ECM

In this briefing:

1. Sea Ltd Placement – Capitalizing on Momentum
2. Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
3. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
4. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
5. Lyft IPO Preview: Maybe We’ll Just Walk?

1. Sea Ltd Placement – Capitalizing on Momentum

Sea Ltd (SE US) is looking to raise about US$1.2bn in its upcoming placement. It will be larger than its IPO in 2017, which raised about US$880m.

The deal scores well on our framework owing to decent valuation, strong price and earnings momentum but had little track record for comparison. The company announced a strong set of FY2018/Q4 2018 results which had beaten estimates. 

Even though, the deal size is large, representing 23.2 days of three-month ADV, there is enough time between the announcement to the end of the bookbuild to price in the impact of the placement. 

2. Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business

Shenwan Hongyuan filed in November to list in Hong Kong. It is a leading brokerage house in China. With an A-share market capitalization of USD 18 billion, the company plans to issue up to 20% of its shares for an A+H listing. In this insight, we will discuss:

• Company’s history.
• Comparison with leading Chinese brokers.
• Our thoughts on valuation.

3. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield

Embassy Office Parks REIT (EOP IN) plans to raise around US$1bn in its India IPO. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of US$4.2bn. 

In my previous insight, Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish I covered the company background and its projected growth. In this insight, I’ll compare it to its closest listed peer, Ascendas India Trust (AIT SP) and add in the performance of other yield driven listings in India.

4. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?

• We evaluate the attractiveness of Sea Ltd’s (SE US) US$1 bn follow-on public offering announced last Fri.
• This offering is a typical opportunistic fundraising as its ADR price has recently surged.
• At assumed deal price of US$21, SE post deal would trade at 4.6x 2019E P/adjusted sales (excl. 1P e-commerce sales), vs. peers average of 5.2x.
• We would recommend investors to go for the deal if it is priced at US$20 or lower.

5. Lyft IPO Preview: Maybe We’ll Just Walk?

Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below 

Intro to Lyft

Lyft – a comparison vs. peers

Strengths and Weaknesses

Financials

In this briefing:

1. Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
2. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
3. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
4. Lyft IPO Preview: Maybe We’ll Just Walk?
5. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century

1. Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business

Shenwan Hongyuan filed in November to list in Hong Kong. It is a leading brokerage house in China. With an A-share market capitalization of USD 18 billion, the company plans to issue up to 20% of its shares for an A+H listing. In this insight, we will discuss:

• Company’s history.
• Comparison with leading Chinese brokers.
• Our thoughts on valuation.

2. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield

Embassy Office Parks REIT (EOP IN) plans to raise around US$1bn in its India IPO. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of US$4.2bn. 

In my previous insight, Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish I covered the company background and its projected growth. In this insight, I’ll compare it to its closest listed peer, Ascendas India Trust (AIT SP) and add in the performance of other yield driven listings in India.

3. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?

• We evaluate the attractiveness of Sea Ltd’s (SE US) US$1 bn follow-on public offering announced last Fri.
• This offering is a typical opportunistic fundraising as its ADR price has recently surged.
• At assumed deal price of US$21, SE post deal would trade at 4.6x 2019E P/adjusted sales (excl. 1P e-commerce sales), vs. peers average of 5.2x.
• We would recommend investors to go for the deal if it is priced at US$20 or lower.

4. Lyft IPO Preview: Maybe We’ll Just Walk?

Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below 

Intro to Lyft

Lyft – a comparison vs. peers

Strengths and Weaknesses

Financials

5. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.2% for IPOs and 63.7% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• ESR Cayman (Hong Kong, ~US$1.5bn)
• Jinshang Bank (Hong Kong, ~US$500m)
• China Everbright Water (Hong Kong, >US$100m, dual-listing)
• Up Fintech/Tiger Brokers (the US, >US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Global Switch Picks Banks for Over $1 Billion IPO
• Warburg Pincus-backed ESR files for Hong Kong IPO of up to $1.5 billion
• Ping An plans IPO of fintech unit in HK at $1.35b
• Starbucks’ China rival Luckin Coffee taps 3 banks for US IPO

Smartkarma Community’s this week Analysis on Upcoming IPO

• Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
• Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
• China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
• China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
• New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

In this briefing:

1. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
2. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
3. Lyft IPO Preview: Maybe We’ll Just Walk?
4. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century
5. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR

1. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield

Embassy Office Parks REIT (EOP IN) plans to raise around US$1bn in its India IPO. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of US$4.2bn. 

