IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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

<a href="https://www.smartkarma.com/entities/home-credit-bv" target="_blank" data-smartkarma-citation="entities:28198:1" rel="noopener">Home Credit (HC HK)</a> is a leading emerging market consumer finance provider. Home Credit has started a two-week pre-marketing roadshow for a Hong Kong IPO to raise around $1.5 billion, according to press reports.<div class="content-highlight">In this note, we outline our initial thoughts on valuation. While we believe that Home Credit is a top-tier business, it will struggle to justify an "up round" valuation amidst the current negative sentiment surrounding the Chinese consumer finance sector.</div>For reference, our previous notes on Home Credit Initiation note: <a href="https://www.smartkarma.com/insights/home-credit-ipo-initiation-credit-where-credit-s-due" target="_blank" data-smartkarma-citation="insights:31156" rel="noopener">Home Credit IPO Initiation: Credit Where Credit’s Due</a>   Segmental analysis: <a href="https://www.smartkarma.com/insights/home-credit-ipo-whole-is-greater-than-the-sum-of-the-parts" target="_blank" data-smartkarma-citation="insights:31178" rel="noopener">Home Credit IPO: Whole Is Greater than the Sum of the Parts</a>  Benchmarking study: <a href="https://www.smartkarma.com/insights/home-credit-ipo-benchmarking-study" target="_blank" data-smartkarma-citation="insights:32146" rel="noopener">Home Credit IPO: Benchmarking Study</a>  PHIP update: <a href="https://www.smartkarma.com/insights/home-credit-ipo-2q-a-quality-vs-quantity-quarter" target="_blank" data-smartkarma-citation="insights:32162" rel="noopener">Home Credit IPO: 2Q a Quality Vs Quantity Quarter</a>

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit has started a two-week pre-marketing roadshow for a Hong Kong IPO to raise around $1.5 billion, according to press reports.In this note, we outline our initial thoughts on valuation. While we believe that Home Credit is a top-tier business, it will struggle to justify an "up round" valuation amidst the current negative sentiment surrounding the Chinese consumer finance sector.For reference, our previous notes on Home Credit Initiation note: Home Credit IPO Initiation: Credit Where Credit’s Due   Segmental analysis: Home Credit IPO: Whole Is Greater than the Sum of the Parts  Benchmarking study: Home Credit IPO: Benchmarking Study  PHIP update: Home Credit IPO: 2Q a Quality Vs Quantity Quarter 

<a href="https://www.smartkarma.com/entities/home-credit-bv" target="_blank" data-smartkarma-citation="entities:28198:1" rel="noopener">Home Credit (HC HK)</a> is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise around $1.5 billion, according to press reports.<div class="content-highlight">Home Credit released its PHIP which discloses its 2Q19 results. While the 2Q19 results offer positives and negatives, on balance we believe that the overarching theme of 2Q19 is that the focus on quality vs quantity of new loans results in improved financial performance.</div>For reference, our previous notes on Home Credit Initiation note: <a href="https://www.smartkarma.com/insights/home-credit-ipo-initiation-credit-where-credit-s-due" target="_blank" data-smartkarma-citation="insights:31156" rel="noopener">Home Credit IPO Initiation: Credit Where Credit’s Due</a>  Segmental analysis: <a href="https://www.smartkarma.com/insights/home-credit-ipo-whole-is-greater-than-the-sum-of-the-parts" target="_blank" data-smartkarma-citation="insights:31178" rel="noopener">Home Credit IPO: Whole Is Greater than the Sum of the Parts</a>  Benchmarking study: <a href="https://www.smartkarma.com/insights/home-credit-ipo-benchmarking-study" target="_blank" data-smartkarma-citation="insights:32146" rel="noopener">Home Credit IPO: Benchmarking Study</a>

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise around $1.5 billion, according to press reports.Home Credit released its PHIP which discloses its 2Q19 results. While the 2Q19 results offer positives and negatives, on balance we believe that the overarching theme of 2Q19 is that the focus on quality vs quantity of new loans results in improved financial performance.For reference, our previous notes on Home Credit Initiation note: Home Credit IPO Initiation: Credit Where Credit’s Due   Segmental analysis: Home Credit IPO: Whole Is Greater than the Sum of the Parts  Benchmarking study: Home Credit IPO: Benchmarking Study 

Home Credit IPO: 2Q a Quality Vs Quantity Quarter

<a href="https://www.smartkarma.com/entities/home-credit-bv" target="_blank" data-smartkarma-citation="entities:28198:1" rel="noopener">Home Credit (HC HK)</a> is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise around $1.5 billion, according to press reports.<div class="content-highlight">China is Home Credit’s largest market as measured by new loans volume, outstanding loan balance and operating income in 2018. Consequently, with investors having a plethora of options to gain exposure to the Chinese online consumer finance market, we believe it is important to benchmark its performance vs listed peers. Overall, our benchmarking study shows that Home Credit (China) is a top-tier business.</div>For reference, our previous notes on Home Credit Initiation note: <a href="https://www.smartkarma.com/insights/home-credit-ipo-initiation-credit-where-credit-s-due" target="_blank" data-smartkarma-citation="insights:31156" rel="noopener">Home Credit IPO Initiation: Credit Where Credit’s Due</a>  Segmental analysis: <a href="https://www.smartkarma.com/insights/home-credit-ipo-whole-is-greater-than-the-sum-of-the-parts" target="_blank" data-smartkarma-citation="insights:31178" rel="noopener">Home Credit IPO: Whole Is Greater than the Sum of the Parts</a>

