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

Horizon Construction Development / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/horizon-construction-development" target="_blank" data-smartkarma-citation="entities:35117:1" rel="noopener">Horizon Construction Development (1887128D HK)</a>/HCD, a subsidiary of <a href="https://www.smartkarma.com/entities/far-east-horizon-ltd" target="_blank" data-smartkarma-citation="entities:420:1" rel="noopener">Far East Horizon (3360 HK)</a>, has launched its HKEx listing at HK$4.52-4.80 per share to raise up to US$223 million.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/horizon-construction-development-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:100813" rel="noopener">Horizon Construction Development IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/horizon-construction-development-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:100922" rel="noopener">Horizon Construction Development IPO: The Bear Case</a>. </li>
<li>Our valuation analysis suggests that HCD is fully priced at the IPO price range. Therefore, we are inclined to pass on the IPO. </li>
</ul>



Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), has launched its HKEx listing at HK$4.52-4.80 per share to raise up to US$223 million.
We previously discussed the IPO in Horizon Construction Development IPO: The Bull Case and Horizon Construction Development IPO: The Bear Case. 
Our valuation analysis suggests that HCD is fully priced at the IPO price range. Therefore, we are inclined to pass on the IPO. 


Horizon Construction Development IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/horizon-construction-development" target="_blank" data-smartkarma-citation="entities:35117:1" rel="noopener">Horizon Construction Development (1887128D HK)</a>/HCD, a subsidiary of <a href="https://www.smartkarma.com/entities/far-east-horizon-ltd" target="_blank" data-smartkarma-citation="entities:420:1" rel="noopener">Far East Horizon (3360 HK)</a>, is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.</li>
<li>In <a href="https://www.smartkarma.com/insights/horizon-construction-development-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:100813" rel="noopener">Horizon Construction Development IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The key elements of the bear case rest on core business margin decline, unexplained headcount reduction, cash burn, long receivable days and stretched balance sheet.</li>
</ul>



Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.
In Horizon Construction Development IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on core business margin decline, unexplained headcount reduction, cash burn, long receivable days and stretched balance sheet.


Horizon Construction Development IPO: The Bear Case

<ul>
<li>
<a href="https://www.smartkarma.com/entities/horizon-construction-development" target="_blank" data-smartkarma-citation="entities:35117:1" rel="noopener">Horizon Construction Development (1887128D HK)</a>/HCD, a subsidiary of <a href="https://www.smartkarma.com/entities/far-east-horizon-ltd" target="_blank" data-smartkarma-citation="entities:420:1" rel="noopener">Far East Horizon (3360 HK)</a>, is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.</li>
<li>HCD is the largest equipment operation service provider in China in terms of revenue in 2021, according to Frost &amp; Sullivan.</li>
<li>The key elements of the bull case rest on market share gains, an anticipated post-COVID recovery boost, high revenue visibility, stable operating margin and young equipment life.</li>
</ul>



Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.
HCD is the largest equipment operation service provider in China in terms of revenue in 2021, according to Frost &amp; Sullivan.
The key elements of the bull case rest on market share gains, an anticipated post-COVID recovery boost, high revenue visibility, stable operating margin and young equipment life.


Horizon Construction Development IPO: The Bull Case

Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>The leader in rental equipment industry offers attractive returns, in spite of short-term risk of recession.</li>
<li>United Rentals' well thought out growth strategy has created an important competitive advantage.</li>
<li>High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the company.</li>
</ul>


The leader in rental equipment industry offers attractive returns, in spite of short-term risk of recession.
United Rentals' well thought out growth strategy has created an important competitive advantage.
High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the company.


United Rentals: This Capital Intensive Business Deserves Attention

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Credit

<ul><li>United Rentals is one of the largest equipment rental companies in the world, known for renting out construction, aerial and industrial equipment, general tools and light equipment.</li><li>The company is operating in a favorable operational climate and its fleet productivity has been increasing as per recent results, resulting in a higher rental revenue.</li><li>The demand for its equipment rental services is relatively high, even though some parts of the economy are slowing down.</li></ul>

United Rentals is one of the largest equipment rental companies in the world, known for renting out construction, aerial and industrial equipment, general tools and light equipment.The company is operating in a favorable operational climate and its fleet productivity has been increasing as per recent results, resulting in a higher rental revenue.The demand for its equipment rental services is relatively high, even though some parts of the economy are slowing down.

United Rentals Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

United States

United Rentals, Inc., through its subsidiary, is an equipment rental company operating a network of locations in the United States and Canada.  The Company serves the construction industry, industrial and commercial concerns, homeowners, and other individuals.

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United Rentals (URI US)

Horizon Construction Development IPO: Valuation Insights

Our valuation analysis suggests that HCD is fully priced at the IPO price range. Therefore, we are inclined to pass on the IPO.

Arun George

Horizon Construction Development IPO: The Bear Case

The key elements of the bear case rest on core business margin decline, unexplained headcount reduction, cash burn, long receivable days and...

Arun George

Horizon Construction Development IPO: The Bull Case

The key elements of the bull case rest on market share gains, an anticipated post-COVID recovery boost, high revenue visibility, stable operating...

Arun George

United Rentals: This Capital Intensive Business Deserves Attention

High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the...

Vladimir Dimitrov, CFA

United Rentals Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

United Rentals is one of the largest equipment rental companies in the world, known for renting out construction, aerial and industrial equipment,...

Baptista Research

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