In my previous insight, Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish I covered the company background and its projected growth. In this insight, I’ll compare it to its closest listed peer, Ascendas India Trust (AIT SP) and add in the performance of other yield driven listings in India.

2. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?

• We evaluate the attractiveness of Sea Ltd’s (SE US) US$1 bn follow-on public offering announced last Fri.
• This offering is a typical opportunistic fundraising as its ADR price has recently surged.
• At assumed deal price of US$21, SE post deal would trade at 4.6x 2019E P/adjusted sales (excl. 1P e-commerce sales), vs. peers average of 5.2x.
• We would recommend investors to go for the deal if it is priced at US$20 or lower.

3. Lyft IPO Preview: Maybe We’ll Just Walk?

Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below 

Intro to Lyft

Lyft – a comparison vs. peers

Strengths and Weaknesses

Financials

4. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.2% for IPOs and 63.7% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• ESR Cayman (Hong Kong, ~US$1.5bn)
• Jinshang Bank (Hong Kong, ~US$500m)
• China Everbright Water (Hong Kong, >US$100m, dual-listing)
• Up Fintech/Tiger Brokers (the US, >US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Global Switch Picks Banks for Over $1 Billion IPO
• Warburg Pincus-backed ESR files for Hong Kong IPO of up to $1.5 billion
• Ping An plans IPO of fintech unit in HK at $1.35b
• Starbucks’ China rival Luckin Coffee taps 3 banks for US IPO

Smartkarma Community’s this week Analysis on Upcoming IPO

• Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
• Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
• China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
• China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
• New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

5. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR

Up Fintech (TIGR US) plans to raise up to US$150m in its US listing. The company counts Xiaomi Corp (1810 HK) and Interactive Brokers Group, Inc (IBKR US) as its main investors.

While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.

I’ve covered some of the aspects of TIGR’s model in Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics. In this insight, I’ll take a quick look at the company’s performance and the issues highlighted above. 

In this briefing:

1. Lyft IPO Preview: Maybe We’ll Just Walk?
2. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century
3. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
4. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
5. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

1. Lyft IPO Preview: Maybe We’ll Just Walk?

Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below 

Intro to Lyft

Lyft – a comparison vs. peers

Strengths and Weaknesses

Financials

2. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.2% for IPOs and 63.7% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• ESR Cayman (Hong Kong, ~US$1.5bn)
• Jinshang Bank (Hong Kong, ~US$500m)
• China Everbright Water (Hong Kong, >US$100m, dual-listing)
• Up Fintech/Tiger Brokers (the US, >US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Global Switch Picks Banks for Over $1 Billion IPO
• Warburg Pincus-backed ESR files for Hong Kong IPO of up to $1.5 billion
• Ping An plans IPO of fintech unit in HK at $1.35b
• Starbucks’ China rival Luckin Coffee taps 3 banks for US IPO

Smartkarma Community’s this week Analysis on Upcoming IPO

• Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
• Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
• China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
• China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
• New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

3. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR

Up Fintech (TIGR US) plans to raise up to US$150m in its US listing. The company counts Xiaomi Corp (1810 HK) and Interactive Brokers Group, Inc (IBKR US) as its main investors.

While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.

I’ve covered some of the aspects of TIGR’s model in Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics. In this insight, I’ll take a quick look at the company’s performance and the issues highlighted above. 

4. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics

Futu Holdings Ltd (FHL US) plans to raise up to US$130m in its US listing. 

