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

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/yihai-int-l-holding-ltd" target="_blank" data-smartkarma-citation="entities:22803:1" rel="noopener">Yihai Int’L Holding (1579 HK)</a> was trading at par with <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> although Yihai's share price is still massively underperforming Nissin Food Holdings'.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/131/original/image_48603681281635075064982.png?1635075064" class="editor-image img-responsive" data-smartkarma-image-id="237131"></figure>
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source: Reuters
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Yihai Int’L Holding (1579 HK) was trading at par with Haidilao (6862 HK) although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to Nissin Foods (1475 HK) although Yihai's share price is still massively underperforming Nissin Food Holdings'.


source: Reuters


Yihai International (1579): Diversified Away from Haidilao

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Equity Capital Markets

Tam Jai International / Equity Capital Markets

<ul>
<li>Although the recent media reports suggested overwhelming interest from both retail and institutional investors, the <a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (2271 HK)</a> IPO subscription status was not all that great with subscription rates of 29.6x and 3.9x for the Hong Kong offer and international offer respectively.</li>
<li>Consequently, the IPO was priced at the low end of the offer range at HK$ 3.33 per share, which implies a market cap and EV of HK$ 4.5bn and HK$ 3.1bn respectively.</li>
<li>Nevertheless, we remain unruffled by the surprisingly low IPO subscriptions as 66% of the Hong Kong IPO during the last three months made listing gains with less than 5.0x subscriptions (international offer).</li>
</ul>


Although the recent media reports suggested overwhelming interest from both retail and institutional investors, the Tam Jai International (2271 HK) IPO subscription status was not all that great with subscription rates of 29.6x and 3.9x for the Hong Kong offer and international offer respectively.
Consequently, the IPO was priced at the low end of the offer range at HK$ 3.33 per share, which implies a market cap and EV of HK$ 4.5bn and HK$ 3.1bn respectively.
Nevertheless, we remain unruffled by the surprisingly low IPO subscriptions as 66% of the Hong Kong IPO during the last three months made listing gains with less than 5.0x subscriptions (international offer).


APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

<a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (2271 HK)</a> raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.Tam Jai International is a restaurant chain operator of the TamJai and SamGor branded fast casual restaurant chain in Hong Kong with operations also in Mainland China and Singapore. As of the latest practicable date (13th September 2021), the firm operated a total of 156 restaurants.Since our last note, China-based peers, with the exception of Jiumaojiu, have traded down 11-18%, whilst its HK-based peers have traded relatively flat. We maintain our original thesis that the IPO price presents a favourable risk to reward ratio and despite valuation seemingly expensive when compared to its acquisition price in 2018, we expect a normalisation of operations in FY22-23.Our previous coverage of the IPO:<ul><li>
<a href="https://www.smartkarma.com/insights/tam-jai-international-ipo-favourable-risk-to-reward-at-low-end" target="_blank" data-smartkarma-citation="insights:58091" rel="noopener">Tam Jai International IPO - Favourable Risk to Reward at Low End</a> </li></ul>

Tam Jai International (2271 HK) raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.Tam Jai International is a restaurant chain operator of the TamJai and SamGor branded fast casual restaurant chain in Hong Kong with operations also in Mainland China and Singapore. As of the latest practicable date (13th September 2021), the firm operated a total of 156 restaurants.Since our last note, China-based peers, with the exception of Jiumaojiu, have traded down 11-18%, whilst its HK-based peers have traded relatively flat. We maintain our original thesis that the IPO price presents a favourable risk to reward ratio and despite valuation seemingly expensive when compared to its acquisition price in 2018, we expect a normalisation of operations in FY22-23.Our previous coverage of the IPO:
Tam Jai International IPO - Favourable Risk to Reward at Low End 

Tam Jai International IPO Trading - Peers Have Traded Down, but Upside from the Bottom End Remains

<ul>
<li>Hong Kong based rice noodles restaurant chain, <a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (TJI HK)</a> announced the price range to its IPO at HK$ 3.33-4.17 per share, which implies a market cap and EV range of HK$ 4.5-5.6bn and HK$ 3.1-3.9bn respectively.</li>
<li>Tam Jai International will raise HK$ 1.1-1.4bn (US$ 145-182m) via issuing 335m new shares. The parent company, Toridoll has also granted underwriters the right to sell up to an additional 50.2m shares as a part of an overallotment option.</li>
<li>The application period ends on Tuesday (28th September 2021) and the shares are expected to start trading on the Hong Kong Stock Exchange from 7th October 2021.</li>
</ul>


