Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

<p>With JAL’s pricing of its secondary offering to take place tomorrow we update our valuation analysis and examine the company’s likely long-term prospects below. While the outlook for the sector remains highly uncertain, even with announcements regarding promising vaccines, we continue to favour JAL compared to its peers.</p>

With JAL’s pricing of its secondary offering to take place tomorrow we update our valuation analysis and examine the company’s likely long-term prospects below. While the outlook for the sector remains highly uncertain, even with announcements regarding promising vaccines, we continue to favour JAL compared to its peers.

JAL – Cheap Valuation Makes This an Easier Decision

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 href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.</p>
<p> I have covered the background of the deal in my earlier write-up, <a href="https://www.smartkarma.com/insights/japan-airlines-placement-given-the-uncertain-outlook-might-need-further-correction" target="_blank" rel="noopener">Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction</a>.</p>
</div><div><div id="annotable-executive_summary-2">In this insight, I'll talk about the updates since then.</div></div>


Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.
 I have covered the background of the deal in my earlier write-up, Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction.
In this insight, I'll talk about the updates since then.

Japan Airlines Placement - Tricky Tricky, Needs to Correct

APAC IPOs & Placements

Zhen Zhou, Toh

JD Health International  / Equity Capital Markets


Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.




Much has happened since Ant Group (6688 HK)'s IPO got pulled so this will be a lengthy weekly note.
Thanks to The Wall Street Journal (WSJ), we now know that Xi Jinping personally cancelled Ant's IPO due to Jack Ma's brazen comments a few weeks earlier. This doesn't look good, especially with news of China’s antitrust watchdogs publishing draft rules targeting monopolistic practices of digital platforms.
The draft rules aim to prevent anti-competitive behavior among online platforms, collaboration on customer data, eliminating smaller payers, and etc. It also mentioned greater regulatory oversight of VIE which will obviously impact upcoming China IPOs and listed companies alike since most of them are built upon VIE structure to raise capital from foreign investors. The Chinese government has not officially legalized such a structure and could use this chance to reign in their control over these companies.
Well, it's 2020, just when you think the bad news end here, there's more. 



Hong Kong's Securities and Futures Commission (SFC) was said to be planning new code of conduct for equity and debt deals. This may see the introduction of framework to calculate fees for bookrunners. Companies looking to list may also need to secure underwriting syndicates earlier to limit non-bookrunners from pitching shares to investors to show they have demand in a bid to secure the bookrunner role. There are also potential changes to allocation rules, specifically, regarding the cornerstone structure in HK IPOs where cornerstone investors can secure guaranteed (usually larger) allocation in an IPO in exchange for a six-month lock-up period. For now, nothing is set in stone and, to be fair, this isn't necessarily bad since the goal here is to tighten supervision. 
Aside from Ant's IPO "hiccup" earlier, Hong Kong IPO activity is still looking strong, for now. JD Health (JDH HK), Blue Moon Group Holdings (BMG HK), and Evergrande Services was said to have gotten their approval this week and will start premarketing in the coming week. Netjoy (NETJOY HK) was also said to be seeking approval this week but we have yet to get confirmation of its approval.


JD Health (京东健康) Pre-IPO - Peer Comparison - It's a Close Fight and Competition Is Intensifying 

JD Health (京东健康) Pre-IPO - Assumptions and Valuations 

Blue Moon Group Pre-IPO - Initial Thoughts on Valuation 
Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales

Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising   
Blue Moon: No. 1 But No Exclusive Advantage, Observation on the Ground

Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison   

Netjoy (云想科技) Pre-IPO: Growth Stalled for the Short Video Marketer 

CR Mixc Lifestyle Services (华润万象生活) Pre-IPO - SOE-Linked Parentage Didn’t Help 

Antengene (6996 HK) launched its IPO this week and Ke Yan, CFA, FRM shared his thoughts on valuation.


Antengene (德琪医药) IPO: Buy the Team 

We also covered recently filed Beijing Kuaishou Technology Co Ltd (1496219D CH) which is expected to raise US$5bn.


Kuaishou Technology Pre-IPO - The Positives - Hot Segment, Fast Growth 

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain 

In Australia, it's a rare treat to get two IPOs almost at the same time. Dalrymple Bay Infrastructure and Nuix have set their terms for IPO and will begin their bookbuild process soon.
There will also be a few trading debuts next week. Jinke Smart Services (9666 HK), Shinsun Holdings (2599 HK), and Sunac Services (1516 HK) will debut in Hong Kong on Tuesday, Wednesday, and Thursday, respectively, followed by Gland Pharma (7172753Z IN) on Friday in India. 
Last but not least, for placements, there were deals across different countries and they were mostly secondary share sale. There is Ascendas Real Estate Investment Trust (AREIT SP) private and preferential placement in Singapore to buy office properties and data centres, Japan Airlines (9201 JP) primary placement to shore up balance sheet, selldowns by shareholders in Jiumaojiu (9922 HK), Shenzhou Intl Group Holdings (2313 HK), BDO Unibank Inc (BDO PM) and VGI PCL (VGI TB).
Out of these, the one that stood out (which happened to be the only one we chose to avoid) was VGI's placement which closed higher the day after its done despite its massive deal size (relative to ADV) and deep discount (11%) to last close. The deal was said to be driven by reverse enquiries and was well covered by institutional investors.


Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction 

Ascendas REIT Placement - Multiple Acquisitions to Be Made, Starting From US Office Properties 

Shenzhou International Placement - Conditioned for Selldowns 

Jiumaojiu (九毛九) Placement - Founder and Employees Selling 

BDO Unibank Placement - Wide Discount to Account for the Large Deal Size 

VGI Global Placement - Biggest Block Ever by BTS 





Accuracy Rate:



Our overall accuracy rate is 73.4% for IPOs and 66.1% for Placements 


(Performance measurement criteria is explained at the end of the note)





New IPO filings this week  




New Horizon Health (Hong Kong, ~US$300m)
Central China Management (Hong Kong, &gt;US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.





News on Upcoming IPOs  





Australian port IPO seeks at least $477 million in test of appetite for coal assets
Nuix seeks to raise $705m in year’s biggest Australian IPO
Brookfield pushing ahead with India Reit IPO by year-end
Warburg Pincus-backed ESR plans REIT IPO of South Korean assets to raise $321m




Analysis on Upcoming IPOs






Name
Insight


Hong Kong


Antengene

Antengene (德琪医药) Pre-IPO: Proven R&amp;D Track Record by Founder Matters 


Blue Moon

Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales 



Blue Moon

Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising 



Blue Moon

Blue Moon: No. 1 But No Exclusive Advantage, Observation on the Ground 



Blue Moon

Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison 



ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)



ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 



ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)



ByteDance

ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 



ByteDance

ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 



ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 



ByteDance

ByteDance (字节跳动) Pre-IPO - Globally the Most Downloaded App for Jan 2020 Driven by India 



ByteDance

ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 



Dida

Dida Pre-IPO - Making Hay While Big Brother Retreats 



E-Star Comm

E-Star Commercial Management Pre-IPO - Better Disclosure in New Prospectus 



E-Star Comm

E-Star Commercial Management Pre-IPO - Still Largely Reliant on Galaxy, Poor Disclosure Doesn’t Help 



Jiayuan Svcs

Jiayuan Services (佳源服务) Pre-IPO - Another Small Property Management Company 



JD Health

JD Health (京东健康) Pre-IPO - Well-Positioned to Ride China’s Healthcare Digitalization 



JD Health

JD Health (京东健康) Pre-IPO - Peer Comparison - It's a Close Fight and Competition Is Intensifying 



JD Health

JD Health (京东健康) Pre-IPO - Assumptions and Valuations 



Kilcoy

Kilcoy Global Foods Pre-IPO - Rapid Earnings Growth on the Back of Margin Improvement 



Kilcoy

Kilcoy Global Foods Pre-IPO - A Lot of Things Still Remain Unexplained 



Kuaishou

Kuaishou Technology Pre-IPO - The Positives - Hot Segment, Fast Growth 



Kuaishou

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain 



Megvii

Megvii (旷视) Pre-IPO - Remarkable Growth (Part 1) 


Megvii

Megvii (旷视) Pre-IPO - A Bet on the Future - Segments, Revenue Drivers and Growth Potential 


Megvii

Megvii (旷视) Pre-IPO - The Real Race Is in Research - Founders' Profile and Talent 


Megvii

Megvii (旷视) Pre-IPO - Competitive Landscape and Peer Analysis 


Megvii

Megvii (旷视) Pre-IPO -  Initial Thoughts on Valuation 


Ocumension

Ocumension (欧康维视) Pre-IPO: All Ready for a Great Listing Except a Block Buster 


Pop Mart

Pop Mart Pre-IPO - The Negatives - Is It a Brand Owner or Just a Retailer? 


Pop Mart

Pop Mart Pre-IPO - The Positives - Expanding Portfolio+Wider Distribution= Explosive Earnings Growth 


Pop Mart

Pop Mart Pre-IPO - Peer Set and Valuation 


Pop Mart

Pop Mart Pre-IPO Quick Note - On the Ground - Pop-Up Stores Are Effective 


RemeGen

RemeGen (荣昌生物) Pre-IPO: Thoughts on Valuation of RC18 and RC48 


Toplist

Toplist China Pre-IPO - Overwhelmingly More Negatives than Positives 


Tasly

Tasly Biopharm (天士力生物) IPO: Visible Growth from Approved Drug but Lacks Blockbusters 


WeDoctor

WeDoctor (微医) Pre-IPO -App Walk Through - The Online Medical Directory and More 


WeDoctor

WeDoctor (微医) Pre-IPO - A More Focused Online Medical Svc Provider than Ping An Good Doctor 


India


ASK

ASK Investment Managers Pre-IPO - Riding on a Wave of Wealth 


Anmol Ind
Anmol Industries Pre-IPO Quick Take - No Growth, Generous Payments to Founders