In my earlier insights, I looked at the company’s background,  past financial performance and scored the deal on our IPO framework.: 

• Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry, 
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, and
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End 

In this insight, I do a quick comparison of Futu versus Up Fintech (TIGR US) (aka Tiger Brokers) who is regarded as Futu’s main competitor in the space.

5. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:

• Company’s business and the value chain of coking coal
• Industry backdrop of the coking coal processing industry in China
• Shareholders and investors
• Thoughts on valuation

In this briefing:

1. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century
2. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
3. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
4. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
5. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

1. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.2% for IPOs and 63.7% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• ESR Cayman (Hong Kong, ~US$1.5bn)
• Jinshang Bank (Hong Kong, ~US$500m)
• China Everbright Water (Hong Kong, >US$100m, dual-listing)
• Up Fintech/Tiger Brokers (the US, >US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Global Switch Picks Banks for Over $1 Billion IPO
• Warburg Pincus-backed ESR files for Hong Kong IPO of up to $1.5 billion
• Ping An plans IPO of fintech unit in HK at $1.35b
• Starbucks’ China rival Luckin Coffee taps 3 banks for US IPO

Smartkarma Community’s this week Analysis on Upcoming IPO

• Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
• Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
• China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
• China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
• New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

2. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR

Up Fintech (TIGR US) plans to raise up to US$150m in its US listing. The company counts Xiaomi Corp (1810 HK) and Interactive Brokers Group, Inc (IBKR US) as its main investors.

While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.

I’ve covered some of the aspects of TIGR’s model in Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics. In this insight, I’ll take a quick look at the company’s performance and the issues highlighted above. 

3. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics

Futu Holdings Ltd (FHL US) plans to raise up to US$130m in its US listing. 

In my earlier insights, I looked at the company’s background,  past financial performance and scored the deal on our IPO framework.: 

• Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry, 
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, and
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End 

In this insight, I do a quick comparison of Futu versus Up Fintech (TIGR US) (aka Tiger Brokers) who is regarded as Futu’s main competitor in the space.

4. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:

• Company’s business and the value chain of coking coal
• Industry backdrop of the coking coal processing industry in China
• Shareholders and investors
• Thoughts on valuation

5. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

Dexin China Holdings (2019 HK) raised US$189m in at HK$2.80 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth.

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

In this briefing:

1. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
2. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
3. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
4. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares
5. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

1. Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR

Up Fintech (TIGR US) plans to raise up to US$150m in its US listing. The company counts Xiaomi Corp (1810 HK) and Interactive Brokers Group, Inc (IBKR US) as its main investors.

While TIGR has grown at a stupendous pace over the past three years, it has been able to do so owing to IBKR doing most of the heavy lifting of execution and clearing. While its trying to change that now, nearly all the revenue is still being driven by its IBKR affiliation.

I’ve covered some of the aspects of TIGR’s model in Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics. In this insight, I’ll take a quick look at the company’s performance and the issues highlighted above. 

2. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics

Futu Holdings Ltd (FHL US) plans to raise up to US$130m in its US listing. 

In my earlier insights, I looked at the company’s background,  past financial performance and scored the deal on our IPO framework.: 

• Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry, 
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, and
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End 

In this insight, I do a quick comparison of Futu versus Up Fintech (TIGR US) (aka Tiger Brokers) who is regarded as Futu’s main competitor in the space.

3. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:

• Company’s business and the value chain of coking coal
• Industry backdrop of the coking coal processing industry in China
• Shareholders and investors
• Thoughts on valuation

4. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

Dexin China Holdings (2019 HK) raised US$189m in at HK$2.80 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth.

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

5. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

AIG is selling its USD 450 million stakes in PICC today after market close. The deal scores negatively in our ECM Framework. 

We like the fact that it will increase the free-float significantly and hence there will be a liquidity event, meanwhile, we are also concerned that the deal size is large compared to its liquidity.

