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.

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 and US Equity Analyst

Roger Xie

Equity Bottom-Up

<ul>
<li>The resurgence of COVID-19 cases has again put the Chinese restaurant sector under pressure. <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> released a business update last night. The latest outbreak of COVID-19 Delta variant in China has caused more than 500 of Yum China stores in 17 provinces closed or offering only takeaway and delivery services. Same-store sales in August 2021 declined by mid-teens percentage year over year, or close to an approximately 20% decline compared to August 2019 (or mid-teen decline on year-over-year basis).  Based on current trend, the Company has experienced significant operating deleveraging, adjusted operating profit, which excludes special items, may be reduced by approximately 50% to 60% for the third quarter of 2021, compared to the same period last year. </li>
<li>Other casual dining companies have experienced similar pullback  given the wide spread of Delta variants in China and record flooding in some areas. For example, <a href="https://www.smartkarma.com/entities/jiumaojiu-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:28293:1" rel="noopener">Jiumaojiu (9922 HK)</a> Tai Er restaurants and Jiu Mao Jiu restaurants have seen around 10% and 20% decline of same-store sale respectively compared with pre-COVID 2019. <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> experienced about 30% decline of same-store sale compared with pre-COVID 2019. We believe the latest surge of COVID-19 has the bigger impact on transportation hubs and tourist locations.</li>
<li>To put the comparison in the same context, <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> recorded 40-50% same-store sale decline during the initial COVID outbreak in February 2020. Apparently, the scale of recent outbreak is not as big as the initial one. We expect that Yum China is more experienced this time to utilize delivery and take-out options as well. The company is using technology to foster brand loyalty and drive more consistent traffic. Yum China had 330 million members on its rewards app. This has facilitated the shift of sales to various digital platforms (more than 84% of sales were digital in 2020) and enabled the company to collect a vast amount of consumer data.  Through analyzing this data, the group is trying to lock in its customers through personalized menu creations based on each diner’s past order history and local tastes. We continue to believe <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> offers investors better reward/risk potential in China restaurant sector. We reiterate TP US$72 for Yum China, which is based on 30x 2021e P/E. </li>
</ul>


The resurgence of COVID-19 cases has again put the Chinese restaurant sector under pressure. Yum China Holdings, Inc (YUMC US) released a business update last night. The latest outbreak of COVID-19 Delta variant in China has caused more than 500 of Yum China stores in 17 provinces closed or offering only takeaway and delivery services. Same-store sales in August 2021 declined by mid-teens percentage year over year, or close to an approximately 20% decline compared to August 2019 (or mid-teen decline on year-over-year basis).  Based on current trend, the Company has experienced significant operating deleveraging, adjusted operating profit, which excludes special items, may be reduced by approximately 50% to 60% for the third quarter of 2021, compared to the same period last year. 
Other casual dining companies have experienced similar pullback  given the wide spread of Delta variants in China and record flooding in some areas. For example, Jiumaojiu (9922 HK) Tai Er restaurants and Jiu Mao Jiu restaurants have seen around 10% and 20% decline of same-store sale respectively compared with pre-COVID 2019. Haidilao (6862 HK) experienced about 30% decline of same-store sale compared with pre-COVID 2019. We believe the latest surge of COVID-19 has the bigger impact on transportation hubs and tourist locations.
To put the comparison in the same context, Yum China Holdings, Inc (YUMC US) recorded 40-50% same-store sale decline during the initial COVID outbreak in February 2020. Apparently, the scale of recent outbreak is not as big as the initial one. We expect that Yum China is more experienced this time to utilize delivery and take-out options as well. The company is using technology to foster brand loyalty and drive more consistent traffic. Yum China had 330 million members on its rewards app. This has facilitated the shift of sales to various digital platforms (more than 84% of sales were digital in 2020) and enabled the company to collect a vast amount of consumer data.  Through analyzing this data, the group is trying to lock in its customers through personalized menu creations based on each diner’s past order history and local tastes. We continue to believe Yum China Holdings, Inc (YUMC US) offers investors better reward/risk potential in China restaurant sector. We reiterate TP US$72 for Yum China, which is based on 30x 2021e P/E. 


