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

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.At the time of listing, SFREIT will own three properties located in Hong Kong, Foshan and Wuhu, all of which are modern logistics properties. The assets have an aggregated gross lettable area of approximately 307,617.5 sqm with an appraised value of HK$6.1bn, as at Mar 2021. The average occupancy of the properties was 95.3%, with a weighted average age of 3.5 years and weighted average remaining land tenure of 37.9 years.

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.At the time of listing, SFREIT will own three properties located in Hong Kong, Foshan and Wuhu, all of which are modern logistics properties. The assets have an aggregated gross lettable area of approximately 307,617.5 sqm with an appraised value of HK$6.1bn, as at Mar 2021. The average occupancy of the properties was 95.3%, with a weighted average age of 3.5 years and weighted average remaining land tenure of 37.9 years.

SF REIT Pre-IPO - One Trick Pony, Who’s Not Doing the Trick

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Update Confirms Weak Outlook: Negative rental reversion rates persist in Hong Kong, as do negative tenant sales. We continue to await another round of negative revaluation of property due to lower rents and/or higher cap rates; and  *No Serious Capital Management Strategy Exists: Management of Link appears hellbent on destroying shareholder value.As gearing was 19.2% at September 2020, management continues to believe that it has abundant headroom to add debt for acquisition. Instead of weighing a buyback’s return versus new investment ROI, management views share buybacks as a mechanism to defend its shares against short-selling. Maybe a re-re-review of its acquisition strategy will occur by earnings when Link’s new mainland China acquisition strategy truly flops.

*Update Confirms Weak Outlook: Negative rental reversion rates persist in Hong Kong, as do negative tenant sales. We continue to await another round of negative revaluation of property due to lower rents and/or higher cap rates; and  *No Serious Capital Management Strategy Exists: Management of Link appears hellbent on destroying shareholder value.As gearing was 19.2% at September 2020, management continues to believe that it has abundant headroom to add debt for acquisition. Instead of weighing a buyback’s return versus new investment ROI, management views share buybacks as a mechanism to defend its shares against short-selling. Maybe a re-re-review of its acquisition strategy will occur by earnings when Link’s new mainland China acquisition strategy truly flops.

*No Results Surprise Post-Profit Warning: In January 2021, MTR Corp (66.HK) [MTR] issued a profit warning for FY 2020, suggesting that the company faced significant operational and valuation challenges, which led to its first loss since listing two decades ago. As warned, MTR announced losses of HKD 4.8 bn both related to the impact of the COVID-19 pandemic and a troubled mega project;*2021 Not Looking Much Better: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain through most of 2021 as business conditions continue to worsen; and* New Projects Remain In Progress: The construction of Shatin-Central Link is in progress, Tuen Ma Line Phase 1 (Tai Wai to Kai Tak) has already opened, and the full Tuen Ma Line is scheduled to be completed in 3Q21. The 1Q22 opening of the Hung Hom to Admiralty section is likely to be delayed.

*No Results Surprise Post-Profit Warning: In January 2021, MTR Corp (66.HK) [MTR] issued a profit warning for FY 2020, suggesting that the company faced significant operational and valuation challenges, which led to its first loss since listing two decades ago. As warned, MTR announced losses of HKD 4.8 bn both related to the impact of the COVID-19 pandemic and a troubled mega project;*2021 Not Looking Much Better: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain through most of 2021 as business conditions continue to worsen; and* New Projects Remain In Progress: The construction of Shatin-Central Link is in progress, Tuen Ma Line Phase 1 (Tai Wai to Kai Tak) has already opened, and the full Tuen Ma Line is scheduled to be completed in 3Q21. The 1Q22 opening of the Hung Hom to Admiralty section is likely to be delayed.  

*New Mainland China Deal Doesn’t Pass Smell Test: Link REIT (823.HK) [Link] announced the acquisition of a 50% stake in Qibao Vanke Plaza (QVP) - a retail shopping mall in Minhang, Shanghai, for CNY 2.8 bn. QVP will remain the shopping mall operator, while Link will have an equal number of board seats and committee representatives as the shopping mall operator. While its unclear if the numbers make any sense given the rental reversion and massive re-tenanting that would have to take place to cover the 3.0% plus per annum CNY financing cost, the lack of control over this property also raises significant risks for Link; and*Fundamental Risks Remain: Link remains in a real quandary - it continues to operate at a loss. Losses were attributed to negative fair value marks. While results on an operating basis were positive, the trend unfortunately remains negative for Link – declining HKD 564 mn (15.1%). The poor operating results were driven by weaker Hong Kong rental income which declined HKD 186 mn (5.4%) HOH; and a HKD 55 mn (9.8%) decline in mainland Chinese property-related revenues – begging the question of why mainland China acquisitions now?

