ECM

In this briefing:

1. A Trading Strategy for EcoproBM Post IPO
2. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations
3. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao
4. Hyundai Autoever IPO Preview
5. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger

1. A Trading Strategy for EcoproBM Post IPO

• In this report, we provide a trading strategy for Ecopro BM Co Ltd (247540 KS) IPO, which is expected to start trading on March 5th. The IPO price has been determined at 48,000 won, which is 19% higher than the mid-point of the original IPO price range of 37,500 won to 42,900 won. The institutional investors’ demand for the Ecopro BM IPO was extremely strong at 988 to 1. 
• In our previous report Ecopro BM IPO: Valuation Analysis, we proposed the base case to high end of the company’s value to be between 56,000 won and 67,800 won. Given the enormous institutional demand for this IPO, it appears that our base case valuation (56,000 won), which is 17% higher than the IPO price, may be too conservative. 
• A more likely scenario now is that the stock reaches about 65,000 won to 70,000 won in the first few hours of trading on the first day, overshooting its intrinsic value and sells off a bit for a few days/weeks, enters a consolidation phase and then resumes its higher share price again. 

2. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations

Zhejiang New Century Hotel Management Group (ZHEKAIH HK) (ZNCH) is looking to raise US$220m in its upcoming IPO. 

ZNCH is a hotel operator and manager with presence across China. The company grew its revenue by a modest 5% from 2015 to 2017 but made significant improvements in profitability. Gross profit, EBITDA and PATMI grew by 33%, 61%, and 132% CAGR over the same period.

However, the improved profitability has not been driven by underlying operations. The company seemed a tad too ambitious to be expanding via leasing hotel when it already has a large hotel management pipeline.

In this insight, we will look at the company’s financial and operational performance, the drivers of its strong margin expansion, and include some questions for management.

3. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao

Anheuser Busch Inbev Sa/Nv (ABI BB) is looking to list its Asian operations in order to lighten its debt burden. The listing will probably be in Hong Kong and the company could raise around US$5bn at a valuation of around US$70bn.

In my earlier insight, Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China, I looked at how the Asian operations of ABI have shaped up over the past few years.  

In this insight, I’ll do a quick comparison of the past financial performance of China Resources Beer Holdin (291 HK) and Tsingtao Brewery Co Ltd H (168 HK).

4. Hyundai Autoever IPO Preview

• Hyundai Autoever is ready to complete its IPO in March 2019. Established in 2000, Hyundai Autoever is the IT service arm of the Hyundai Motor Group. Hyundai Autoever is expected to play a key role in the Hyundai Motor Group’s push to become a leading global player of autonomous driving in the coming decade. 
• The IPO price range is between 40,000 won and 44,000 won. The IPO base deal size is from $125 million to $138 million. According to the bankers’ valuation, the expected market cap is expected to range from 840 billion won to 924 billion won. 
• The bankers used four companies including Samsung SDS, POSCO ICT, Lotte Data Comm, and Shinsegae I&C to value Hyundai Autoever. Using the annualized net profit of the comps in 2018, the bankers derived an average P/E multiple of 24x for the peers. Then the bankers took the annualized net profit of Hyundai Autoever in 2018 (52.2 billion won) and applied the peers average P/E multiple of 24x to derive the implied market cap of 1.25 trillion won. After applying additional IPO discount of 26.4% – 33.1%, the bankers derived the IPO price range of 40,000 to 44,000 won. 

5. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger

• Hyundai Autoever offers a total 3,510,000 shares. Split is 9.9% primary and 90.1% secondary. Shares are preliminarily priced at ₩40,000~44,000. This puts the company value at ₩840~924bil. Bookbuilding will be Mar 13~14.
• Valuation is a bit aggressive. It is being heard that local institutions are not particularly excited about this IPO mainly because of Autoever’s 90% captive business. That is, growth story isn’t looking fancy. At a 17x PER on Autoever’s FY19 expected earnings, it is sitting in the middle of the indicative price band. There shouldn’t be much room to play around.
• The major shareholder was expected to sell as much as 50% of their shares through secondary distribution. Actual offering size is much smaller. This sparks the speculation that Autoever will soon be merged with Glovis. Much smaller offering size may be for facilitating the merger. It can pave a less controversial path for another merger attempt with Mobis.
• But this speculation can render this IPO meaningless though. I expect this IPO will be a dull event. I wouldn’t avoid it completely though. Stable income stream and connected car are are still something worthy. I’d buy them at the right price. Low end should be the right price.

