Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 148 stocks over the last week. The average A-H premium was 108.9% as of Sep 27th.</li>
<li>The average A-H premium changed by -1.5ppt week-on-week, led by real estate, consumer discretionary, information technology and offset by consumer staples, communication services, energy.</li>
<li>We highlight weekly changes in A-H premium for China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen.</li>
</ul>


We analyse the changes of A-H premium on 148 stocks over the last week. The average A-H premium was 108.9% as of Sep 27th.
The average A-H premium changed by -1.5ppt week-on-week, led by real estate, consumer discretionary, information technology and offset by consumer staples, communication services, energy.
We highlight weekly changes in A-H premium for China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen.


A-H Premium Weekly (Sep 27th):China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.</li>
<li>
<a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a>, while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. </li>
<li>Based on the gearing level, floating rate proportion, and YTD performance, <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> and <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> are the two potential best bets.</li>
</ul>


With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.

Sands China (1928 HK), while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. 
Based on the gearing level, floating rate proportion, and YTD performance, New World Development (17 HK) and Hang Lung Properties (101 HK) are the two potential best bets.


HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Midea Group Co Ltd A / Equity Capital Markets

<ul>
<li>For the reasons why Midea is eager to IPO in HK, investors shouldn’t just look at the surface of its glory, but delve into the “real motives” behind capital operations.</li>
<li>The policy of subsidizing the trade-in of home appliances belongs to “early overdraft of demand” and is unsustainable. Valuation logic for the performance increment brought by such policy is P/B.</li>
<li>If Midea cannot achieve the expected breakthroughs in To B business or internationalization in 2025-2026 to hedge against the weak domestic business, Midea's performance/valuation in following years would inevitable decline.</li>
</ul>


For the reasons why Midea is eager to IPO in HK, investors shouldn’t just look at the surface of its glory, but delve into the “real motives” behind capital operations.
The policy of subsidizing the trade-in of home appliances belongs to “early overdraft of demand” and is unsustainable. Valuation logic for the performance increment brought by such policy is P/B.
If Midea cannot achieve the expected breakthroughs in To B business or internationalization in 2025-2026 to hedge against the weak domestic business, Midea's performance/valuation in following years would inevitable decline.


Pre-IPO Midea Group H Share - Here Are the Risks Behind

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares. </li>
<li>We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.</li>
<li>Pricing of this offering is expected to be completed on 13 September and listing on 17 September. </li>
</ul>


We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares. 
We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
Pricing of this offering is expected to be completed on 13 September and listing on 17 September. 


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/midea-group-co-ltd-a" target="_blank" data-smartkarma-citation="entities:16185:1" rel="noopener">Midea Group Co Ltd A (000333 CH)</a> raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.</li>
<li>Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.</li>
<li>We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.</li>
</ul>



Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.


Midea A/H Listing - Strong Demand for Quality Asset, Index Flows Could Help in the near Term

China

Haier Smart Home Co. Ltd. manufactures and distributes appliances. The Company produces air conditioners, refrigerators, freezers, small household electrical appliances, and other related products. Haier Smart Home markets its products domestically and internationally.

Price Gauge
52-week Range	0.00 - 0.00
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Haier Smart Home (6690 HK)

A-H Premium Weekly (Sep 27th):China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen.

Ke Yan, CFA, FRM

HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

US interest rate decline benefits HSI companies with high gearing levels, like New World Development and Hang Lung Properties, while Sands China's...

Osbert Tang, CFA

Midea Group HK IPO Valuation Analysis

Midea Group's shares closed up 7.8% at HK$59.10 on Tuesday. This strong IPO performance in HK by the Midea Group is likely to set in motion a...

Douglas Kim

Midea A/H Listing - Strong Demand for Quality Asset, Index Flows Could Help in the near Term

Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized. In this...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

A-H Premium Weekly (Sep 27th):China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Eastern, China Southern Airlines, Tsingtao, HPI, RemeGen.

Ke Yan, CFA, FRM

HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

​US interest rate decline benefits HSI companies with high gearing levels, like New World Development and Hang Lung Properties, while Sands China's...

Osbert Tang, CFA

Pre-IPO Midea Group H Share - Here Are the Risks Behind

During Mid Autumn Festival, home appliance chain sales was up >30% YoY after years of decline. Due to trade-ins policy, there's sharp increase in...

Xinyao (Criss) Wang

Midea Group HK IPO Valuation Analysis

Midea Group's shares closed up 7.8% at HK$59.10 on Tuesday. This strong IPO performance in HK by the Midea Group is likely to set in motion a...

Douglas Kim

Midea A/H Listing - Strong Demand for Quality Asset, Index Flows Could Help in the near Term

Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized. In this...

Sumeet Singh

US interest rate decline benefits HSI companies with high gearing levels, like New World Development and Hang Lung Properties, while Sands China's...