Hong Kong based rice noodles restaurant chain, Tam Jai International (TJI HK) announced the price range to its IPO at HK$ 3.33-4.17 per share, which implies a market cap and EV range of HK$ 4.5-5.6bn and HK$ 3.1-3.9bn respectively.
Tam Jai International will raise HK$ 1.1-1.4bn (US$ 145-182m) via issuing 335m new shares. The parent company, Toridoll has also granted underwriters the right to sell up to an additional 50.2m shares as a part of an overallotment option.
The application period ends on Tuesday (28th September 2021) and the shares are expected to start trading on the Hong Kong Stock Exchange from 7th October 2021.


Tam Jai International IPO Valuation: Cheaper Than Noodles

Event-Driven

TORIDOLL Holdings Corporation / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toridoll-holdings-corporation" target="_blank" data-smartkarma-citation="entities:8193:1" rel="noopener">TORIDOLL Holdings Corporation (3397 JP)</a> is one of the largest restaurant chains in Japan with over 1,100 restaurants in the domestic market and another 600+ restaurants in overseas markets.</li>
<li>The company’s fully owned subsidiary, Hong Kong based rice noodle chain operator, <a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (TJI HK)</a> is seeking a listing on the Hong Kong stock exchange. Although Tam Jai’s IPO valuation is still unknown, we think the IPO could get a valuation of around HK$ 11.9bn, which is around 76% and 50% of Toridoll’s current market cap and EV respectively.</li>
<li>Based on the estimated valuation of Tam Jai, Toridoll’s domestic business and other overseas restaurant ventures are trading at cheap implied valuation multiples compared to peers, suggesting that there could be an upside upon completion of the Tam Jai International IPO.</li>
</ul>



TORIDOLL Holdings Corporation (3397 JP) is one of the largest restaurant chains in Japan with over 1,100 restaurants in the domestic market and another 600+ restaurants in overseas markets.
The company’s fully owned subsidiary, Hong Kong based rice noodle chain operator, Tam Jai International (TJI HK) is seeking a listing on the Hong Kong stock exchange. Although Tam Jai’s IPO valuation is still unknown, we think the IPO could get a valuation of around HK$ 11.9bn, which is around 76% and 50% of Toridoll’s current market cap and EV respectively.
Based on the estimated valuation of Tam Jai, Toridoll’s domestic business and other overseas restaurant ventures are trading at cheap implied valuation multiples compared to peers, suggesting that there could be an upside upon completion of the Tam Jai International IPO.


Tam Jai International IPO Could Unlock The Value of Toridoll’s Smaller Business Operations

China

Haidilao International Holding Ltd. operates Chinese cuisine restaurant brand focusing on hot pot cuisine. The Company provides hot pots, soup bases, dipping sauces, drinks, prepared food, and other products. Haidilao International Holding opens restaurants in Taiwan, Hong Kong, Singapore, South Korea, Japan, and the United States.

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Haidilao International Holding (6862 HK)

Yihai International (1579): Diversified Away from Haidilao

Mispriced Yihai Intl - share price highly correlated with Haidilao although it has diversified away by growing its ready-to-eat food business that...

Henry Soediarko

Tam Jai International IPO Valuation

Tam Jai IPO seems to be priced at a steep discount to peers, suggesting limited downside risk to Tam Jai’s IPO price. Therefore, we remain...

Oshadhi Kumarasiri

Tam Jai International IPO Trading - Peers Have Traded Down, but Upside from the Bottom End Remains

Tam Jai International (2271 HK) raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.

Clarence Chu

Tam Jai International IPO Valuation: Cheaper Than Noodles

Hong Kong based rice noodles restaurant chain, Tam Jai announced the price range to its IPO at HK$ 3.33-4.17 per share, which implies a market cap...

Oshadhi Kumarasiri

Tam Jai International IPO Could Unlock The Value of Toridoll’s Smaller Business Operations

Tam Jai international currently remains hidden among Toridoll’s businesses. However, if the upcoming IPO fetches around HK$11.9bn valuation,...

Oshadhi Kumarasiri

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