Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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

Helens International Holdings / Equity Capital Markets

<ul>
<li>The largest pub chain in China, <a href="https://www.smartkarma.com/entities/helen-s-international-holding" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holding (9869 HK)</a> is expected to price its IPO on 9<sup>th</sup> September 2021, within its indicative price range of HK$ 18.82-20.72 per share, which implies a market cap and EV range of HK$ 23.5-25.8bn and HK$ 20.8-22.9bn respectively.</li>
<li>The company will raise gross proceeds of around HK$ 2.5-2.8bn from the proposed Hong Kong IPO by selling 135m primary shares.</li>
</ul>


The largest pub chain in China, Helen's International Holding (9869 HK) is expected to price its IPO on 9th September 2021, within its indicative price range of HK$ 18.82-20.72 per share, which implies a market cap and EV range of HK$ 23.5-25.8bn and HK$ 20.8-22.9bn respectively.
The company will raise gross proceeds of around HK$ 2.5-2.8bn from the proposed Hong Kong IPO by selling 135m primary shares.


Helens International Holdings IPO Valuation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/helen-s-international-holding" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holding (9869 HK)</a> is the largest pub chain in China with around 528 pubs across a number of cities in the Eastern part of China. The company intends to raise around US$ 315-347m from the proposed Hong Kong IPO by selling 135m primary shares at an offer price range of HK$ 18.82-20.72 per share.</li>
<li>We think the IPO price range is rather expensive as it indicates a trailing EV/Sales of 21.1-23.2x. Although the growth prospects of Helens International seems excellent, the company may need to increase its revenue by around 6.0-7.0x to even remotely justify its IPO multiple.</li>
</ul>



Helen's International Holding (9869 HK) is the largest pub chain in China with around 528 pubs across a number of cities in the Eastern part of China. The company intends to raise around US$ 315-347m from the proposed Hong Kong IPO by selling 135m primary shares at an offer price range of HK$ 18.82-20.72 per share.
We think the IPO price range is rather expensive as it indicates a trailing EV/Sales of 21.1-23.2x. Although the growth prospects of Helens International seems excellent, the company may need to increase its revenue by around 6.0-7.0x to even remotely justify its IPO multiple.


Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p>Last Friday, the company announced a profit alert with revenue grew 60% and NPAT RMB 1.8 billion or 163% higher YoY citing improvement in operating margin. This could come not only from a discipline operating expenses management but also an improved product mix; margin from online sales is higher than from retail. </p><p>There will be some sellers today to book some profit from yesterday's gain but long-term investors should hold on to this as the nationalistic pattern may last longer than the first half of 2021 especially when the US is still making taking a hard stand on the Xinjiang issue, now moving from the cotton to solar panel, therefore, driving a higher revenue to <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a> .</p><div class="content-highlight"><p>Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital structure compared to its peers warrant some premium. </p></div>

Last Friday, the company announced a profit alert with revenue grew 60% and NPAT RMB 1.8 billion or 163% higher YoY citing improvement in operating margin. This could come not only from a discipline operating expenses management but also an improved product mix; margin from online sales is higher than from retail. There will be some sellers today to book some profit from yesterday's gain but long-term investors should hold on to this as the nationalistic pattern may last longer than the first half of 2021 especially when the US is still making taking a hard stand on the Xinjiang issue, now moving from the cotton to solar panel, therefore, driving a higher revenue to Li Ning Co Ltd (2331 HK) .Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital structure compared to its peers warrant some premium. 

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.