*New Mainland China Deal Doesn’t Pass Smell Test: Link REIT (823.HK) [Link] announced the acquisition of a 50% stake in Qibao Vanke Plaza (QVP) - a retail shopping mall in Minhang, Shanghai, for CNY 2.8 bn. QVP will remain the shopping mall operator, while Link will have an equal number of board seats and committee representatives as the shopping mall operator. While its unclear if the numbers make any sense given the rental reversion and massive re-tenanting that would have to take place to cover the 3.0% plus per annum CNY financing cost, the lack of control over this property also raises significant risks for Link; and*Fundamental Risks Remain: Link remains in a real quandary - it continues to operate at a loss. Losses were attributed to negative fair value marks. While results on an operating basis were positive, the trend unfortunately remains negative for Link – declining HKD 564 mn (15.1%). The poor operating results were driven by weaker Hong Kong rental income which declined HKD 186 mn (5.4%) HOH; and a HKD 55 mn (9.8%) decline in mainland Chinese property-related revenues – begging the question of why mainland China acquisitions now?

HK/China Equity Long-Short

Osbert Tang, CFA

In this Insight, we take a look on <a href="https://www.smartkarma.com/entities/sf-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:31496:1" rel="noopener">SF Real Estate Investment Trust (SF HK)</a> (SF REIT), which is a proposed REIT listing in Hong Kong with <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> (SFH) as its sponsor. The REIT will initially have three logistics properties in its portfolio, one in Hong Kong and two in China (Foshan and Wuhu). Having a gross lettable area of 307,990.8 sq.m., the appraised value of these properties amounted to HK$6.1bn.On balance and based on the information in the application proof prospectus, we view the REIT positively. Key positives are: 1.) quality assets; 2.) stable profit and cash flow; and 3.) potential injection. On the other hand, the key negatives are: 1.) focus on HK; 2.) reliance on SFH; and 3.) small size.

In this Insight, we take a look on SF Real Estate Investment Trust (SF HK) (SF REIT), which is a proposed REIT listing in Hong Kong with S.F. Holding (002352 CH) (SFH) as its sponsor. The REIT will initially have three logistics properties in its portfolio, one in Hong Kong and two in China (Foshan and Wuhu). Having a gross lettable area of 307,990.8 sq.m., the appraised value of these properties amounted to HK$6.1bn.On balance and based on the information in the application proof prospectus, we view the REIT positively. Key positives are: 1.) quality assets; 2.) stable profit and cash flow; and 3.) potential injection. On the other hand, the key negatives are: 1.) focus on HK; 2.) reliance on SFH; and 3.) small size.

SF REIT Pre-IPO: Initial Thoughts on S.F. Holding's (002352 CH) Logistics REIT In HK

Hong Kong

Link REIT is a real estate investment trust in Hong Kong. The Trust owns and operates shopping centers, parking space facilities and real estate retail space.

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Link REIT (823 HK)

SF REIT Pre-IPO - One Trick Pony, Who’s Not Doing the Trick

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$300m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

Link REIT – Cash Burning Holes

LINK REIT: Negative rental reversion rates and tenant sales persist in Hong Kong, negative revaluation of property continues. Link is hellbent on...

Thomas J. Monaco

MTR Corp – Struggles Set To Continue

MTR CORP: As warned, MTR announced losses of HKD 4.8 bn both due to the impact of COVID-19 and a troubled mega project. With border closures to...

Thomas J. Monaco

Link REIT – Same Old, Same Old

LINK REIT: Link is acquiring a 50% stake in Qibao Vanke Plaza (QVP) in China. Its unclear if the numbers make sense given the variables, the lack...

Thomas J. Monaco

SF REIT Pre-IPO: Initial Thoughts on S.F. Holding's (002352 CH) Logistics REIT In HK

SF REIT will be an interesting REIT given its close tie with SF Holding. We see the huge potential for future acquisitions from the sponsor a clear...

Osbert Tang, CFA

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