IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Jinke Property Group / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/jinke-smart-services" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> is a Chinese property management company which is a subsidiary of <a href="https://www.smartkarma.com/entities/jinke-property-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13291:1" rel="noopener">Jinke Property Group (000656 CH)</a>. From 2015 to 2020, Jinke was ranked first among the Top 100 property management companies as measured by overall strengths in the Southwestern China Region, according to China Index Academy. Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. </p><div class="content-highlight"><p>Property developers continue to spin-off their property management arms due to tight credit conditions. However, sentiment on property management IPOs seems to have turned as recent IPOs of <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a> and <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a> are trading 20% and 5% below their IPO prices, respectively. The poor post-IPO performance despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Overall, on a fundamental view, we believe that Jinke is attractive.</p></div>

Jinke Smart Services (9666 HK) is a Chinese property management company which is a subsidiary of Jinke Property Group (000656 CH). From 2015 to 2020, Jinke was ranked first among the Top 100 property management companies as measured by overall strengths in the Southwestern China Region, according to China Index Academy. Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. Property developers continue to spin-off their property management arms due to tight credit conditions. However, sentiment on property management IPOs seems to have turned as recent IPOs of KWG Living Group (3913 HK) and Shimao Services Holdings (873 HK) are trading 20% and 5% below their IPO prices, respectively. The poor post-IPO performance despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Overall, on a fundamental view, we believe that Jinke is attractive.

Jinke Smart Services IPO Initiation: Street Smart

Sunac Services Holdings / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services Holdings (1820476D HK)</a> is a Chinese property management company. Sunac is the fastest-growing large-scale property management service provider in China, according to China Index Academy. Sunac is pre-marketing an IPO to raise $1 billion, according to press reports.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/sunac-services-ipo-initiation-next-in-line" target="_blank" rel="noopener">our initiation note</a>, we stated that Sunac’s fundamentals over the track record period are attractive. The PHIP discloses the 1H20 results which include New Century (consolidated from 8 May), along with a few data points on the post-period trading. The PHIP data points support our view that Sunac is a well-run property management company. </p></div>

Sunac Services Holdings (1820476D HK) is a Chinese property management company. Sunac is the fastest-growing large-scale property management service provider in China, according to China Index Academy. Sunac is pre-marketing an IPO to raise $1 billion, according to press reports.In our initiation note, we stated that Sunac’s fundamentals over the track record period are attractive. The PHIP discloses the 1H20 results which include New Century (consolidated from 8 May), along with a few data points on the post-period trading. The PHIP data points support our view that Sunac is a well-run property management company. 

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Shimao Property Holdings / Equity Capital Markets

<p>The IPO price for <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a> (SSH), the latest in a long line of property management service companies to be listed, will be announced tomorrow. Shares will commence trading this Friday.</p>
<p>SSH is the spin-off of <a href="https://www.smartkarma.com/entities/shimao-property-holdings-limited" target="_blank" data-smartkarma-citation="entities:8375:1" rel="noopener">Shimao Property Holdings (813 HK)</a>, who will own 66.5% in SSH after the IPO, down from 90% currently.</p>
<p>Similar to <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>, SSH's implied PER is in keeping with its generous growth the last two years, and arguably can be justified, to some degree, when comparing PER/Growth to peer comps.</p>
<p>However, Shimao Property looks expensive when de-consolidating out the implied market cap of SSH.</p>
<p>As always, more below the fold. </p>

The IPO price for Shimao Services Holdings (873 HK) (SSH), the latest in a long line of property management service companies to be listed, will be announced tomorrow. Shares will commence trading this Friday.
SSH is the spin-off of Shimao Property Holdings (813 HK), who will own 66.5% in SSH after the IPO, down from 90% currently.
Similar to KWG Living Group (3913 HK), SSH's implied PER is in keeping with its generous growth the last two years, and arguably can be justified, to some degree, when comparing PER/Growth to peer comps.
However, Shimao Property looks expensive when de-consolidating out the implied market cap of SSH.
As always, more below the fold. 

