ECM

In this briefing:

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results
2. Maoyan Entertainment IPO: The Trouble with Blockbusters

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

Hansoh Pharma, a leading generic pharmaceutical manufacturer, filed an application to list on the Hong Kong Stock Exchange. In our previous insight, we have covered the company’s core products and pipeline candidates. We also mentioned the recent regulatory development that affects the industry of generic drug manufacturers, in particular, the recent 4+7 City Centralized Tender Results (4+7 城市药品集中采购). 

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

2. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

In this briefing:

1. ASIC Review of Allocation in Equity Raising – Some Truths, Some Half-Truths – No Improvements
2. China East Education (中国东方教育) Pre-IPO – The Company Known for Its Culinary School
3. Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry
4. China Tobacco International IPO: Heavy Regulation, Declining Margins – A Bit Late to IPO Party
5. Futu Holdings IPO Preview: Running Out of Steam

1. ASIC Review of Allocation in Equity Raising – Some Truths, Some Half-Truths – No Improvements

Over 2017-18, the Australian Securities & Investments Commission (ASIC) undertook a review of allocation in equity raising transactions. The review involved large and mid-sized licensees (brokers), Issuers, International investors and other international regulators. The results of the review were published by ASIC in Dec 2018. This insight highlights some of the key findings.

It’s good to see that some of the standard practices of banks allocating more to existing clients and participants of earlier deals have at least been acknowledged. Even though some institutional investors have outright labelled the allocation process as a “black box”, ASIC doesn’t seem to want to do much about it.

The area where ASIC is more concerned is the messaging to investors which highlights the different definitions of “well-covered” across banks. Although, the banks seem to have mislead the regulator on interpretation of “real-demand” with ECM bankers saying that all orders are taken at face-value. That raises a whole new level of questions on the messaging around demand for the deal.

2. China East Education (中国东方教育) Pre-IPO – The Company Known for Its Culinary School

China Xinhua Education (2779 HK) listed in Q1 of 2018 and we wrote in our insight that the founder had vocational schools that have been separated from China Xinhua that seemed to be his prized asset. Fast forward to December 2018, the prized asset has finally filed its draft prospectus under the entity China East Education (CEE HK) and it is looking to raise US$400m in its IPO.

In this insight, we will analyze the company’s financial and operating performance, compare it to listed education companies, and provide some questions we have for management.

3. Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry

Futu Holdings Ltd (FHL US) plans to raise around US$300m in its US IPO. The company is backed by Tencent Holdings (700 HK) , Matrix Partners and Sequoia, who together own over 45% of the company.

The founding team comes mostly from Tencent, which might explain Tencent’s large stake in the company. Growth for the company has been stupendous despite the jittery markets, with margin financing adding to the top-line growth. 

While its low costs will help it to steal clients from the more traditional brokers, other new low-cost brokers seem to be offering similar services at comparable rates. In addition, the company is not licensed or regulated by any entities in China, despite the majority of its client base being Chinese nationals. Furthermore, the company plans to expand into newer overseas market where it doesn’t seem to have much of a cost advantage.

4. China Tobacco International IPO: Heavy Regulation, Declining Margins – A Bit Late to IPO Party

China Tobacco International (GHALPZ CH) is a subsidiary and offshore unit of China National Tobacco Corp., a state-owned enterprise (SOE). The company procures tobacco leaves from regions around the world and exports tobacco leaf products and branded cigarettes to the duty-free outlets outside China’s customs area and in Southeast Asia.

The IPO is expected to raise US$100M and the company expects to use the proceeds to expand market share, acquire new cigarette brands, working capital, and other corporate purposes.                      

5. Futu Holdings IPO Preview: Running Out of Steam

Futu Holdings Ltd (FHL US) is the fourth largest online broker in Hong Kong. Futu has filed for a Nasdaq IPO to raise $300 million, down from an earlier indication of a $500 million raise according to press reports. Futu is backed by Tencent Holdings (700 HK) (38.2% shareholder), Matrix Partners (6.1%) and Sequoia Capital (4.0%).

In this briefing:

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results
2. Maoyan Entertainment IPO: The Trouble with Blockbusters
3. Weimob IPO: Prospectus Point to Mixed Fundamentals

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

Hansoh Pharma, a leading generic pharmaceutical manufacturer, filed an application to list on the Hong Kong Stock Exchange. In our previous insight, we have covered the company’s core products and pipeline candidates. We also mentioned the recent regulatory development that affects the industry of generic drug manufacturers, in particular, the recent 4+7 City Centralized Tender Results (4+7 城市药品集中采购). 