In this briefing:

1. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations
2. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao
3. Hyundai Autoever IPO Preview
4. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger
5. HLX02: Innovation Could Overtake

1. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations

Zhejiang New Century Hotel Management Group (ZHEKAIH HK) (ZNCH) is looking to raise US$220m in its upcoming IPO. 

ZNCH is a hotel operator and manager with presence across China. The company grew its revenue by a modest 5% from 2015 to 2017 but made significant improvements in profitability. Gross profit, EBITDA and PATMI grew by 33%, 61%, and 132% CAGR over the same period.

However, the improved profitability has not been driven by underlying operations. The company seemed a tad too ambitious to be expanding via leasing hotel when it already has a large hotel management pipeline.

In this insight, we will look at the company’s financial and operational performance, the drivers of its strong margin expansion, and include some questions for management.

2. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao

Anheuser Busch Inbev Sa/Nv (ABI BB) is looking to list its Asian operations in order to lighten its debt burden. The listing will probably be in Hong Kong and the company could raise around US$5bn at a valuation of around US$70bn.

In my earlier insight, Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China, I looked at how the Asian operations of ABI have shaped up over the past few years.  

In this insight, I’ll do a quick comparison of the past financial performance of China Resources Beer Holdin (291 HK) and Tsingtao Brewery Co Ltd H (168 HK).

3. Hyundai Autoever IPO Preview

• Hyundai Autoever is ready to complete its IPO in March 2019. Established in 2000, Hyundai Autoever is the IT service arm of the Hyundai Motor Group. Hyundai Autoever is expected to play a key role in the Hyundai Motor Group’s push to become a leading global player of autonomous driving in the coming decade. 
• The IPO price range is between 40,000 won and 44,000 won. The IPO base deal size is from $125 million to $138 million. According to the bankers’ valuation, the expected market cap is expected to range from 840 billion won to 924 billion won. 
• The bankers used four companies including Samsung SDS, POSCO ICT, Lotte Data Comm, and Shinsegae I&C to value Hyundai Autoever. Using the annualized net profit of the comps in 2018, the bankers derived an average P/E multiple of 24x for the peers. Then the bankers took the annualized net profit of Hyundai Autoever in 2018 (52.2 billion won) and applied the peers average P/E multiple of 24x to derive the implied market cap of 1.25 trillion won. After applying additional IPO discount of 26.4% – 33.1%, the bankers derived the IPO price range of 40,000 to 44,000 won. 

4. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger

• Hyundai Autoever offers a total 3,510,000 shares. Split is 9.9% primary and 90.1% secondary. Shares are preliminarily priced at ₩40,000~44,000. This puts the company value at ₩840~924bil. Bookbuilding will be Mar 13~14.
• Valuation is a bit aggressive. It is being heard that local institutions are not particularly excited about this IPO mainly because of Autoever’s 90% captive business. That is, growth story isn’t looking fancy. At a 17x PER on Autoever’s FY19 expected earnings, it is sitting in the middle of the indicative price band. There shouldn’t be much room to play around.
• The major shareholder was expected to sell as much as 50% of their shares through secondary distribution. Actual offering size is much smaller. This sparks the speculation that Autoever will soon be merged with Glovis. Much smaller offering size may be for facilitating the merger. It can pave a less controversial path for another merger attempt with Mobis.
• But this speculation can render this IPO meaningless though. I expect this IPO will be a dull event. I wouldn’t avoid it completely though. Stable income stream and connected car are are still something worthy. I’d buy them at the right price. Low end should be the right price.

5. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

In this briefing:

1. Hyundai Autoever IPO Preview
2. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger
3. HLX02: Innovation Could Overtake
4. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help
5. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. Hyundai Autoever IPO Preview

• Hyundai Autoever is ready to complete its IPO in March 2019. Established in 2000, Hyundai Autoever is the IT service arm of the Hyundai Motor Group. Hyundai Autoever is expected to play a key role in the Hyundai Motor Group’s push to become a leading global player of autonomous driving in the coming decade. 
• The IPO price range is between 40,000 won and 44,000 won. The IPO base deal size is from $125 million to $138 million. According to the bankers’ valuation, the expected market cap is expected to range from 840 billion won to 924 billion won. 
• The bankers used four companies including Samsung SDS, POSCO ICT, Lotte Data Comm, and Shinsegae I&C to value Hyundai Autoever. Using the annualized net profit of the comps in 2018, the bankers derived an average P/E multiple of 24x for the peers. Then the bankers took the annualized net profit of Hyundai Autoever in 2018 (52.2 billion won) and applied the peers average P/E multiple of 24x to derive the implied market cap of 1.25 trillion won. After applying additional IPO discount of 26.4% – 33.1%, the bankers derived the IPO price range of 40,000 to 44,000 won. 

2. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger

• Hyundai Autoever offers a total 3,510,000 shares. Split is 9.9% primary and 90.1% secondary. Shares are preliminarily priced at ₩40,000~44,000. This puts the company value at ₩840~924bil. Bookbuilding will be Mar 13~14.
• Valuation is a bit aggressive. It is being heard that local institutions are not particularly excited about this IPO mainly because of Autoever’s 90% captive business. That is, growth story isn’t looking fancy. At a 17x PER on Autoever’s FY19 expected earnings, it is sitting in the middle of the indicative price band. There shouldn’t be much room to play around.
• The major shareholder was expected to sell as much as 50% of their shares through secondary distribution. Actual offering size is much smaller. This sparks the speculation that Autoever will soon be merged with Glovis. Much smaller offering size may be for facilitating the merger. It can pave a less controversial path for another merger attempt with Mobis.
• But this speculation can render this IPO meaningless though. I expect this IPO will be a dull event. I wouldn’t avoid it completely though. Stable income stream and connected car are are still something worthy. I’d buy them at the right price. Low end should be the right price.

3. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

4. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help

Carlyle, along with SBI, plans to sell the rest of its stake in Aruhi Corp (7198 JP) for around US$280m.

Aruhi listed in Dec 2017, when Carlyle sold 18m shares. This is the second and final tranche of shares owned by Carlyle.  The total sale accounts for 41% of the company’s outstanding shares making it a relatively large deal to digest. 

However, the shares have done well since listing and the stock scores well on our framework. Valuations appear reasonable, if the company is able to achieve its mid-term targets.

5. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger
2. HLX02: Innovation Could Overtake
3. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help
4. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. Hyundai Autoever IPO Pricing: Likely to Be a Dull Event Given No Growth Story & Glovis Merger

• Hyundai Autoever offers a total 3,510,000 shares. Split is 9.9% primary and 90.1% secondary. Shares are preliminarily priced at ₩40,000~44,000. This puts the company value at ₩840~924bil. Bookbuilding will be Mar 13~14.
• Valuation is a bit aggressive. It is being heard that local institutions are not particularly excited about this IPO mainly because of Autoever’s 90% captive business. That is, growth story isn’t looking fancy. At a 17x PER on Autoever’s FY19 expected earnings, it is sitting in the middle of the indicative price band. There shouldn’t be much room to play around.
• The major shareholder was expected to sell as much as 50% of their shares through secondary distribution. Actual offering size is much smaller. This sparks the speculation that Autoever will soon be merged with Glovis. Much smaller offering size may be for facilitating the merger. It can pave a less controversial path for another merger attempt with Mobis.
• But this speculation can render this IPO meaningless though. I expect this IPO will be a dull event. I wouldn’t avoid it completely though. Stable income stream and connected car are are still something worthy. I’d buy them at the right price. Low end should be the right price.

2. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

3. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help

Carlyle, along with SBI, plans to sell the rest of its stake in Aruhi Corp (7198 JP) for around US$280m.

Aruhi listed in Dec 2017, when Carlyle sold 18m shares. This is the second and final tranche of shares owned by Carlyle.  The total sale accounts for 41% of the company’s outstanding shares making it a relatively large deal to digest. 

However, the shares have done well since listing and the stock scores well on our framework. Valuations appear reasonable, if the company is able to achieve its mid-term targets.

4. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. HLX02: Innovation Could Overtake
2. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help
3. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

2. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help

Carlyle, along with SBI, plans to sell the rest of its stake in Aruhi Corp (7198 JP) for around US$280m.

Aruhi listed in Dec 2017, when Carlyle sold 18m shares. This is the second and final tranche of shares owned by Carlyle.  The total sale accounts for 41% of the company’s outstanding shares making it a relatively large deal to digest. 

However, the shares have done well since listing and the stock scores well on our framework. Valuations appear reasonable, if the company is able to achieve its mid-term targets.

3. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help
2. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. Aruhi Placement – Bigger than the IPO but Good Track Record and Price Performance Should Help

Carlyle, along with SBI, plans to sell the rest of its stake in Aruhi Corp (7198 JP) for around US$280m.