In this briefing:

1. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
2. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
3. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares
4. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event
5. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End

1. Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics

Futu Holdings Ltd (FHL US) plans to raise up to US$130m in its US listing. 

In my earlier insights, I looked at the company’s background,  past financial performance and scored the deal on our IPO framework.: 

• Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry, 
• Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, and
• Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End 

In this insight, I do a quick comparison of Futu versus Up Fintech (TIGR US) (aka Tiger Brokers) who is regarded as Futu’s main competitor in the space.

2. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:

• Company’s business and the value chain of coking coal
• Industry backdrop of the coking coal processing industry in China
• Shareholders and investors
• Thoughts on valuation

3. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

Dexin China Holdings (2019 HK) raised US$189m in at HK$2.80 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth.

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

4. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

AIG is selling its USD 450 million stakes in PICC today after market close. The deal scores negatively in our ECM Framework. 

We like the fact that it will increase the free-float significantly and hence there will be a liquidity event, meanwhile, we are also concerned that the deal size is large compared to its liquidity.

5. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End

Futu Holdings Ltd (FHL US) plans to raise upto US$130m in its US listing. The deal has been downsized from its earlier indicative size of US$300m and the valuation too has been downsized by almost the same extent to around US$1.2-1.5bn.

In my earlier insights, Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry and Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, I looked at the company’s background and past financial performance.

 In this insight, I’ll run the deal through our IPO framework and comment on valuations. At the low-end the deal might be worth looking into, although free-float might end up being very small owing to US$30m being taken up Tencent which would leave just about US$100m as free-float.

In this briefing:

1. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
2. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares
3. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event
4. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
5. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption

1. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle

China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:

• Company’s business and the value chain of coking coal
• Industry backdrop of the coking coal processing industry in China
• Shareholders and investors
• Thoughts on valuation

2. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

Dexin China Holdings (2019 HK) raised US$189m in at HK$2.80 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth.

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

3. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

AIG is selling its USD 450 million stakes in PICC today after market close. The deal scores negatively in our ECM Framework. 

We like the fact that it will increase the free-float significantly and hence there will be a liquidity event, meanwhile, we are also concerned that the deal size is large compared to its liquidity.

4. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End

Futu Holdings Ltd (FHL US) plans to raise upto US$130m in its US listing. The deal has been downsized from its earlier indicative size of US$300m and the valuation too has been downsized by almost the same extent to around US$1.2-1.5bn.

In my earlier insights, Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry and Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, I looked at the company’s background and past financial performance.

 In this insight, I’ll run the deal through our IPO framework and comment on valuations. At the low-end the deal might be worth looking into, although free-float might end up being very small owing to US$30m being taken up Tencent which would leave just about US$100m as free-float.

5. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption

China Tobacco International (Hong Kong), a subsidiary of the China Tobacco International, is seeking a listing in Hong Kong. Per media reports, the company plans to raise USD 100 million. In this insight, we will discuss the following topics: 

• What does China Tobacco International do?
• What is its relationship with China Tobacco?
• How did its different segments perform?
• The industrial backdrop

In this briefing:

1. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares
2. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event
3. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
4. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
5. New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short

1. Dexin China (德信中国) Post IPO – Poor Trading Liquidity, Top Ten Placees Hold 76% of IPO Shares

Dexin China Holdings (2019 HK) raised US$189m in at HK$2.80 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth.

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

2. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

AIG is selling its USD 450 million stakes in PICC today after market close. The deal scores negatively in our ECM Framework. 

We like the fact that it will increase the free-float significantly and hence there will be a liquidity event, meanwhile, we are also concerned that the deal size is large compared to its liquidity.

3. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End

Futu Holdings Ltd (FHL US) plans to raise upto US$130m in its US listing. The deal has been downsized from its earlier indicative size of US$300m and the valuation too has been downsized by almost the same extent to around US$1.2-1.5bn.

In my earlier insights, Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry and Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, I looked at the company’s background and past financial performance.

