Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 20 January, KCGI private equity fund formally started its corporate governance activist campaign on Osstem Implant (048260 KS).</li>
<li>KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely to outperform KOSPI by a wide margin in 2023.</li>
<li>KCGI has demanded Kyoo-Ok Choi (Chairman of Osstem Implant) to resign.</li>
</ul>


On 20 January, KCGI private equity fund formally started its corporate governance activist campaign on Osstem Implant (048260 KS).
KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely to outperform KOSPI by a wide margin in 2023.
KCGI has demanded Kyoo-Ok Choi (Chairman of Osstem Implant) to resign.


KCGI Formally Goes Activist on Osstem Implant

Equity Long-Short Analyst

Pyari Menon

Equity Bottom-Up

<ul>
<li>Economic slowdown, China lockdown and more competition has hit <a href="https://www.smartkarma.com/entities/align-technology-inc" target="_blank" data-smartkarma-citation="entities:2817:1" rel="noopener">Align Technology (ALGN US)</a> share performance. Quantity and quality of innovations suggests a solid moat that should help a comeback.</li>
<li>ALGN has dominant leadership in digital design and mass custom manufacture of clear aligner orthodontics. A return of demand should lead to strong upside. </li>
<li>Dentistry has seen significant new technologies we list the top fifteen innovators in the sector. Align is primarily in the narrow business of straightening teeth, but dominates the space.</li>
</ul>


Economic slowdown, China lockdown and more competition has hit Align Technology (ALGN US) share performance. Quantity and quality of innovations suggests a solid moat that should help a comeback.
ALGN has dominant leadership in digital design and mass custom manufacture of clear aligner orthodontics. A return of demand should lead to strong upside. 
Dentistry has seen significant new technologies we list the top fifteen innovators in the sector. Align is primarily in the narrow business of straightening teeth, but dominates the space.


Align Technology - Very Well Positioned when Demand Returns

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/align-technology-inc" target="_blank" data-smartkarma-citation="entities:2817:1" rel="noopener">Align Technology (ALGN US)</a> is better investment idea than its Chinese competitor <a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (6699 HK),</a> due to its larger global scale of operation, early mover advantage, and cheaper valuation.    </li>
<li>Align Technology is well-positioned for 20%+ revenue and earnings growth through 2024, driven by large and underpenetrated TAM of 19 million annual ortho starts.</li>
<li>Align Technology shares are trading at a steep discount to Angelalign Technology shares. Price erosion due to the increasing competition remains the key risks for both the companies.</li>
</ul>



Align Technology (ALGN US) is better investment idea than its Chinese competitor Angelalign Technology (6699 HK), due to its larger global scale of operation, early mover advantage, and cheaper valuation.    
Align Technology is well-positioned for 20%+ revenue and earnings growth through 2024, driven by large and underpenetrated TAM of 19 million annual ortho starts.
Align Technology shares are trading at a steep discount to Angelalign Technology shares. Price erosion due to the increasing competition remains the key risks for both the companies.


Align Technology (ALGN US) Vs. Angelalign Technology (6699 HK): Which One Is Better Investment