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

2. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

3. Weimob IPO: Prospectus Point to Mixed Fundamentals

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business. It is backed by Tencent Holdings (700 HK), which is 3% shareholder and its largest customer. Weimob has started book building to raise gross proceeds of $108-135 million. Cornerstone investors which include a close associate of Tencent and Huifu Payment Limited (1806 HK) have agreed to purchase $42 million worth of shares in the offering.

In this briefing:

1. Futu Holdings IPO Preview: Running Out of Steam
2. IPO Radar: AutoCorp, Honda’s Avatar in Thailand
3. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
4. Weimob IPO Valuation: Optically Cheap
5. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation

1. Futu Holdings IPO Preview: Running Out of Steam

Futu Holdings Ltd (FHL US) is the fourth largest online broker in Hong Kong. Futu has filed for a Nasdaq IPO to raise $300 million, down from an earlier indication of a $500 million raise according to press reports. Futu is backed by Tencent Holdings (700 HK) (38.2% shareholder), Matrix Partners (6.1%) and Sequoia Capital (4.0%).

2. IPO Radar: AutoCorp, Honda’s Avatar in Thailand

In August 2017, Honda stole the top spot in Thai passenger cars from Toyota and held it for a few months. They are still formidable players, and ACG (AutoCorp) which runs Honda dealerships and service centers across Thailand, is expected to IPO some time in 2019. Here’s our quick look at the company.

• We value this IPO at Bt2/sh using DCF, since there’s really no good comparables. The company is expected to enjoy slower revenue growth and higher margins going forward as car sales slow down nationally and maintenance becomes a bigger chunk of the revenues.
• They only operate in four provinces and run 8 showrooms with over 6,000 sqm of display space. The service centers account for almost 17,200 sqm. The big chunk comes from lower margin car sales. Along with accessories, these account for 84% of revenues.
• The IPO is firmly underwritten by Singapore’s Phillips Securities and is good for more than a quarter of shares outstanding (26%). The founding Rangkanuwat family control all remaining shares and have committed to 6 month lock-up period.

3. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting

Chengdu Expressway Company Limited (1785 HK) is looking to raise US$112m in its upcoming IPO. 

The expressways that CEC operate are integral in Chengdu’s transport network. The expressways have been upgraded and expanded consistently over the past three years which has led to an increase in traffic and toll revenue. However, in terms of valuation, CEC will likely trade at a valuation closer to small expressway peers which implies a 10% downside.

In this insight, we will look at the company’s financial and operational performance, toll payment model, and compare its valuation to Hong Kong-listed expressway peers. We will also run the deal through our IPO framework.

4. Weimob IPO Valuation: Optically Cheap

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business which has started book building to raise gross proceeds of $108-135 million. According to press reports, Weimob is being viewed favourably by investors as it is being offered at a “cheap” valuation of 18-23x 2019 P/E.

5. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation

Weimob.com (1260480D CH),  a Tencent Holdings (700 HK) and GIC investee company, plans to raise up to US$135m in its Hong Kong IPO.

I’ve covered most aspects of the deal in my earlier insight, Weimob Pre-IPO – Can Be Steamrolled by Tencent, Anytime, where I spoke about the over-reliance on Tencent, high attrition rates and acquisition costs for SMBs, and the increasing contribution of its ads business.

In this insight, I’ll provide an update from the latest filings, comment on valuations and run the deal through our IPO framework.

In this briefing:

1. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor
2. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results
3. Maoyan Entertainment IPO: The Trouble with Blockbusters
4. Weimob IPO: Prospectus Point to Mixed Fundamentals

1. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor

Viva Biotechnology, a China-based drug discovery company, is seeking to raise USD 200m to list on the Hong Kong Stock Exchange. In this insight, we cover the following topics:

• Services provided by Viva. 
• Revenue model of the company.
• The CRO market.
• The company’s history and shareholders.
• Our initial thoughts on valuation.

• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different
• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect

2. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

Hansoh Pharma, a leading generic pharmaceutical manufacturer, filed an application to list on the Hong Kong Stock Exchange. In our previous insight, we have covered the company’s core products and pipeline candidates. We also mentioned the recent regulatory development that affects the industry of generic drug manufacturers, in particular, the recent 4+7 City Centralized Tender Results (4+7 城市药品集中采购). 