Hutchmed China Ltd / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/hutchmed-china-ltd" target="_blank" data-smartkarma-citation="entities:133:1" rel="noopener">Hutchmed China Ltd (13 HK)</a> has launched a $603 million secondary listing on HKEx by offering 104.0 million ordinary shares at a maximum offer price of HK$45.00 per share. Bookbuilding is scheduled to run until the pricing on 23 June. The net proceeds will be used to fund the late-stage clinical programs (<em>savolitinib, surufatinib, fruquintinib</em>, HMPL-689 and HMPL-523), to support further proof-of-concept studies and strengthen commercialisation capabilities.</p>
<p>HutchMed has primary listings on Nasdaq and on UK AIM. The HKEx secondary listing will be supported by five cornerstone investors which will subscribe for HK$2,535 million ($325 million) of the offer shares (54.17% of the offer shares at the maximum offer price). The cornerstone investors are <a href="https://www.smartkarma.com/entities/carlyle-group-inc" target="_blank" data-smartkarma-citation="entities:33402:1" rel="noopener">Carlyle Group Inc (CG US)</a>, CPP Investments, General Atlantic, <a href="https://www.smartkarma.com/entities/hbm-healthcare-investments-ag" target="_blank" data-smartkarma-citation="entities:22373:1" rel="noopener">HBM Healthcare Investments AG (HBMN SW)</a> and CICC Capital.</p>
<p>HutchMed is a China-based, globally focused, biopharma company, active in discovery, development, manufacturing, and commercialisation. The investment case centres on the<br>success of its oncology/immunology platform, which has several near-term clinical and regulatory catalysts from the novel highly selective small molecule (tyrosine kinase inhibitor) pipeline. Notably, in-house discovered drugs, <em>Elunate (fruquintinib)</em> and <em>Sulanda (surufatinib)</em>, together with a likely approval for <em>savolitinib</em>, are transforming China prospects. <em>Elunate</em> is performing well in China, with NRDL inclusion boosting volumes. The first global launch is likely to be <em>surufatinib </em>with a US launch targeted for late 2021 or early 2022.</p>
</div><div><div class="content-highlight"><p>In this note, we will look at HutchMed’s potential HK-ADS premium/(discount). As per the norm, HutchMed will price its H-shares at a discount to its ADSs/UK shares to entice investors to participate in the secondary listing. HutchMed pricing its H-shares at a discount of 2-3% to its ADSs will be reasonable, in our view.</p></div></div>


Hutchmed China Ltd (13 HK) has launched a $603 million secondary listing on HKEx by offering 104.0 million ordinary shares at a maximum offer price of HK$45.00 per share. Bookbuilding is scheduled to run until the pricing on 23 June. The net proceeds will be used to fund the late-stage clinical programs (savolitinib, surufatinib, fruquintinib, HMPL-689 and HMPL-523), to support further proof-of-concept studies and strengthen commercialisation capabilities.
HutchMed has primary listings on Nasdaq and on UK AIM. The HKEx secondary listing will be supported by five cornerstone investors which will subscribe for HK$2,535 million ($325 million) of the offer shares (54.17% of the offer shares at the maximum offer price). The cornerstone investors are Carlyle Group Inc (CG US), CPP Investments, General Atlantic, HBM Healthcare Investments AG (HBMN SW) and CICC Capital.
HutchMed is a China-based, globally focused, biopharma company, active in discovery, development, manufacturing, and commercialisation. The investment case centres on the success of its oncology/immunology platform, which has several near-term clinical and regulatory catalysts from the novel highly selective small molecule (tyrosine kinase inhibitor) pipeline. Notably, in-house discovered drugs, Elunate (fruquintinib) and Sulanda (surufatinib), together with a likely approval for savolitinib, are transforming China prospects. Elunate is performing well in China, with NRDL inclusion boosting volumes. The first global launch is likely to be surufatinib with a US launch targeted for late 2021 or early 2022.
In this note, we will look at HutchMed’s potential HK-ADS premium/(discount). As per the norm, HutchMed will price its H-shares at a discount to its ADSs/UK shares to entice investors to participate in the secondary listing. HutchMed pricing its H-shares at a discount of 2-3% to its ADSs will be reasonable, in our view.

HutchMed Secondary Listing: HK-ADS Premium/​​​(Discount) Views

China and US Equity Analyst

Roger Xie

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> delivered 21Q1 result better than market expectation. Helped by a low base for comparison (Pandemic peak in China in 20Q1), Yum China revenue is up 46% year-over-year or 11% vs 19Q1, operating profit is up 250% year-over-year or 13% vs 19Q1. The positive surprise is that Pizza Hut is starting to fully reap the benefits of multiple years of revitalization efforts. Pizza Hut's restaurant delivered margin of 15.3% in 21Q1 (the highest level since 2017), which drives operating profit up 20% vs 19Q1. </li>
<li>Yum China management expects non-linear recovery of SSS (<em>Same Store Sale</em>) as dine-in traffic still well below 2019 level. The resurgence of COVID-19 cases early this year has put Chinese restaurant sector under pressure. Several cities have returning to citywide quarantines, and travel volume during the early period of Chinese New Year is down 70%. Given Yum China's resilience in its KFC brand and the faster recovery in Pizza Hut, we feel more confident that the company can sustain a midteens restaurant margin over the next few years and even achieve high teens over the longer period. </li>
<li>Management's guidance on growth strategy also shows Yum China's agility to navigate through the uncertainty. 1) Yum China is dedicated to opening another 1,000 stores in 2021, and reach around more than 11,000 stores in China by year end; 2) Growing its portfolio to include diversified restaurant offerings; 3) Digital strategy: Delivery and takeaway now account for 55%/40% of KFC/PH revenue. We continue to believe <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc" target="_blank" data-smartkarma-citation="entities:23677:1" rel="noopener">Yum China Holdings, Inc (YUMC US)</a> offers investors better reward/risk potential in China restaurant sector. Our raised TP for Yum Chin is US$72, which is based on 30x 2021e P/E. </li>
</ul>



