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

Weilong Delicious Global Holdi / Equity Capital Markets

<ul>
<li>In <a href="https://www.smartkarma.com/insights/weilong-delicious-ipo-initiation-tasty-bite" target="_blank" data-smartkarma-citation="insights:60830" rel="noopener">Weilong Delicious IPO Initiation: Tasty Bite</a>, we stated that Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation.</li>
<li>However, the 1H21 update is mixed. The top-line growth remains strong but at the cost of margins. Margin headwinds are likely to persist in the short term. </li>
<li>In a weak HKEx IPO market, we think that Weilong’s mixed fundamentals will likely struggle to gain investor enthusiasm.   </li>
</ul>


In Weilong Delicious IPO Initiation: Tasty Bite, we stated that Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation.
However, the 1H21 update is mixed. The top-line growth remains strong but at the cost of margins. Margin headwinds are likely to persist in the short term. 
In a weak HKEx IPO market, we think that Weilong’s mixed fundamentals will likely struggle to gain investor enthusiasm.   


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.

<ul>
<li>Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO.</li>
<li>According to F&amp;S, WDG ranked first among spicy snack food enterprises in China, with a market share of 5.7%, and in the seasoned flour product and spicy vegetable snacks categories.</li>
<li>In this note, we will look at the updates from its recently filed PHIP.</li>
</ul>


Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO.
According to F&amp;S, WDG ranked first among spicy snack food enterprises in China, with a market share of 5.7%, and in the seasoned flour product and spicy vegetable snacks categories.
In this note, we will look at the updates from its recently filed PHIP.


Weilong Delicious Global Pre-IPO - PHIP Updates - Mixed Bag 1H21 Performance

<p><a href="https://www.smartkarma.com/entities/weilong-delicious-global-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33378:1" rel="noopener">Weilong Delicious Global (WDG HK)</a> is a leading spicy snack food company in China. It is one of the fastest-growing and most profitable companies in the snack food industry in China, according to Frost &amp; Sullivan.  </p><p>Weilong is seeking approval for an HKEx IPO to raise up to $1 billion, according to press reports. Weilong’s shareholders include CPE, Hillhouse, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, Yunfeng Capital and Sequoia Capital China. </p><p>Generation Z and the millennials are the primary consumers in the snack food industry in China, as they account for 38.2% of China’s population but 69.2% of snack food consumption, according to Frost &amp; Sullivan. The retail sales value of China’s spicy snack food industry is forecasted to grow at a CAGR of 10.4% from 2020 to 2025 and reach RMB257.0 billion by 2025, according to Frost &amp; Sullivan. As the leading snack food brand as measured by brand awareness among those at or under the age of 25, Weilong is well-placed to tap this market opportunity. </p><div class="content-highlight"><p>Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation. Weilong is also relatively unscathed from the spate of recent regulations that have decimated other sectors, such as the technology and education sector. On balance, we think that Weilong’s fundamentals are attractive.</p></div>

Weilong Delicious Global (WDG HK) is a leading spicy snack food company in China. It is one of the fastest-growing and most profitable companies in the snack food industry in China, according to Frost &amp; Sullivan.  Weilong is seeking approval for an HKEx IPO to raise up to $1 billion, according to press reports. Weilong’s shareholders include CPE, Hillhouse, Tencent (700 HK), Yunfeng Capital and Sequoia Capital China. Generation Z and the millennials are the primary consumers in the snack food industry in China, as they account for 38.2% of China’s population but 69.2% of snack food consumption, according to Frost &amp; Sullivan. The retail sales value of China’s spicy snack food industry is forecasted to grow at a CAGR of 10.4% from 2020 to 2025 and reach RMB257.0 billion by 2025, according to Frost &amp; Sullivan. As the leading snack food brand as measured by brand awareness among those at or under the age of 25, Weilong is well-placed to tap this market opportunity. Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation. Weilong is also relatively unscathed from the spate of recent regulations that have decimated other sectors, such as the technology and education sector. On balance, we think that Weilong’s fundamentals are attractive.

