Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>Our base case valuation of Arm Holdings is target price of US$36.3 per share, which represents 23% lower than the lower end of the IPO price range. </li>
<li>We estimate Arm's sales to reach US2,832 million in FY2024 (up 5.7% YoY) and US$3,038 million in FY 2025 (up 7.3% YoY). </li>
<li>Given the lack of upside, we have a NEGATIVE view of Arm Holdings. Our valuation sensitivity analysis suggests implied price of US$29.4 to US$43.9 per share. </li>
</ul>


Our base case valuation of Arm Holdings is target price of US$36.3 per share, which represents 23% lower than the lower end of the IPO price range. 
We estimate Arm's sales to reach US2,832 million in FY2024 (up 5.7% YoY) and US$3,038 million in FY 2025 (up 7.3% YoY). 
Given the lack of upside, we have a NEGATIVE view of Arm Holdings. Our valuation sensitivity analysis suggests implied price of US$29.4 to US$43.9 per share. 


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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> aims to raisebetween US$4.5-4.9bn via selling some of its stake in <a href="https://www.smartkarma.com/entities/arm-holdings-inc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">ARM Holdings</a>' US IPO.</li>
<li>ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.</li>
<li>In our previous notes, we looked at the company’s past performance. In this note, we talk about valuation.</li>
</ul>



Softbank Group (9984 JP) aims to raisebetween US$4.5-4.9bn via selling some of its stake in ARM Holdings' US IPO.
ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
In our previous notes, we looked at the company’s past performance. In this note, we talk about valuation.


ARM Holdings IPO - Thoughts on Valuation - Still Very Demanding

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/arm-holdings-inc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">ARM Holdings (1822695D US)</a> has launched a roadshow for its IPO. <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> offers 95.5 million ADSs (over-allotment option of 7.0 million ADS) at US$47.00-51.00 per ADS.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/arm-holdings-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:111238" rel="noopener">ARM Holdings IPO: The Bull Case</a>, <a href="https://www.smartkarma.com/insights/arm-holdings-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:111471" rel="noopener">ARM Holdings IPO: The Bear Case</a> and <a href="https://www.smartkarma.com/insights/arm-holdings-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:111704" rel="noopener">ARM Holdings IPO: Valuation Insights</a>. </li>
<li>The IPO price range values ARM at a premium to peers' multiples. DCF sensitivity analysis suggests a need for ambitious forecasts to justify the price range.</li>
</ul>



ARM Holdings (1822695D US) has launched a roadshow for its IPO. Softbank Group (9984 JP) offers 95.5 million ADSs (over-allotment option of 7.0 million ADS) at US$47.00-51.00 per ADS.
We previously discussed the IPO in ARM Holdings IPO: The Bull Case, ARM Holdings IPO: The Bear Case and ARM Holdings IPO: Valuation Insights. 
The IPO price range values ARM at a premium to peers' multiples. DCF sensitivity analysis suggests a need for ambitious forecasts to justify the price range.


ARM Holdings IPO: Unattractive Price Range

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> aims to raise around US$8-10bn via selling some of its stake in <a href="https://www.smartkarma.com/entities/arm-holdings-inc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">ARM Holdings</a>' US IPO.</li>
<li>ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.</li>
<li>In our earlier note, we looked at Arm’s past performance and undertook a peer comparison. In this note, we talk about valuations.</li>
</ul>



Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings' US IPO.
ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
In our earlier note, we looked at Arm’s past performance and undertook a peer comparison. In this note, we talk about valuations.


ARM Holdings Pre-IPO - Thoughts on Valuations

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> aims to raise around US$8-10bn via selling some of its stake in <a href="https://www.smartkarma.com/entities/arm-holdings-inc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">ARM Holdings</a>’ US IPO.</li>
<li>ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.</li>
<li>In our earlier note, we looked at Arm’s past performance. In this note, we undertake a peer comparison.</li>
</ul>



Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings’ US IPO.
ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
In our earlier note, we looked at Arm’s past performance. In this note, we undertake a peer comparison.


ARM Holdings Pre-IPO - Peer Comparison - The Smallest and One of the Slowest

United States

Advanced Micro Devices, Inc. (AMD) produces semiconductor products and devices. The Company offers products such as microprocessors, embedded microprocessors, chipsets, graphics, video and multimedia products and supplies it to third-party foundries, as well as provides assembling, testing, and packaging services. AMD serves customers worldwide.

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Advanced Micro Devices (AMD US)

ARM Holdings IPO Valuation Analysis

Our base case valuation of Arm Holdings is target price of US$36.3 per share, which represents 23% lower than the lower end of the IPO price range.

Douglas Kim

ARM Holdings IPO - Thoughts on Valuation - Still Very Demanding

Softbank Group (9984 JP) aims to raisebetween US$4.5-4.9bn via selling some of its stake in ARM Holdings' US IPO. In this note, we provide our...

Sumeet Singh

ARM Holdings IPO: Unattractive Price Range

The IPO price range values ARM at a premium to peers' multiples. DCF sensitivity analysis suggests a need for ambitious forecasts to justify the...

Arun George

ARM Holdings Pre-IPO - Thoughts on Valuations

Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings' US IPO. In this note, we talk about valuations.

Sumeet Singh

ARM Holdings Pre-IPO - Peer Comparison - The Smallest and One of the Slowest

Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings’ US IPO. In this note, we undetake a peer...

Sumeet Singh

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