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise around $1.5 billion, according to press reports.China is Home Credit’s largest market as measured by new loans volume, outstanding loan balance and operating income in 2018. Consequently, with investors having a plethora of options to gain exposure to the Chinese online consumer finance market, we believe it is important to benchmark its performance vs listed peers. Overall, our benchmarking study shows that Home Credit (China) is a top-tier business.For reference, our previous notes on Home Credit Initiation note: Home Credit IPO Initiation: Credit Where Credit’s Due  Segmental analysis: Home Credit IPO: Whole Is Greater than the Sum of the Parts 

<a href="https://www.smartkarma.com/entities/9f-inc" target="_blank" data-smartkarma-citation="entities:28238:1" rel="noopener">9F Inc (JFG US)</a>, a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018. It announced its IPO price range of $7.50-9.50 per ADS. At the mid-point of the IPO price range, 9F will raise net IPO proceeds of $47.1 million, resulting in a fully diluted market cap of $2 billion.<div class="content-highlight">In <a href="https://www.smartkarma.com/insights/9f-ipo-initiation-what-s-the-point" target="_blank" rel="noopener">our IPO initiation note</a>, we highlighted that investors have a plethora of options to gain exposure to the Chinese online consumer finance sector and it is unclear if 9F brings something unique to the table. Our analysis suggests that the proposed IPO price range is unattractive and we would give the IPO a pass.</div>

9F Inc (JFG US), a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018. It announced its IPO price range of $7.50-9.50 per ADS. At the mid-point of the IPO price range, 9F will raise net IPO proceeds of $47.1 million, resulting in a fully diluted market cap of $2 billion.In our IPO initiation note, we highlighted that investors have a plethora of options to gain exposure to the Chinese online consumer finance sector and it is unclear if 9F brings something unique to the table. Our analysis suggests that the proposed IPO price range is unattractive and we would give the IPO a pass.

<a href="https://www.smartkarma.com/entities/9f-inc" target="_blank" data-smartkarma-citation="entities:28238:1" rel="noopener">9F Inc (JFG US)</a>, a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018. 9F has filed for a US IPO to raise up to $150 million.<div class="content-highlight">Understandably, investors continue to be weary on investing in the Chinese online consumer finance sector despite inexpensive multiples. Setting aside the current industry uncertainty, we believe that 9F’s fundamentals are at best, a mixed bag. Consequently, with investors having a plethora of options to gain exposure to the Chinese online consumer finance sector, it is unclear if 9F brings something unique to the table.</div>

9F Inc (JFG US), a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018. 9F has filed for a US IPO to raise up to $150 million.Understandably, investors continue to be weary on investing in the Chinese online consumer finance sector despite inexpensive multiples. Setting aside the current industry uncertainty, we believe that 9F’s fundamentals are at best, a mixed bag. Consequently, with investors having a plethora of options to gain exposure to the Chinese online consumer finance sector, it is unclear if 9F brings something unique to the table.

Hong Kong

Oi Wah Pawnshop Credit Holdings Limited provides financing services. The Company provides short-term secured financing, including pawn loans and mortgage loans.

Oi Wah Pawnshop Credit Holdings (1319 HK)

Shougang Concord Grand Group Limited, through its subsidiaries, invests in and manages real estate properties.

51 Credit Card Inc. provides credit cards services. The Company offers credit card issuing, payment processing, and personal loans services. 51 Credit Card serves customers worldwide.

China Art Financial Holdings Limited is an art finance provider. The Company offers art assets pawn and auction services. China Art Financial serves customers throughout China.

Capital Finance Holdings Limited operates as an investment holding company. The Company engages in financing services such as pawn and entrusted loan, micro-financing, and financial consultancy businesses. Capital Finance Holdings serves customers in China and Hong Kong.

Aeon Credit Service (Asia) Company Limited provides a range of consumer credit finance services which include the issuance of credit cards, vehicle financing, hire purchase financing, and personal loan financing.

Allied Group Limited provides investment, finance and corporate management, and consultancy services.  The Company also trades securities, invests in and develops real estate properties and provides building management and maintenance services.

Sun Hung Kai & Company Limited is an investment holding company. The Company, through its subsidiaries, focuses on providing tailor-made financing solutions to corporations, small businesses, and individuals.

