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

<div><p><a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (NYK HK)</a> is the second-largest premium teahouse chain in China accounting for 18.9% of China’s premium modern teahouse market as measured by total retail consumption value in 2020, according to CIC. It is pre-marketing an HKEx IPO to raise up to $500 million, according to press reports.</p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/nayuki-holdings-ipo-initiation-a-new-leaf" target="_blank" data-smartkarma-citation="insights:48532" rel="noopener">Nayuki Holdings IPO Initiation: A New Leaf</a>, we noted that premium teahouses have rapidly gained popularity in China as they bring new tea-drinking experiences and benefit from the structural trend of consumer’s consumption upgrades driven by higher disposable income. We opined that Nayuki has the right ingredients to offer investors an attractive play on this market.</p>
<div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/nayuki-holdings-ipo-drinking-habits" target="_blank" data-smartkarma-citation="insights:52873" rel="noopener">Nayuki Holdings IPO: Drinking Habits</a>, we noted that recent results (disclosed in the PHIP) show that Nayuki is well-positioned as a post-COVID-19 recovery play. In this note, we take the first look at Nayuki's potential valuation. </p></div>
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Nayuki Holdings (NYK HK) is the second-largest premium teahouse chain in China accounting for 18.9% of China’s premium modern teahouse market as measured by total retail consumption value in 2020, according to CIC. It is pre-marketing an HKEx IPO to raise up to $500 million, according to press reports.
In Nayuki Holdings IPO Initiation: A New Leaf, we noted that premium teahouses have rapidly gained popularity in China as they bring new tea-drinking experiences and benefit from the structural trend of consumer’s consumption upgrades driven by higher disposable income. We opined that Nayuki has the right ingredients to offer investors an attractive play on this market.
In Nayuki Holdings IPO: Drinking Habits, we noted that recent results (disclosed in the PHIP) show that Nayuki is well-positioned as a post-COVID-19 recovery play. In this note, we take the first look at Nayuki's potential valuation. 


Nayuki Holdings IPO: Valuation First-Look

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.

<div><p><a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (NYK HK)</a> is looking to raise US$500m in its upcoming Hong Kong IPO. </p></div><div><p>Nayuki is the operator of Nayuki teahouses, a premium modern teahouse chain in China. The company had a network of 491 Nayuki teahouses across 61 cities in China as of December 2020. As per CIC, Nayuki is the most extensive premium modern teahouse network in China in terms of the number of cities covered.</p></div><div><p>We had previously covered the IPO in:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-fast-growing-cash-flow-positive-teahouse-chain" target="_blank" data-smartkarma-citation="insights:49798" rel="noopener">Nayuki (奈雪) Pre-IPO - Fast-Growing, Cash Flow Positive Teahouse Chain</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-phip-updates-4q20-results-shows-improvement" target="_blank" data-smartkarma-citation="insights:52793" rel="noopener">Nayuki (奈雪) Pre-IPO - PHIP Updates - 4Q20 Results Shows Improvement</a> </li>
</ul></div>

Nayuki Holdings (NYK HK) is looking to raise US$500m in its upcoming Hong Kong IPO. Nayuki is the operator of Nayuki teahouses, a premium modern teahouse chain in China. The company had a network of 491 Nayuki teahouses across 61 cities in China as of December 2020. As per CIC, Nayuki is the most extensive premium modern teahouse network in China in terms of the number of cities covered.We had previously covered the IPO in:

Nayuki (奈雪) Pre-IPO - Fast-Growing, Cash Flow Positive Teahouse Chain 

Nayuki (奈雪) Pre-IPO - PHIP Updates - 4Q20 Results Shows Improvement 


Nayuki (奈雪) Pre-IPO - Industry Landscape and Peer Comparison

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*No Stranger To Losses:</em></strong> As initially discussed in our “Credit Suisse Group – Hit Parade Continues” note dated March 30, 2021, we expressed our concerns related to various high profile screw-ups at Credit Suisse Group (CSGN.VX) [Credit Suisse]. Credit Suisse’ high profile challenges still include: Archegos Capital Management; Greensill Capital; Wirecard, and Luckin Coffee; and   </p><p><strong><em>*Adding Insult To Injury: </em></strong>According to Bloomberg, construction start-up, Katerra, has burned through over USD 2.0 bn and is now being shut down.  Credit Suisse initially indicated losses of between USD 1.0-USD 1.5 bn on its Greensill-related exposures.  Well, this figure appears to increase those losses closer to USD 2.0 bn.  </p>

*No Stranger To Losses: As initially discussed in our “Credit Suisse Group – Hit Parade Continues” note dated March 30, 2021, we expressed our concerns related to various high profile screw-ups at Credit Suisse Group (CSGN.VX) [Credit Suisse]. Credit Suisse’ high profile challenges still include: Archegos Capital Management; Greensill Capital; Wirecard, and Luckin Coffee; and   *Adding Insult To Injury: According to Bloomberg, construction start-up, Katerra, has burned through over USD 2.0 bn and is now being shut down.  Credit Suisse initially indicated losses of between USD 1.0-USD 1.5 bn on its Greensill-related exposures.  Well, this figure appears to increase those losses closer to USD 2.0 bn.  

