Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>SK Bioscience announced an excellent IPO book building results on 8 March. The IPO price has been confirmed at 65,000 won per share, which is at the top of the IPO price range. At the IPO price of 65,000 won, the company's initial market cap will be 5.0 trillion won.</li>
<li>The total demand ratio of the SK Bioscience IPO was 1,275.5 to 1, which is very high. Of these institutional investors, 96.7% of them thought that the value of the company should be 65,000 won or more. Our base case valuation for the company is a market cap of 11.5 trillion won or <strong>149,000 won</strong> per share, which would represent a 129% upside from the IPO price of 65,000 won. </li>
<li>Despite the numerous positives about the SK Bioscience IPO, the biggest near-term and long-term problem of SK Bioscience is whether or not the COVID-19 vaccines of AstraZeneca, NovaVax, and other major global vaccine developers are safe or not.  Since 26 February (when COVID-19 vaccinations started in Korea), there have been <a href="https://blog.naver.com/jijisjungle/222264180891" target="_blank" rel="noopener">11 people</a> that have died in Korea after taking the AstraZeneca COVID-19 vaccines (death rate of 0.003%). For now, the Korean authorities have ruled out any association that may link the deaths of these 11 people with the COVID-19 vaccines.</li>
</ul>


SK Bioscience announced an excellent IPO book building results on 8 March. The IPO price has been confirmed at 65,000 won per share, which is at the top of the IPO price range. At the IPO price of 65,000 won, the company's initial market cap will be 5.0 trillion won.
The total demand ratio of the SK Bioscience IPO was 1,275.5 to 1, which is very high. Of these institutional investors, 96.7% of them thought that the value of the company should be 65,000 won or more. Our base case valuation for the company is a market cap of 11.5 trillion won or 149,000 won per share, which would represent a 129% upside from the IPO price of 65,000 won. 
Despite the numerous positives about the SK Bioscience IPO, the biggest near-term and long-term problem of SK Bioscience is whether or not the COVID-19 vaccines of AstraZeneca, NovaVax, and other major global vaccine developers are safe or not.  Since 26 February (when COVID-19 vaccinations started in Korea), there have been 11 people that have died in Korea after taking the AstraZeneca COVID-19 vaccines (death rate of 0.003%). For now, the Korean authorities have ruled out any association that may link the deaths of these 11 people with the COVID-19 vaccines.


Trading Strategy of SK Bioscience IPO Post Pricing

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.

<div>
<p>A group of shareholders plans to raise around US$200m via selling a 4.6% stake in <a href="https://www.smartkarma.com/entities/i-mab" target="_blank" data-smartkarma-citation="entities:28384:1" rel="noopener">I-Mab (IMAB US).</a></p>
<p>We have previously covered the IPO in:</p>
</div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/i-mab-pre-ipo-strong-management-and-investor-backing-with-differentiated-products" target="_blank" rel="noopener">I-Mab (天境生物) Pre-IPO: Strong management and investor backing with differentiated products</a></li>
<li><a href="https://www.smartkarma.com/insights/i-mab-ipo-everest-deal-a-valuation-booster" target="_blank" rel="noopener">I-Mab (天境生物) IPO: Everest Deal a Valuation Booster</a></li>
<li><a href="https://www.smartkarma.com/insights/i-mab-ipo-trading-tiny-float-and-undemanding-valuation" target="_blank" rel="noopener">I-Mab (天境生物) IPO Trading: Tiny Float and Undemanding Valuation</a></li>
</ul></div><div><p>In this insight, we will talk about updates since then and run the deal through our ECM framework.</p></div>


A group of shareholders plans to raise around US$200m via selling a 4.6% stake in I-Mab (IMAB US).
We have previously covered the IPO in:

I-Mab (天境生物) Pre-IPO: Strong management and investor backing with differentiated products
I-Mab (天境生物) IPO: Everest Deal a Valuation Booster
I-Mab (天境生物) IPO Trading: Tiny Float and Undemanding Valuation
In this insight, we will talk about updates since then and run the deal through our ECM framework.