Aruhi listed in Dec 2017, when Carlyle sold 18m shares. This is the second and final tranche of shares owned by Carlyle.  The total sale accounts for 41% of the company’s outstanding shares making it a relatively large deal to digest. 

However, the shares have done well since listing and the stock scores well on our framework. Valuations appear reasonable, if the company is able to achieve its mid-term targets.

2. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin
2. Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth
3. ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

2. Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

Dexin China Holdings (2019 HK) (Dexin) is looking to raise up to US$220m in its upcoming IPO. We have covered the company in our previous insight, Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing.

While details of Huzhou’s property growth has been provided and showed that the city is growing the fastest compared to Hangzhou and Wenzhou, other concerns such as related party transactions and the partial listing of assets remain.

In this insight, we will provide updates on the company’s 9M 2018 financials, details of the cornerstone investor, and valuation compared to listed peers. We will also run the deal through our framework.

3. ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

In our first insight (link here) covering ByteDance, we discuss ByteDance’s app matrix, the differentiating factors of ByteDance and the key difference between its Jinri Toutiao app and Tencent News. 

In this insight, we will discuss in details its next blockbuster app, Tiktok. Similar to Jinri Toutiao, it is utilizing AI technology for content curation. In addition to that, the app also uses AI technology to beautify content producers. Compared to text-based content, the short-video content is more viral. 

In the next insight, we will look at the company’s overseas expansion, past series of financing and valuation. 

In this briefing:

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin
2. Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth
3. ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
4. Dreamtech IPO: Valuation Analysis

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

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 72.1% for IPOs and 63.8% for Placements 

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

New IPO filings

• Reliance General Insurance (re-filed, India)

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

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

2. Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

Dexin China Holdings (2019 HK) (Dexin) is looking to raise up to US$220m in its upcoming IPO. We have covered the company in our previous insight, Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing.

While details of Huzhou’s property growth has been provided and showed that the city is growing the fastest compared to Hangzhou and Wenzhou, other concerns such as related party transactions and the partial listing of assets remain.

In this insight, we will provide updates on the company’s 9M 2018 financials, details of the cornerstone investor, and valuation compared to listed peers. We will also run the deal through our framework.

3. ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

In our first insight (link here) covering ByteDance, we discuss ByteDance’s app matrix, the differentiating factors of ByteDance and the key difference between its Jinri Toutiao app and Tencent News. 

In this insight, we will discuss in details its next blockbuster app, Tiktok. Similar to Jinri Toutiao, it is utilizing AI technology for content curation. In addition to that, the app also uses AI technology to beautify content producers. Compared to text-based content, the short-video content is more viral. 

In the next insight, we will look at the company’s overseas expansion, past series of financing and valuation. 

4. Dreamtech IPO: Valuation Analysis

• The bookbuilding of the Dreamtech Co Ltd (192650 KS) IPO will start in about 6 business days. This report provides a valuation analysis of this company. Dreamtech makes modules and sensors for smartphones, auto vehicles, home appliances, and health care products. In late January 2019, the company reduced the IPO price range to 11,000 won to 13,000 won (from 13,400 won to 16,700 won previously). 
• The comps have better sales growth, net margin, and net profit growth than the company. However, Dreamtech has slightly better ROE and balance sheet strength than the comps. Therefore, we believe it is appropriate to put a 10-20% discount on the comps’ average P/E valuation of 17.6x in 2017 and 2018. 
• Our base case valuation of the company is 13,961 won, which is only 7% higher than the high end of the IPO price range (13,000 won). Thus, given the lack of enough upside, we would avoid this deal. However, if the deal is priced at the low end of the IPO price range (11,000 won), it could potentially be attractive. Our base case valuation is based on 15x P/E, which is a 15% discount to the average P/E multiples of its peers in 2017 and 2018. We also used net profit of 29.1 billion won, which is the average estimated net profit of the company in 2017 and 2018. 

In this briefing:

1. ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

1. ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance, an emerging TMT player in China and one of the challengers to the BAT’s dominance in China, is said to be preparing for 2019 listing. It will be the largest Chinese TMT listing this year as the company was valued at USD 75 billion in the pre-IPO fundraising, closed in October 2018. 

In this insight, we will discuss ByteDance’s business, in particular, how the text-based media distribution platform Jinri Toutiao (今日头条) built the foundation of the company, and paved ways for the short-video distribution platform Watermelon Video (西瓜视频), Volcano Video (火山视频), and Tiktok (抖音).

In our next insight, we will discuss how Tiktok became successful and the company’s overseas expansion.