IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Novotech Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/novotech-health-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33411:1" rel="noopener">Novotech Holdings (NVT HK)</a> is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise $0.5-1.0 billion, according to press reports.</p></div><div>
<div><p>In <a href="https://www.smartkarma.com/insights/novotech-health-ipo-initiation-on-demand-science" target="_blank" data-smartkarma-citation="insights:57198" rel="noopener">Novotech Health IPO Initiation: On-Demand Science</a>, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. </p></div>
<div><div><p>In <a href="https://www.smartkarma.com/insights/novotech-health-ipo-a-solid-start-to-2021" target="_blank" data-smartkarma-citation="insights:57255" rel="noopener">Novotech Health IPO: A Solid Start to 2021</a>, we examined the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we maintained our view that the fundamentals look attractive. </p></div></div>
</div><div><div><div class="content-highlight"><p>In this note, we present our forecasts and take the first look at Novotech's potential valuation range. </p></div></div></div>

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise $0.5-1.0 billion, according to press reports.
In Novotech Health IPO Initiation: On-Demand Science, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 
In Novotech Health IPO: A Solid Start to 2021, we examined the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we maintained our view that the fundamentals look attractive. 
In this note, we present our forecasts and take the first look at Novotech's potential valuation range. 

Novotech Health IPO: Valuation First-Look

<p><a href="https://www.smartkarma.com/entities/novotech-health-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33411:1" rel="noopener">Novotech Holdings (NVT HK)</a> is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise up to $1.5 billion, according to press reports.</p><p>In <a href="https://www.smartkarma.com/insights/novotech-health-ipo-initiation-on-demand-science" target="_blank" data-smartkarma-citation="insights:57198" rel="noopener">Novotech Health IPO Initiation: On-Demand Science</a>, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. </p><div class="content-highlight"><p>In this note, we examine the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we continue to maintain our view that the fundamentals look attractive. </p></div>

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise up to $1.5 billion, according to press reports.In Novotech Health IPO Initiation: On-Demand Science, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. In this note, we examine the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we continue to maintain our view that the fundamentals look attractive. 

Novotech Health IPO: A Solid Start to 2021

<p><a href="https://www.smartkarma.com/entities/novotech-health-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33411:1" rel="noopener">Novotech Holdings (NVT HK)</a> is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan.</p><p>The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech is set to pre-market an HKEx IPO to raise up to $1.5 billion, according to press reports.</p><p>While the Chinese regulatory reset has wreaked havoc on several sectors, investor sentiment on the China CRO industry remains relatively solid with the H-shares of <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a> and <a href="https://www.smartkarma.com/entities/pharmaron-beijing-co-ltd" target="_blank" data-smartkarma-citation="entities:28428:1" rel="noopener">Pharmaron Beijing Co Ltd-H (3759 HK)</a> up 18% and 30% YTD, respectively.</p><div class="content-highlight"><p>Unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. On balance, we think that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. </p></div>

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan.The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech is set to pre-market an HKEx IPO to raise up to $1.5 billion, according to press reports.While the Chinese regulatory reset has wreaked havoc on several sectors, investor sentiment on the China CRO industry remains relatively solid with the H-shares of WuXi AppTec Co. Ltd. (2359 HK) and Pharmaron Beijing Co Ltd-H (3759 HK) up 18% and 30% YTD, respectively.Unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. On balance, we think that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 