G-Resources Group Limited provides financial services. The Company focuses on principal investment, financial services, money lending, and real property business. G-Resources Group serves customers in Hong Kong.

Min Xin Holdings Limited, through its subsidiaries, provides financial services and invests in securities.  The Company also develops and invests in properties as well as invests in toll road and industrial instrument manufacturing.

Solvar Limited provides consumer lending services. The Company specializes in automotive finance for new and used vehicles and personal loans for a variety of needs. Solvar serves customers in Australia and New Zealand.

PT Clipan Finance Indonesia Tbk provides leasing and consumer financing services.

Han Kook Capital Co., Ltd. provides leasing services including lease financing, factoring, and rentals.  The Company also offers credit loans, collateral loans, and notes discount services.

Maxi-Cash Financial Services Corp Ltd. offers financial services. The Company offers its services in the form of pawnbroking and the retail and trading of pre-owned jewellery and watches through pawnshops and retail outlets in locations throughout Singapore.

Maxi Cash Financial Services Corp (MCFS SP)

China Huirong Financial Holdings Limited is a short-term secured financing service provider. The Company specializes in providing short-term loans secured by collateral, or "pawn loans", to customers.

China Huirong Financial Holdings (1290 HK)

Elk-Desa Resources Bhd is an investment holding company.  The Company provides purchase financing for used motor vehicles in Malaysia.

Ferratum Oyj provides loan services and repayment plans to its customers. The Company operates a mobile application to provide loan services across Europe.

Provident Financial plc is a financial services group specialising in the provision of personal credit products for consumers in the United Kingdom non standard lending market. The Company's Consumer Credit division provides small, unsecured loans, which they collect in weekly installments. The Company's Credit Cards business is operated through Vanquis Bank.

BDO Leasing and Finance, Inc. provides leasing and financing products and services to individual and corporate customers in the Philippines. The company operates through three segments: Leasing, Financing, and Others. It offers various leasing products, which comprise direct leases, sale-leaseback arrangements, and real estate leases, as well as operating and finance leases. The company�s financing products include amortized commercial and retail loans, installment paper purchases, floor stock financing, and factoring of receivables, as well as amortized consumer loans, and receivables discounting products. Its loans are used to finance the purchase of automobiles, trucks, office equipment, industrial, agricultural and office machinery, and real property, as well as operating assets comprising receivables and inventories. The company also rents and leases equipment and real properties. It markets its products and services through its head office and a network of six branches. The company was incorporated in 1981 and is headquartered in Quezon City, the Philippines. BDO Leasing and Finance, Inc. is a subsidiary of BDO Unibank, Inc.

IDLC Finance Limited engages in investment banking, discretionary portfolio management, and margin lending activities in Bangladesh. It offers small and medium enterprise (SME) finance products, such as SME loans/leases, seasonal and women entrepreneur loans, SME Shachal loans, SME Surakkha and deposit products, revolving short term loans, commercial space and vehicle loans, IDLC Udbhabon, machinery lease, and healthcare finance solutions. The company also provides supplier and distributor finance products, including factoring of accounts receivable, bill/invoice discounting, and work order and distributor financing; and corporate finance products that include lease, project, and green financing products, as well as short term loans and specialized products. In addition, it offers structured finance solutions, such as syndicated fund raising for bonds, commercial paper, preference shares, projects/infrastructure finance, foreign currency loans, private placement of equity refinancing of special funds, securitization of assets, and working capital syndication solutions, as well as corporate advisory, merger and acquisitions, and other services. Further, the company provides consumer finance products, such as home, car, and personal loans, as well as loans against deposit; flexible term deposit and regular earner packages; and treasury products, including overnight borrowing/placement, term deposits, bonds, debentures, commercial paper, preference shares, equity investments, and treasury bills/bonds. Further, it provides capital markets products, such as cash and margin accounts, IPO, margin loans, and discretional portfolio management; and premium brokerage for high networth individuals and institutional and foreign investors. The company was formerly known as Industrial Development Leasing Company of Bangladesh Limited and changed its name to IDLC Finance Limited in August 2007. IDLC Finance Limited was founded in 1985 and is headquartered in Dhaka, Bangladesh.

VCredit Holdings Limited provides consumer finance services. The Company offers microloans, financing guarantees, financial leasing, and other services. VCredit Holdings also provides related consulting services.

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VCredit Holdings Ltd (2003 HK)

Home Credit IPO: Valuation a Tough Sell

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit has started a two-week pre-marketing roadshow for a Hong...

Arun George

Home Credit IPO: 2Q a Quality Vs Quantity Quarter

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise...

Arun George

Home Credit IPO: Benchmarking Study

Home Credit (HC HK) is a leading emerging market consumer finance provider. Home Credit is set to start pre-marketing for a Hong Kong IPO to raise...

Arun George

9F IPO: Valuation Pays to Walk Away

9F Inc (JFG US), a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in...

Arun George

9F IPO Initiation: What’s the Point?

9F Inc (JFG US), a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in...

Arun George

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