Yum China Holdings, Inc (YUMC US) delivered 21Q1 result better than market expectation. Helped by a low base for comparison (Pandemic peak in China in 20Q1), Yum China revenue is up 46% year-over-year or 11% vs 19Q1, operating profit is up 250% year-over-year or 13% vs 19Q1. The positive surprise is that Pizza Hut is starting to fully reap the benefits of multiple years of revitalization efforts. Pizza Hut's restaurant delivered margin of 15.3% in 21Q1 (the highest level since 2017), which drives operating profit up 20% vs 19Q1. 
Yum China management expects non-linear recovery of SSS (Same Store Sale) as dine-in traffic still well below 2019 level. The resurgence of COVID-19 cases early this year has put Chinese restaurant sector under pressure. Several cities have returning to citywide quarantines, and travel volume during the early period of Chinese New Year is down 70%. Given Yum China's resilience in its KFC brand and the faster recovery in Pizza Hut, we feel more confident that the company can sustain a midteens restaurant margin over the next few years and even achieve high teens over the longer period. 
Management's guidance on growth strategy also shows Yum China's agility to navigate through the uncertainty. 1) Yum China is dedicated to opening another 1,000 stores in 2021, and reach around more than 11,000 stores in China by year end; 2) Growing its portfolio to include diversified restaurant offerings; 3) Digital strategy: Delivery and takeaway now account for 55%/40% of KFC/PH revenue. We continue to believe Yum China Holdings, Inc (YUMC US) offers investors better reward/risk potential in China restaurant sector. Our raised TP for Yum Chin is US$72, which is based on 30x 2021e P/E. 


Yum China (YUMC and 9987.HK): Pizza Hut Recovered Faster than Market Expectation

China

Yum China Holdings, Inc. operates chain restaurants. The Company offers pizza, entrees, pasta, rice dishes, appetizers, soups, vegetables, beverages, and desserts. Yum China Holding conducts its business worldwide.

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Yum China Holdings (9987 HK)

Helens International Holdings IPO Valuation

Helen’s IPO is valued in line with Haidilao and Jiumaojiu’s February 2021 peak multiples. However, market conditions have deteriorated...

Oshadhi Kumarasiri

Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

Helen’s needs more than an enticing growth story to get investors to back its IPO at these elevated valuation multiples. The company needs to...

Oshadhi Kumarasiri

Li Ning (2331): Marching On

Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital...

Henry Soediarko

HutchMed Secondary Listing: HK-ADS Premium/(Discount) Views

HutchMed has launched a $603 million secondary listing on HKEx. In this note, we will look at HutchMed’s potential HK-ADS premium/(discount).

Arun George

Yum China (YUMC and 9987.HK): Pizza Hut Recovered Faster than Market Expectation

The biggest earning surprise is that Pizza Hut is starting to fully reap the benefits of multiple years of revitalization efforts. We raise TP for...

Roger Xie

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Helens International Holdings IPO Valuation

Helen’s IPO is valued in line with Haidilao and Jiumaojiu’s February 2021 peak multiples. However, market conditions have deteriorated...

Oshadhi Kumarasiri

Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

Helen’s needs more than an enticing growth story to get investors to back its IPO at these elevated valuation multiples. The company needs to...

Oshadhi Kumarasiri

Li Ning (2331): Marching On

Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital...

Henry Soediarko

HutchMed Secondary Listing: HK-ADS Premium/​​​(Discount) Views

HutchMed has launched a $603 million secondary listing on HKEx. In this note, we will look at HutchMed’s potential HK-ADS premium/(discount).

Arun George

Yum China (YUMC and 9987.HK): Pizza Hut Recovered Faster than Market Expectation

The biggest earning surprise is that Pizza Hut is starting to fully reap the benefits of multiple years of revitalization efforts. We raise TP for...

Roger Xie

HutchMed Secondary Listing: HK-ADS Premium/(Discount) Views