Novotech Health IPO Initiation: On-Demand Science

Joinn Laboratories China  Lt / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/joinn-laboratories-h" target="_blank" data-smartkarma-citation="entities:31498:1" rel="noopener">Joinn Laboratories (H) (6127 HK)</a> is a global contract research organisation (CRO). JOINN is the largest CRO in non-clinical drug safety assessment in China with a revenue market share of 15.5% in 2019, according to Frost &amp; Sullivan. JOINN's H-shares will commence trading on Friday, 26 February. JOINN priced its H-share listing at HK$151. The <a href="https://inews.hket.com/article/2886409/%E3%80%90%E6%96%B0%E8%82%A1IPO%E3%80%91%E6%98%AD%E8%A1%8D%E6%96%B0%E8%97%A56127%E6%9A%97%E7%9B%A4%E6%BD%9B%E6%B0%B4%E3%80%80%E8%BC%83%E6%8B%9B%E8%82%A1%E5%83%B9%E4%BD%8E%E7%B4%843-?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">last traded grey market price</a> across three brokerages vary from a high of HK$146.70 to a low of HK$142.00 per H-share, according to press reports.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/joinn-laboratories-ipo-initiation-on-demand-science" target="_blank" data-smartkarma-citation="insights:47482" rel="noopener">JOINN Laboratories IPO Initiation: On-Demand Science</a>, we stated that JOINN potentially gives investors another avenue to gain exposure to the China CRO industry. On balance, we concluded that JOINN’s fundamentals are attractive as the positives outweigh the negatives. In <a href="https://www.smartkarma.com/insights/joinn-laboratories-ipo-phip-points-to-progress" target="_blank" data-smartkarma-citation="insights:47985" rel="noopener">JOINN Laboratories IPO: PHIP Points to Progress</a>, we noted that the 9M20 results reinforce our belief that JOINN is worth a closer look at and has attractive fundamentals. In <a href="https://www.smartkarma.com/insights/joinn-laboratories-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:48236" rel="noopener">JOINN Laboratories IPO: Valuation Insights</a>, we noted that the combination of a reasonable AH discount and relative valuation suggests the proposed H-share price range is attractive.</p></div><div>
<div class="content-highlight"><p>Since the bookbuilding was launched, JOINN's CRO peers have materially derated. Over this period, JOINN A-shares have declined 12% from RMB161.35 (prior to launch) to close at RMB141.19 per A-share. Largely due to this derating, we think that JOINN is fairly priced at the H-share listing price of HK$151. On the other hand, the low grey market price of HK$142 per H-share is attractive from both an AH discount and a CY2021 P/E basis.</p></div>
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Joinn Laboratories (H) (6127 HK) is a global contract research organisation (CRO). JOINN is the largest CRO in non-clinical drug safety assessment in China with a revenue market share of 15.5% in 2019, according to Frost &amp; Sullivan. JOINN's H-shares will commence trading on Friday, 26 February. JOINN priced its H-share listing at HK$151. The last traded grey market price across three brokerages vary from a high of HK$146.70 to a low of HK$142.00 per H-share, according to press reports.In JOINN Laboratories IPO Initiation: On-Demand Science, we stated that JOINN potentially gives investors another avenue to gain exposure to the China CRO industry. On balance, we concluded that JOINN’s fundamentals are attractive as the positives outweigh the negatives. In JOINN Laboratories IPO: PHIP Points to Progress, we noted that the 9M20 results reinforce our belief that JOINN is worth a closer look at and has attractive fundamentals. In JOINN Laboratories IPO: Valuation Insights, we noted that the combination of a reasonable AH discount and relative valuation suggests the proposed H-share price range is attractive.
Since the bookbuilding was launched, JOINN's CRO peers have materially derated. Over this period, JOINN A-shares have declined 12% from RMB161.35 (prior to launch) to close at RMB141.19 per A-share. Largely due to this derating, we think that JOINN is fairly priced at the H-share listing price of HK$151. On the other hand, the low grey market price of HK$142 per H-share is attractive from both an AH discount and a CY2021 P/E basis.



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.