Shimao Services: KWG Living-Like Valuation; Parent Trading Rich

KWG Living Group / Equity Capital Markets

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<p>This week in StubWorld ...</p>
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<a href="https://www.smartkarma.com/entities/kwg-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:12601:1" rel="noopener">Kwg Property Holding (1813 HK)</a> is trading rich to peers after the in-specie distribution of soon-to-be-listed <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>. KWG Living itself will need to hit significant earnings growth targets to justify its implied market valuation.</div>
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<p>Preceding my comments on KWG are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<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 as a % - of at least 20%.</p>
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This week in StubWorld ...



Kwg Property Holding (1813 HK) is trading rich to peers after the in-specie distribution of soon-to-be-listed KWG Living Group (3913 HK). KWG Living itself will need to hit significant earnings growth targets to justify its implied market valuation.

Preceding my comments on KWG 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 as a % - of at least 20%.




Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>  offers comprehensive property management services for both residential properties and commercial properties in China. The company has filed for an IPO on the Hong Kong Stock Exchange to raise about US$402m through the issuance of 383m shares at an indicative IPO price of HK$8.13 per share.</p><p>The company has entered into cornerstone investment agreements with Hillhouse Funds, Orchid China and LMA SPC, Harvest Global Capital Investments, Snow Lake, Valliance, China Lesso, OP Capital and Aspex Master Fund. These cornerstone investors have agreed to subscribe for an aggregate amount of US$120m worth of shares.</p><p>In our previous insight on the company, we discussed the company’s business model, business segments and its financials. In this insight, we discuss the company’s valuation and key risks.</p><p>Read our previous insight:</p><p><a href="https://www.smartkarma.com/insights/kwg-living-ipo-expansion-in-community-value-added-services-drives-growth" target="_blank" data-smartkarma-citation="insights:44334" rel="noopener">KWG Living IPO: Expansion in Community Value-Added Services Drives Growth</a> </p>

KWG Living Group (3913 HK)  offers comprehensive property management services for both residential properties and commercial properties in China. The company has filed for an IPO on the Hong Kong Stock Exchange to raise about US$402m through the issuance of 383m shares at an indicative IPO price of HK$8.13 per share.The company has entered into cornerstone investment agreements with Hillhouse Funds, Orchid China and LMA SPC, Harvest Global Capital Investments, Snow Lake, Valliance, China Lesso, OP Capital and Aspex Master Fund. These cornerstone investors have agreed to subscribe for an aggregate amount of US$120m worth of shares.In our previous insight on the company, we discussed the company’s business model, business segments and its financials. In this insight, we discuss the company’s valuation and key risks.Read our previous insight:KWG Living IPO: Expansion in Community Value-Added Services Drives Growth 

KWG Living IPO: Strong Financials and Growth Prospects Justify a Premium

China

A-Living Smart City Services Co., Ltd. offers property management services. The Company provides hydropower maintenance, parking management, home cleaning, and other services. A-Living Smart City Services also engages in interior decoration works, landscaping works, and others.

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A-Living Smart City Services C (3319 HK)

Jinke Smart Services IPO Initiation: Street Smart

Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. On a...

Arun George

Sunac Services IPO: PHIP Data Points

The PHIP discloses the 1H20 results which include New Century, along with a few post-period data points. The PHIP data points support our view that...

Arun George

Shimao Services: KWG Living-Like Valuation; Parent Trading Rich

Shimao Property's trades at a significant premium to the implied P/B for property developers, net of their management services investment holding.

David Blennerhassett

StubWorld: KWG Living - Crowded In Crowd

Kwg Prop (1813 HK) is trading rich to peers after the in-specie distribution of soon-to-be-listed KWG Living (3913 HK). KWGL will need to hit...

David Blennerhassett

KWG Living IPO: Strong Financials and Growth Prospects Justify a Premium

We compare the company's implied valuation matrices and KPIs with property management service peers in China. Though KWG Living's shares seem...

Shifara Samsudeen, ACMA, CGMA

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