Weilong Delicious IPO Initiation: Tasty Bite

Del Monte Philippines / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/del-monte-philippines-inc" target="_blank" data-smartkarma-citation="entities:26988:1" rel="noopener">Del Monte Philippines (1575316D PM)</a>/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the <em>Del Monte</em> trademark for the Philippines for processed products and also sells products under the brands of <em>S&amp;W, Contadina</em> and <em>Today’s</em>.</p>
<p>The parent company is <a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd-5951cd46-129c-41bb-8eb2-58654da08425" target="_blank" data-smartkarma-citation="entities:22651:1" rel="noopener">Del Monte Pacific (DELM PM)</a> which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.</p>
</div><div><p>Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/del-monte-philippines-ipo-initiation-tempting-fruit" target="_blank" data-smartkarma-citation="insights:54769" rel="noopener">Del Monte Philippines IPO Initiation: Tempting Fruit</a>, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. </p></div></div></div>


Del Monte Philippines (1575316D PM)/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the Del Monte trademark for the Philippines for processed products and also sells products under the brands of S&amp;W, Contadina and Today’s.
The parent company is Del Monte Pacific (DELM PM) which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.
Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. In Del Monte Philippines IPO Initiation: Tempting Fruit, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. 

Del Monte Philippines IPO: Valuation First-Look

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<p>Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. </p><p>A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. </p><p>The most widely held stock in the 'Staples sector is <a href="https://www.smartkarma.com/entities/wal-mart-de-mexico-sab-de-cv" target="_blank" data-smartkarma-citation="entities:28373:1" rel="noopener">Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY)</a>, held by 34.6% of the funds in our analysis at an average weight of 0.35%.  <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS),</a><a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> and <a href="https://www.smartkarma.com/entities/fomento-de-construcciones-y-co" target="_blank" data-smartkarma-citation="entities:21269:1" rel="noopener">Fomento De Construcciones Y Co (FCC SM)</a> make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.</p><p>The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.</p>

Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. The most widely held stock in the 'Staples sector is Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY), held by 34.6% of the funds in our analysis at an average weight of 0.35%.  LG Household &amp; Health Care (051900 KS),Kweichow Moutai (600519 CH) and Fomento De Construcciones Y Co (FCC SM) make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.

Consumer Staples:  EM Managers Positioned at All-Time Lows

China

Uni-President China's products include beverages and food. 

The Group recorded a revenue of RMB22,761.8 million in 2020, representing an increase of 3.4% as compared with that of the corresponding period last year, and profits after tax of RMB1,625.7 million, representing an increase of 19.0% as compared with that of last year. 

We recorded a double-digit growth in the food business as the increasing brand value of daily-consumed noodles “Soup Daren（湯達人）” was highly recognized by consumers and the brand philosophy of the high-end Chinese cuisine “Kai Xiao Zao （開小灶）” was continuously promoted to create and extend the consumption scenarios, thereby contributing to such multifold growth in revenue. 

The beverages business was gradually recovering despite the impacts caused by the epidemic. “Uni Assam Milk Tea（統一阿薩姆奶茶）” was favoured by consumers as
usual with a unwavering leading position in the milk tea market and positive growth in revenue. Sugar-free tea “Chai Li Won（茶裏王）” aligned with consumers’ lifestyle concept of “sugar-free” to improve its brand recognition. On its road to value marketing, the Group remained steadfast in developing brands that are loved and trusted by consumers.

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Uni President China (220 HK)

Weilong Delicious IPO: Mixed Update

Weilong is pre-marketing for an HKEx IPO to raise up to $1 billion. The PHIP discloses a mixed 1H21 update as strong top-line growth came at the...

Arun George

Weilong Delicious Global Pre-IPO - PHIP Updates - Mixed Bag 1H21 Performance

Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. In this note we talk about...

Sumeet Singh

Weilong Delicious IPO Initiation: Tasty Bite

Weilong is seeking approval for an HKEx IPO to raise up to $1 billion. Weilong offers an appealing mix of robust top-line growth, high margins and...

Arun George

Del Monte Philippines IPO: Valuation First-Look

DMPI is pre-marketing for an IPO to raise up to $0.9 billion at the maximum offer price of PHP54.80. In this note, we present our forecasts and...

Arun George

Consumer Staples: EM Managers Positioned at All-Time Lows

Consumer Staples allocations have fallen to their lowest levels in over a decade. A 5-year decline in Consumer Staples exposure was compounded by...

Steven Holden

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