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<p>Joinn Lab, a China-based niche market leader in the drug safety segment, launched the book building to raise up to USD 843m to list in Hong Kong.  Joinn Lab raised HKD 6,287 million (USD 811m) from its global offering and will list on the Hong Kong Stock Exchange on Friday, Feb 26th.</p>
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<p>In our previous note, we discussed that Joinn Lab's business segment. We note that it has a strong presence in the drug safety segment, particularly the IND application for biologic candidates thanks to its long history in the market and high standard of lab facilities and operation. We think the company has strong growth ahead, driven by the Wuzhou breeding facility, Suzhou lab and California lab in the next two years, followed by expansion in Chongqing and Guangzhou in the longer term. We were of the view that investors would like to pay a premium for the company's strong leadership in the niche market and high growth ahead, but the premium will be offset by its smaller size of operation compared to other CRO players.</p>
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<p>In this note, we look at the updates since our last note. We think the deal attracted strong demand but its upside is capped by its A-share prices. </p>
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<h2>Our previous coverage on Joinn Lab</h2>
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<p><a href="https://www.smartkarma.com/insights/joinn-lab-a-h-leader-in-the-niche-drug-safety-cro-segment" target="_blank" rel="noopener">Joinn Lab (昭衍新药) A+H: Leader in niche drug safety CRO segment</a></p>
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<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/joinn-lab-a-h-visible-upside" target="_blank" rel="noopener">Joinn Lab (昭衍新药) A+H: Visible Upside</a></li>
</ul>
</div>


Joinn Lab, a China-based niche market leader in the drug safety segment, launched the book building to raise up to USD 843m to list in Hong Kong.  Joinn Lab raised HKD 6,287 million (USD 811m) from its global offering and will list on the Hong Kong Stock Exchange on Friday, Feb 26th.


In our previous note, we discussed that Joinn Lab's business segment. We note that it has a strong presence in the drug safety segment, particularly the IND application for biologic candidates thanks to its long history in the market and high standard of lab facilities and operation. We think the company has strong growth ahead, driven by the Wuzhou breeding facility, Suzhou lab and California lab in the next two years, followed by expansion in Chongqing and Guangzhou in the longer term. We were of the view that investors would like to pay a premium for the company's strong leadership in the niche market and high growth ahead, but the premium will be offset by its smaller size of operation compared to other CRO players.


In this note, we look at the updates since our last note. We think the deal attracted strong demand but its upside is capped by its A-share prices. 


Our previous coverage on Joinn Lab




Joinn Lab (昭衍新药) A+H: Leader in niche drug safety CRO segment

Joinn Lab (昭衍新药) A+H: Visible Upside



Joinn Lab (昭衍新药) A+H Trading: Fall in A-Share Limits the Upside

China

Joinn Laboratories (China) Co., Ltd. operates as a medicines development company. The Company offers drug development, pharmaceutical analysis, pharmacologic testing, and other related services. Joinn Laboratories (China) also provides pesticide and medical device safety evaluation services.

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Joinn Laboratories China Lt (603127 CH)

Novotech Health IPO: Valuation First-Look

Novotech is pre-marketing an HKEx IPO to raise $0.5-1.0 billion. In this note, we present our forecasts and take the first look at Novotech's...

Arun George

Novotech Health IPO: A Solid Start to 2021

We examine the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we continue to maintain...

Arun George

Novotech Health IPO Initiation: On-Demand Science

Novotech is set to pre-market an HKEx IPO to raise up to $1.5 bn. Novotech’s fundamentals are solid and the IPO is worth a look for investors...

Arun George

JOINN Laboratories IPO: Trading Debut

The grey market price varies from HK$146.70-HK$142.00 per H-share vs listing price of HK$151. JOINN is fairly priced at the H-share listing price...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Novotech Health IPO: Valuation First-Look

Novotech is pre-marketing an HKEx IPO to raise $0.5-1.0 billion. In this note, we present our forecasts and take the first look at Novotech's...

Arun George

Novotech Health IPO: A Solid Start to 2021

We examine the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we continue to maintain...

Arun George

Novotech Health IPO Initiation: On-Demand Science

Novotech is set to pre-market an HKEx IPO to raise up to $1.5 bn. Novotech’s fundamentals are solid and the IPO is worth a look for investors...

Arun George

JOINN Laboratories IPO: Trading Debut

The grey market price varies from HK$146.70-HK$142.00 per H-share vs listing price of HK$151. JOINN is fairly priced at the H-share listing price...

Arun George

Joinn Lab (昭衍新药) A+H Trading: Fall in A-Share Limits the Upside

In this note, we look at updates since our last note. We think the deal attracted strong demands but its upside is capped by its A-share prices.

Ke Yan, CFA, FRM