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

Equity Capital Markets

Angelalign Technology  / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (6699 HK)</a> , one of the leading clear alignment treatment solution providers in China has set the terms for its IPO. The company plans to issue approx. 16.8m shares (10% of the outstanding shares post-IPO) at an indicative price range of HK$147-173 per share. At the midpoint of the above price range of HK$160 per share, Angelalign will raise net proceeds of HK$2.5bn (US$324m) at a market capitalisation of HK$26.5bn and a post-money valuation of HK$22.9bn.<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 225.0pt;">Angelalign Technology IPO Details</td></tr>
<tr>
<td style="width: 162.3pt;">No. of Shares Issued</td>
<td style="width: 62.7pt;">   16,829,600</td>
</tr>
<tr>
<td style="width: 162.3pt;">IPO Price per Share (HK$)</td>
<td style="width: 62.7pt;">147-173</td>
</tr>
<tr>
<td style="width: 162.3pt;">Offer as a % of Outstanding Shares</td>
<td style="width: 62.7pt;">10.2%</td>
</tr>
<tr>
<td style="width: 162.3pt;">Total Shares Outstanding (m)</td>
<td style="width: 62.7pt;">165.81</td>
</tr>
<tr>
<td style="width: 162.3pt;">Net Proceeds (HK$m)</td>
<td style="width: 62.7pt;">          2,513.0</td>
</tr>
<tr>
<td style="width: 162.3pt;">Market Capitalisation (HK$m)</td>
<td style="width: 62.7pt;">        26,529.1</td>
</tr>
<tr>
<td style="width: 162.3pt;">Enterprise Value (HK$m)</td>
<td style="width: 62.7pt;">        22,945.5</td>
</tr>
</tbody></table>Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)The company plans to use approx. 40% of the net proceeds from the IPO on funding the construction of new manufacturing facilities and R&amp;D center and plans to utilise another 18.3% of the net IPO proceeds on further strengthening its R&amp;D capabilities.

Angelalign Technology (6699 HK) , one of the leading clear alignment treatment solution providers in China has set the terms for its IPO. The company plans to issue approx. 16.8m shares (10% of the outstanding shares post-IPO) at an indicative price range of HK$147-173 per share. At the midpoint of the above price range of HK$160 per share, Angelalign will raise net proceeds of HK$2.5bn (US$324m) at a market capitalisation of HK$26.5bn and a post-money valuation of HK$22.9bn.
Angelalign Technology IPO Details

No. of Shares Issued
   16,829,600


IPO Price per Share (HK$)
147-173


Offer as a % of Outstanding Shares
10.2%


Total Shares Outstanding (m)
165.81


Net Proceeds (HK$m)
          2,513.0


Market Capitalisation (HK$m)
        26,529.1


Enterprise Value (HK$m)
        22,945.5

Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)The company plans to use approx. 40% of the net proceeds from the IPO on funding the construction of new manufacturing facilities and R&amp;D center and plans to utilise another 18.3% of the net IPO proceeds on further strengthening its R&amp;D capabilities.

Angelalign IPO Valuation: Limited Upside from the Top End

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.

<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (AAT HK)</a> is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.In <a href="https://www.smartkarma.com/insights/angelalign-ipo-initiation-if-tooth-be-told" target="_blank" data-smartkarma-citation="insights:51881" rel="noopener">Angelalign IPO Initiation: If Tooth Be Told</a>, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.<div class="content-highlight">On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   </div>

Angelalign Technology (AAT HK) is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.In Angelalign IPO Initiation: If Tooth Be Told, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   

Switzerland

Straumann Holding AG develops, produces and sells dental implants.  The Company manufactures metal devices implantable in the jaw, in place of missing teeth, to which prosthetic teeth are attached.  Straumann has subsidiaries throughout Europe and North America.  The Company sells its products worldwide.

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Straumann Holding (STMN SW)

KCGI Formally Goes Activist on Osstem Implant

KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant's price is likely...

Douglas Kim

Align Technology - Very Well Positioned when Demand Returns

Decline in earnings has driven the sell-off, but with patience and tolerance for volatility ALGN's innovation dominance should lead to good long...

Pyari Menon

Align Technology (ALGN US) Vs. Angelalign Technology (6699 HK): Which One Is Better Investment

This insight has analyzed why Align Technology is a better investment idea than Angelalign Technology and thrown light on former’s fundamental...

Tina Banerjee

Angelalign IPO Valuation: Limited Upside from the Top End

We believe implied valuation multiples at the lower end of the IPO price range seems more attractive compared to peers while we think there is very...

Shifara Samsudeen, ACMA, CGMA

Angelalign IPO: Valuation Insights

While we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on...

Arun George

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