Bharat Hotel

Bharat Hotels Pre-IPO - Catching up with Peers 



Burger King

Burger King India Pre-IPO - Has Been Growing Fast and Plans to Grow Even Faster 



Burger King

Burger King India Pre-IPO - Peer Comparison Yields Interesting Nuggets on Profitability and Capex 



Bajaj En

Bajaj Energy Pre-IPO - Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 



CMS Info
CMS Info Systems Pre-IPO - When a PE Sells to Another PE... Only One Gets the Timing Right


Crystal Crop
Crystal Crop Protection Pre-IPO - DRHP Raises More Questions than in Answers


ESAF SFB

ESAF Small Finance Bank Pre-IPO - Growing Fast but Remains Highly Dependant on a Related Party 


Flemingo 
Flemingo Travel Retail Pre-IPO - Its a Different Business in Every Country


Emami Cem

Emami Cement Pre-IPO - Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 


IRFC

Indian Railway Finance Pre-IPO - Low Risk, Low Margin Business 


NSE
NSE IPO Preview- Not Only Fast..its Risky and Expensive


NSE
National Stock Exchange Pre-IPO Review - Bigger, Better, Stronger but a Little Too Fast for Some


Mrs. Bector
Mrs. Bectors Food Specialities Pre-IPO Quick Take - Sales for Its Main Segment Have Been Sta



LIC


Life Insurance Corporation of India Pre-IPO - Early Take on India's Largest IPO 



Lodha

Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable


Lodha
Lodha Developers IPO: Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt


Penna Cem

Penna Cement - Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 


PNB Met
PNB Metlife Pre-IPO Quick Take - Doesn't Stack up Well Versus Its Larger Peers


Samhi Hotels

Samhi Hotels Pre-IPO - Assets and Borrowings Are Growing, but Earnings Haven’t Kept Pace 


Malaysia


QSR
QSR Brands Pre-IPO - As Healthy as Fast Food


Thailand


PTTOR

PTT Oil and Retail IPO - F&amp;B Business Is the Profit Driver 


The U.S


CDP

CDP Holdings Pre-IPO Review - Highly Reliant on Best Inc. 


CloudMinds
CloudMinds Inc Early Thoughts - Still Nascent





ECM Weekly (15 November 2020) - JD Health, Kuaishou, CR Mixc Life, Antengene, and Placements!

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

Thematic (Sector/Industry)

<p>Less than a year since the news hit that the Chinese outbreak spread to the world, <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> has announced its vaccine with more than <strong>90%</strong> effective in preventing Covid-19 among those without evidence of prior infection. Similar to <a href="https://www.smartkarma.com/insights/china-outbreak-theme-winners-and-losers" target="_blank" data-smartkarma-citation="insights:35971" rel="noopener">China Outbreak Theme: Winners and Losers</a> , this insight will discuss the potential winners and losers from the announcement of the vaccine. </p><p>Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. </p><p>Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. </p>

Less than a year since the news hit that the Chinese outbreak spread to the world, Pfizer Inc (PFE US) has announced its vaccine with more than 90% effective in preventing Covid-19 among those without evidence of prior infection. Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine. Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. 

Event-Driven

<p>On the back of JAL’s announcement of a $1.6bn capital raise that drove the stock down 11.0% today, we examine conditions for compatriot ANA. We have flagged ANA’s weaker balance sheet compared to JAL and would also point out that ANA will likely have bigger cash flow needs over time as it still needs to replace a significant portion of an aging fleet. We do not see how ANA can realistically avoid a capital injection.</p>

On the back of JAL’s announcement of a $1.6bn capital raise that drove the stock down 11.0% today, we examine conditions for compatriot ANA. We have flagged ANA’s weaker balance sheet compared to JAL and would also point out that ANA will likely have bigger cash flow needs over time as it still needs to replace a significant portion of an aging fleet. We do not see how ANA can realistically avoid a capital injection.

Japan

Japan Airlines Co. Ltd. provides air transportation services. The Company offers a variety of scheduled  flights and unscheduled flights throughout the world as well as offers air courier services. Japan Airlines also provides tickets, resort hotels, and travel agencies services.

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Japan Airlines (9201 JP)

JAL – Cheap Valuation Makes This an Easier Decision

We outline the relative attractiveness of subscribing to JAL's secondary offering, its relative valuation compared to peer ANA and longer-term...

Mio Kato

Japan Airlines Placement - Tricky Tricky, Needs to Correct

Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.

Sumeet Singh

ECM Weekly (15 November 2020) - JD Health, Kuaishou, CR Mixc Life, Antengene, and Placements!

Much has happened since Ant's IPO got pulled. VIE structure may be at risk and HK ECM practices could get a squeeze from new code of conduct for...

Zhen Zhou, Toh

Pfizer Vaccine: Winners and Losers

Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine.

Henry Soediarko

ANA – Significant Downside Remains

With competitor JAL raising capital to fund investment in more fuel-efficient aircraft we believe ANA could be forced to similarly raise capital,...

Mio Kato

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