Yum China (YUMC and 9987.HK): Short-Term Pressure Due to Resurge of COVID Cases in China

Equity Capital Markets

Helens International Holdings / Equity Capital Markets

<ul>
<li>The largest pub chain in China, <a href="https://www.smartkarma.com/entities/helen-s-international-holding" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holding (9869 HK)</a> is expected to price its IPO on 9th September 2021, within its indicative price range of HK$ 18.82-20.72 per share, which implies a market cap and EV range of HK$ 23.5-25.8bn and HK$ 20.8-22.9bn respectively.</li>
<li>The company will raise gross proceeds of around HK$ 2.5-2.8bn from the proposed Hong Kong IPO by selling 135m primary shares.</li>
</ul>


The largest pub chain in China, Helen's International Holding (9869 HK) is expected to price its IPO on 9th September 2021, within its indicative price range of HK$ 18.82-20.72 per share, which implies a market cap and EV range of HK$ 23.5-25.8bn and HK$ 20.8-22.9bn respectively.
The company will raise gross proceeds of around HK$ 2.5-2.8bn from the proposed Hong Kong IPO by selling 135m primary shares.


Helens International Holdings IPO Valuation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/helen-s-international-holding" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holding (9869 HK)</a> is the largest pub chain in China with around 528 pubs across a number of cities in the Eastern part of China. The company intends to raise around US$ 315-347m from the proposed Hong Kong IPO by selling 135m primary shares at an offer price range of HK$ 18.82-20.72 per share.</li>
<li>We think the IPO price range is rather expensive as it indicates a trailing EV/Sales of 21.1-23.2x. Although the growth prospects of Helens International seems excellent, the company may need to increase its revenue by around 6.0-7.0x to even remotely justify its IPO multiple.</li>
</ul>



Helen's International Holding (9869 HK) is the largest pub chain in China with around 528 pubs across a number of cities in the Eastern part of China. The company intends to raise around US$ 315-347m from the proposed Hong Kong IPO by selling 135m primary shares at an offer price range of HK$ 18.82-20.72 per share.
We think the IPO price range is rather expensive as it indicates a trailing EV/Sales of 21.1-23.2x. Although the growth prospects of Helens International seems excellent, the company may need to increase its revenue by around 6.0-7.0x to even remotely justify its IPO multiple.


Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

APAC IPOs & Placements

Zhen Zhou, Toh

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/helen-s-international-holding" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holding (9869 HK)</a> (HIH) is looking to raise up to US$358m in its Hong Kong IPO. Helens International Holdings (HIH) is the operator of a bar chain called “Helen’s”. The company was the largest bar chain in China in 2018 -  March 2021, in terms of the number of bars, according to Frost and Sullivan (F&amp;S).In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.Our previous coverage of the IPO:<ul>
<li>
<a href="https://www.smartkarma.com/insights/helens-intl-pre-ipo-largest-bar-chain-targeted-at-youths" target="_blank" data-smartkarma-citation="insights:56817" rel="noopener">Helens Intl (海伦司国际) Pre-IPO - Largest Bar Chain Targeted at Youths</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/helens-intl-pre-ipo-peer-comparison" target="_blank" data-smartkarma-citation="insights:56939" rel="noopener">Helens Intl (海伦司国际) Pre-IPO - Peer Comparison</a> </li>
</ul>

Helen's International Holding (9869 HK) (HIH) is looking to raise up to US$358m in its Hong Kong IPO. Helens International Holdings (HIH) is the operator of a bar chain called “Helen’s”. The company was the largest bar chain in China in 2018 -  March 2021, in terms of the number of bars, according to Frost and Sullivan (F&amp;S).In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.Our previous coverage of the IPO:

Helens Intl (海伦司国际) Pre-IPO - Largest Bar Chain Targeted at Youths 

Helens Intl (海伦司国际) Pre-IPO - Peer Comparison 


Helens Intl (海伦司国际) IPO - Cheap Drinks, Expensive Valuation

China

Jiumaojiu International Holdings Limited operates as a holding company. The Company, through its subsidiaries, focuses on manufactures food products. Jiumaojiu International Holdings serves customers in China.

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Jiumaojiu (9922 HK)

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

Yum China (YUMC and 9987.HK): Short-Term Pressure Due to Resurge of COVID Cases in China

We believe Yum China Holdings can successfully navigated through the recent surge of COVID cases and can generate sales through delivery and other...

Roger Xie

Helens International Holdings IPO Valuation

Helen’s IPO is valued in line with Haidilao and Jiumaojiu’s February 2021 peak multiples. However, market conditions have deteriorated...

Oshadhi Kumarasiri

Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

Helen’s needs more than an enticing growth story to get investors to back its IPO at these elevated valuation multiples. The company needs to...

Oshadhi Kumarasiri

Helens Intl (海伦司国际) IPO - Cheap Drinks, Expensive Valuation

Helen's International Holding (9869 HK) (HIH) is looking to raise up to US$358m in its Hong Kong IPO. Helens International Holdings (HIH) is the...

Zhen Zhou, Toh

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