 In this insight, I’ll run the deal through our IPO framework and comment on valuations. At the low-end the deal might be worth looking into, although free-float might end up being very small owing to US$30m being taken up Tencent which would leave just about US$100m as free-float.

4. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption

China Tobacco International (Hong Kong), a subsidiary of the China Tobacco International, is seeking a listing in Hong Kong. Per media reports, the company plans to raise USD 100 million. In this insight, we will discuss the following topics: 

• What does China Tobacco International do?
• What is its relationship with China Tobacco?
• How did its different segments perform?
• The industrial backdrop

5. New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short

Zhejiang New Century Hotel Management Group (1158 HK) (NCH) is looking to raise up to US$179m in its upcoming IPO.

NCH is riddled with related party transactions, from the sales of consumer goods, carpets and wine to having 24% of its hotel management revenue come from related parties. There had been a handful of small acquisitions and disposals but it all seemed to be just reshuffling of assets between NCH and the controlling shareholder with no clear strategy. 

Key metrics show that even though NCH is operating at higher ADR and RevPAR compared to peers, it ultimately falls short in terms of EBITDA and net margins. It also has the lowest occupancy rate.

In this insight, we will focus on corporate governance issues, peer metric comparison, and relative valuation with listed hotel operators. 

In this briefing:

1. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event
2. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
3. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
4. New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
5. CStone Pharma (基石药业) Post-IPO: Strong Debut but Lacks near Term Catalysts

1. AIG Sells PICC: A Clean-Up Trade Cum Liquidity Event

AIG is selling its USD 450 million stakes in PICC today after market close. The deal scores negatively in our ECM Framework. 

We like the fact that it will increase the free-float significantly and hence there will be a liquidity event, meanwhile, we are also concerned that the deal size is large compared to its liquidity.

2. Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End

Futu Holdings Ltd (FHL US) plans to raise upto US$130m in its US listing. The deal has been downsized from its earlier indicative size of US$300m and the valuation too has been downsized by almost the same extent to around US$1.2-1.5bn.

In my earlier insights, Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry and Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation, I looked at the company’s background and past financial performance.

 In this insight, I’ll run the deal through our IPO framework and comment on valuations. At the low-end the deal might be worth looking into, although free-float might end up being very small owing to US$30m being taken up Tencent which would leave just about US$100m as free-float.

3. China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption

China Tobacco International (Hong Kong), a subsidiary of the China Tobacco International, is seeking a listing in Hong Kong. Per media reports, the company plans to raise USD 100 million. In this insight, we will discuss the following topics: 

• What does China Tobacco International do?
• What is its relationship with China Tobacco?
• How did its different segments perform?
• The industrial backdrop

4. New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short

Zhejiang New Century Hotel Management Group (1158 HK) (NCH) is looking to raise up to US$179m in its upcoming IPO.

NCH is riddled with related party transactions, from the sales of consumer goods, carpets and wine to having 24% of its hotel management revenue come from related parties. There had been a handful of small acquisitions and disposals but it all seemed to be just reshuffling of assets between NCH and the controlling shareholder with no clear strategy. 

Key metrics show that even though NCH is operating at higher ADR and RevPAR compared to peers, it ultimately falls short in terms of EBITDA and net margins. It also has the lowest occupancy rate.

In this insight, we will focus on corporate governance issues, peer metric comparison, and relative valuation with listed hotel operators. 

5. CStone Pharma (基石药业) Post-IPO: Strong Debut but Lacks near Term Catalysts

CStone Pharma’s IPO was priced at HKD 12.00/share and started trading today. In this insight, we summarize the allocation, the use of proceeds and recap our view on our valuation. We also look at past few biotech listings and discuss our thoughts on the market sentiments. We are of the view that despite a strong debut performance, CStone lacks near term catalysts that can continue to drive performance after the first day. 

Our Previous Coverage of CStone

• CStone Pharma (基石药业) IPO: Strong Assembly and Backing (Part 1)
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)