I-Mab Placement - Heading in the Right Direction

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Cathay Pacific Airways / Equity Bottom-Up

<div>
<p>After Hong Kong's government planned to impose a 14-day quarantine and seven-day medical surveillance on all aircrew, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0125/2021012500513.pdf" target="_blank" rel="noopener">announced</a> it would have a "<em>significant impact on our ability to service our passenger and cargo markets</em>" and would add <em>"a further increase in our cash burn of approximately HK$300-$400 million per month</em>".</p>
<p>In effect, the uptick in cost from these new quarantine measures negates the cost savings from the cessation of Cathay Dragon announced last October.</p>
<p>Cathay has now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0128/2021012800096.pdf" target="_blank" rel="noopener">announced</a> the issuance of a HK$6.74bn 2.75% convertible bond due 2026.</p>
<p>The conversion price is HK$8.57/share, a 30% premium to the last close of HK$6.59/share. Assuming full conversion, these shares represent 10.89% of shares out on a fully diluted basis.</p>
<p>Upon conversion, together with the exercise of warrants held by the Hong Kong government, <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> and <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a>'s effective stakes would decline to 37.91% and 25.27% respectively from 45.00% and 29.99% currently. </p>
<p>Cathay's shares are up 25% in the past three months - before this latest fund-raising proposal - in line with a basket of peers of 28%. Year-on-year, Cathay is down 33%, bang in line with its peer basket.</p>
</div>
<div>
<p>Separately <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s discount to NAV has narrowed to 43% from a low of 55% last November.</p>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


After Hong Kong's government planned to impose a 14-day quarantine and seven-day medical surveillance on all aircrew, Cathay Pacific Airways (293 HK) announced it would have a "significant impact on our ability to service our passenger and cargo markets" and would add "a further increase in our cash burn of approximately HK$300-$400 million per month".
In effect, the uptick in cost from these new quarantine measures negates the cost savings from the cessation of Cathay Dragon announced last October.
Cathay has now announced the issuance of a HK$6.74bn 2.75% convertible bond due 2026.
The conversion price is HK$8.57/share, a 30% premium to the last close of HK$6.59/share. Assuming full conversion, these shares represent 10.89% of shares out on a fully diluted basis.
Upon conversion, together with the exercise of warrants held by the Hong Kong government, Swire Pacific (A) (19 HK) and Air China Ltd (H) (753 HK)'s effective stakes would decline to 37.91% and 25.27% respectively from 45.00% and 29.99% currently. 
Cathay's shares are up 25% in the past three months - before this latest fund-raising proposal - in line with a basket of peers of 28%. Year-on-year, Cathay is down 33%, bang in line with its peer basket.


Separately Swire Pacific (A) (19 HK)'s discount to NAV has narrowed to 43% from a low of 55% last November.


As always, more below the fold.


Cathay Pacific (293 HK): Back To Terminal

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p>Despite the lockdown and ceaseless increase in the infection cases in Indonesia, the mobility rate in the workplace has improved by 50% that helped to narrow Q3 2020 loss apart from the cost savings initiative. </p>
<p>Vaccine discovery has helped Bluebird's share price ascension but the real push will come from the vaccination in Indonesia that will lead to a looser government policy lockdown and it is bound to create a more permanent feeling that it is business as usual (pre-COVID) therefore may even lead to a re-opening of the borders. </p>
<div class="content-highlight">
<p>At 9.8 EV/EBITDA and 0.73 PBR, <a href="https://www.smartkarma.com/entities/blue-bird-tbk-pt" target="_blank" data-smartkarma-citation="entities:19482:1" rel="noopener">Blue Bird (BIRD IJ)</a> is currently trading at 42% and 44% discount in EV/EBITDA and PBR compared to its peers despite a 57% rally. We should expect to see further multiple expansion in Blue Bird as mass vaccination is taking place and people have more confidence in the economic recovery in Indonesia. </p>
</div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/182/498/original/image_2762037721610626999059.png?1610626999" class="editor-image img-responsive" data-smartkarma-image-id="182498"></figure>
<div class="content-remarks">
<p>source: Capital IQ</p>
</div>

Despite the lockdown and ceaseless increase in the infection cases in Indonesia, the mobility rate in the workplace has improved by 50% that helped to narrow Q3 2020 loss apart from the cost savings initiative. 
Vaccine discovery has helped Bluebird's share price ascension but the real push will come from the vaccination in Indonesia that will lead to a looser government policy lockdown and it is bound to create a more permanent feeling that it is business as usual (pre-COVID) therefore may even lead to a re-opening of the borders. 