<p><strong>*Archegos Charges Higher, 1Q21 Results Reduce Capital Raise Risk: </strong>The immediate financial impact from Archegos is larger than expected (USD 4.7 bn). The combination of stellar 1Q21 results plus the decision to manage 1H21 capital charges has allowed Credit Suisse Group (CSGN.VX) [Credit Suisse] to preserve its a 2020 dividend. Fortunately, the big profit beat has cushioned the blow from poor risk management allowing CET1 to remain above 12%. The fear of an equity capital raise seems to have abated for the moment; and<strong> </strong></p><p><strong><em>*Outclassed By US Counterparts: </em></strong>Goldman Sachs &amp; Co. (GS.US) [Goldman], in typically fashion, always to seems to have the best information at the earliest possible instance, and as a result were able to act early and decisively – coming through the Archegos liquidations thus far relatively unscathed.  Other prime brokers, including Credit Suisse which didn’t have close to the full Archegos picture, were caught with their pants down in what was supposed to be an orderly unwind descended into chaos.</p>

*Archegos Charges Higher, 1Q21 Results Reduce Capital Raise Risk: The immediate financial impact from Archegos is larger than expected (USD 4.7 bn). The combination of stellar 1Q21 results plus the decision to manage 1H21 capital charges has allowed Credit Suisse Group (CSGN.VX) [Credit Suisse] to preserve its a 2020 dividend. Fortunately, the big profit beat has cushioned the blow from poor risk management allowing CET1 to remain above 12%. The fear of an equity capital raise seems to have abated for the moment; and *Outclassed By US Counterparts: Goldman Sachs &amp; Co. (GS.US) [Goldman], in typically fashion, always to seems to have the best information at the earliest possible instance, and as a result were able to act early and decisively – coming through the Archegos liquidations thus far relatively unscathed.  Other prime brokers, including Credit Suisse which didn’t have close to the full Archegos picture, were caught with their pants down in what was supposed to be an orderly unwind descended into chaos.

<p><strong><em>*Taking It On The Chin…Again:</em></strong>Having finally seen enough of this feckless global investment bank, S&amp;P Global Ratings has finally come around (took you long enough) and downgraded its outlook on all Credit Suisse entities to negative from stable. Putting S&amp;P over the edge was Credit Suisse’ exposure to Archegos Capital Management (Archegos) share liquidation as a result of margin calls whereby the bank is amongst the most exposed;  and</p><p><strong><em>*Ratings Agency Concerns: </em></strong>While Credit Suisse seems to be in competition with Deutsche Bank (DBK.GY) as the world’s most poorly managed bank, we find it incredulous that its actually S&amp;P calling out Credit Suisse for risk management.<strong><em> </em></strong>There are too many market participants have very little discipline, and to make matters worse, central banks have been all too happy to remove the moral hazard involved with excessive risk taking. In our view, the credit ratings agency model is permanently broken as waterfall risks in various corporates, rated pools and tranches have become increasingly significant with the markets unable to self-regulate and regulators either unable to regulate (or told not to regulate). </p>

*Taking It On The Chin…Again:Having finally seen enough of this feckless global investment bank, S&amp;P Global Ratings has finally come around (took you long enough) and downgraded its outlook on all Credit Suisse entities to negative from stable. Putting S&amp;P over the edge was Credit Suisse’ exposure to Archegos Capital Management (Archegos) share liquidation as a result of margin calls whereby the bank is amongst the most exposed;  and*Ratings Agency Concerns: While Credit Suisse seems to be in competition with Deutsche Bank (DBK.GY) as the world’s most poorly managed bank, we find it incredulous that its actually S&amp;P calling out Credit Suisse for risk management. There are too many market participants have very little discipline, and to make matters worse, central banks have been all too happy to remove the moral hazard involved with excessive risk taking. In our view, the credit ratings agency model is permanently broken as waterfall risks in various corporates, rated pools and tranches have become increasingly significant with the markets unable to self-regulate and regulators either unable to regulate (or told not to regulate). 

Credit Suisse Group – Hit Parade Continues

China

Luckin Coffee Inc. provides non-alcoholic beverages. The Company offers various types of coffee. Luckin Coffee serves customers in China.

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Luckin Coffee (LKNCY US)

Nayuki Holdings IPO: Valuation First-Look

Nayuki is pre-marketing an HKEx IPO to raise up to $500 million, according to press reports. In this note, we take the first look at Nayuki's...

Arun George

Nayuki (奈雪) Pre-IPO - Industry Landscape and Peer Comparison

Nayuki is the operator of Nayuki teahouses, a premium modern teahouse chain in China. We look at peers and industry in this note.

Zhen Zhou, Toh

Credit Suisse Group – Here We Go Again

CREDIT SUISSE GROUP: There were already concerns related to various high profile screw-ups. The latest appears to be Greensill-related construction...

Thomas J. Monaco

Credit Suisse Group – Painful To Watch

CREDIT SUISSE GROUP: The immediate impact from Archegos is larger than expected. However, the stellar 1Q21 results plus managing 1H21 capital...

Thomas J. Monaco

Credit Suisse Group – Hit Parade Continues

CREDIT SUISSE GROUP: S&P Global Ratings has finally downgraded its outlook on all Credit Suisse entities to negative resultant over its exposure to...

Thomas J. Monaco

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