$300m via its H-shares listing. In this note, we look at the deal dynamics and provide our...

Sumeet Singh

A Quiet Single Day

Another year another Single's Day, but the pandemic has put a damper on this year's shopping bonanza. Faced with a shrinking pie, a new player is...

Evelyn Zhang

Haier Smart Homes (6690 HK): H-Shares Trading Tight To A-Shares

basket of liquid A/Hs trade at 44% discount and one of HSH's closest peers is at 37%. The trade here is to short Hs and go long the As, with a...

David Blennerhassett

StubWorld: Last Roll Of The Dice For Haier

A basket of liquid A/Hs trade at 44%+discount and a close peer is at 35%+. I think ~38-40% discount range is more appropriate. That gives a range...

David Blennerhassett

Haier Electric (1169 HK): The "H-Share" Guessing Game

Haier's look-through ~34% discount (Hs vs As) is tight relative to liquid A/Hs. This looks full and I would not get involved, and would only re...

David Blennerhassett