At 9.8 EV/EBITDA and 0.73 PBR, Blue Bird (BIRD IJ) is currently trading at 42% and 44% discount in EV/EBITDA and PBR compared to its peers despite a 57% rally. We should expect to see further multiple expansion in Blue Bird as mass vaccination is taking place and people have more confidence in the economic recovery in Indonesia. 



source: Capital IQ


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<p>First of all, Merry Christmas and Happy New Year!</p>
<p><strong>1. Industry viewpoints:</strong></p>
<ul>
<li>While we are still waiting for the official results of the volume-based purchase (VBP) negotiations in 2020, let’s take a further look at the competitive landscape of PD-1/L1 in China.</li>
<li>The regenerative medical implant devices would be a development trend of medical implant devices in the future.</li>
<li>Affected by the centralized procurement policy in China, the growth rate of high-value medical consumables market is expected to slow year by year.</li>
</ul>
<p><strong>2. Company news:</strong></p>
<p style="text-align: start;">News about the progress of new drugs from <a href="https://www.smartkarma.com/entities/alphamab-oncology" target="_blank" data-smartkarma-citation="entities:28213:1" rel="noopener">Alphamab Co Ltd (9966 HK)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/ascletis-pharma-inc" target="_blank" data-smartkarma-citation="entities:27265:1" rel="noopener">Ascletis Pharma Inc (1672 HK)</a> and <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>.</p>
<p><strong>3. Market review:</strong></p>
<p>Last week, stock price for healthcare sector in A share increased 1.1%, while CSI 300 increased 0.84% over the same period of time.</p>
<p><strong>4. Risk Disclosure:</strong></p>
<p style="text-align: start;">Policy risk, R&amp;D risk, Company risk and COVID-19 risk.</p>

First of all, Merry Christmas and Happy New Year!
1. Industry viewpoints:

While we are still waiting for the official results of the volume-based purchase (VBP) negotiations in 2020, let’s take a further look at the competitive landscape of PD-1/L1 in China.
The regenerative medical implant devices would be a development trend of medical implant devices in the future.
Affected by the centralized procurement policy in China, the growth rate of high-value medical consumables market is expected to slow year by year.

2. Company news:
News about the progress of new drugs from Alphamab Co Ltd (9966 HK), Innovent Biologics Inc (1801 HK), Ascletis Pharma Inc (1672 HK) and Jiangsu Hengrui Medicine (600276 CH).
3. Market review:
Last week, stock price for healthcare sector in A share increased 1.1%, while CSI 300 increased 0.84% over the same period of time.
4. Risk Disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

United Kingdom

AstraZeneca PLC is a holding company. The Company, through its subsidiaries, researches, manufactures, and sells pharmaceutical and medical products. AstraZeneca focuses its operations on eight therapeutic areas: Gastrointestinal, Oncology, Cardiovascular, Respiratory, Central Nervous System, Pain Control, Anaesthesia, and Infection.

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Astrazeneca Plc Spons Adr (AZN US)

Trading Strategy of SK Bioscience IPO Post Pricing

The IPO price of SK Bioscience was confirmed at 65,000 won per share, which is at the top of the IPO price range. The total demand ratio of the SK...

Douglas Kim

I-Mab Placement - Heading in the Right Direction

A group of shareholders plans to raise around US$200m via selling a 4.6% stake in I-Mab (IMAB US). We have previously covered the IPO as well.

Sumeet Singh

Cathay Pacific (293 HK): Back To Terminal

Vaccine rollout and a hard turnaround in global tourism/air travel appear highly optimistic. I think Cathay has further to fall from here.

David Blennerhassett

BlueBird (BIRD): Flying Higher

At 9.8 EV/EBITDA and 0.73 PBR, Blue Bird (BIRD IJ) is currently trading at 42% and 44% discount in EV/EBITDA and PBR compared to its peers despite...

Henry Soediarko

China Healthcare Weekly (Dec.25)

This article analyzed healthcare industry viewpoints such as competitive landscape of PD-1/L1 in China, news of Alphamab, Hengrui, Innovent and...

Xinyao (Criss) Wang

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