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

3. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

4. Weimob IPO: Prospectus Point to Mixed Fundamentals

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business. It is backed by Tencent Holdings (700 HK), which is 3% shareholder and its largest customer. Weimob has started book building to raise gross proceeds of $108-135 million. Cornerstone investors which include a close associate of Tencent and Huifu Payment Limited (1806 HK) have agreed to purchase $42 million worth of shares in the offering.

In this briefing:

1. IPO Radar: AutoCorp, Honda’s Avatar in Thailand
2. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
3. Weimob IPO Valuation: Optically Cheap
4. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation
5. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor

1. IPO Radar: AutoCorp, Honda’s Avatar in Thailand

In August 2017, Honda stole the top spot in Thai passenger cars from Toyota and held it for a few months. They are still formidable players, and ACG (AutoCorp) which runs Honda dealerships and service centers across Thailand, is expected to IPO some time in 2019. Here’s our quick look at the company.

• We value this IPO at Bt2/sh using DCF, since there’s really no good comparables. The company is expected to enjoy slower revenue growth and higher margins going forward as car sales slow down nationally and maintenance becomes a bigger chunk of the revenues.
• They only operate in four provinces and run 8 showrooms with over 6,000 sqm of display space. The service centers account for almost 17,200 sqm. The big chunk comes from lower margin car sales. Along with accessories, these account for 84% of revenues.
• The IPO is firmly underwritten by Singapore’s Phillips Securities and is good for more than a quarter of shares outstanding (26%). The founding Rangkanuwat family control all remaining shares and have committed to 6 month lock-up period.

2. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting

Chengdu Expressway Company Limited (1785 HK) is looking to raise US$112m in its upcoming IPO. 

The expressways that CEC operate are integral in Chengdu’s transport network. The expressways have been upgraded and expanded consistently over the past three years which has led to an increase in traffic and toll revenue. However, in terms of valuation, CEC will likely trade at a valuation closer to small expressway peers which implies a 10% downside.

In this insight, we will look at the company’s financial and operational performance, toll payment model, and compare its valuation to Hong Kong-listed expressway peers. We will also run the deal through our IPO framework.

3. Weimob IPO Valuation: Optically Cheap

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business which has started book building to raise gross proceeds of $108-135 million. According to press reports, Weimob is being viewed favourably by investors as it is being offered at a “cheap” valuation of 18-23x 2019 P/E.

4. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation

Weimob.com (1260480D CH),  a Tencent Holdings (700 HK) and GIC investee company, plans to raise up to US$135m in its Hong Kong IPO.

I’ve covered most aspects of the deal in my earlier insight, Weimob Pre-IPO – Can Be Steamrolled by Tencent, Anytime, where I spoke about the over-reliance on Tencent, high attrition rates and acquisition costs for SMBs, and the increasing contribution of its ads business.

In this insight, I’ll provide an update from the latest filings, comment on valuations and run the deal through our IPO framework.

5. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor

Viva Biotechnology, a China-based drug discovery company, is seeking to raise USD 200m to list on the Hong Kong Stock Exchange. In this insight, we cover the following topics:

• Services provided by Viva. 
• Revenue model of the company.
• The CRO market.
• The company’s history and shareholders.
• Our initial thoughts on valuation.

• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different
• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect

In this briefing:

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results
2. Maoyan Entertainment IPO: The Trouble with Blockbusters
3. Weimob IPO: Prospectus Point to Mixed Fundamentals
4. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)

1. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

Hansoh Pharma, a leading generic pharmaceutical manufacturer, filed an application to list on the Hong Kong Stock Exchange. In our previous insight, we have covered the company’s core products and pipeline candidates. We also mentioned the recent regulatory development that affects the industry of generic drug manufacturers, in particular, the recent 4+7 City Centralized Tender Results (4+7 城市药品集中采购). 

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

2. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

3. Weimob IPO: Prospectus Point to Mixed Fundamentals

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business. It is backed by Tencent Holdings (700 HK), which is 3% shareholder and its largest customer. Weimob has started book building to raise gross proceeds of $108-135 million. Cornerstone investors which include a close associate of Tencent and Huifu Payment Limited (1806 HK) have agreed to purchase $42 million worth of shares in the offering.

4. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)

Although Uber aims to be an Amazon for transport, we will focus on the ride-hailing market in part 3 of this series. Here, we try to answer the following questions:

1. What are the indicative ride-hailing market shares of Uber vs Lyft in North America?
2. What is Uber’s share in other key countries?
3. What are the lawsuits investors should watch out for?
4. How do Uber’s revenue drivers compare with Lyft’s?
5. What are the timelines and key figures for both companies’ IPOs?

This is the third note in a series about the expected 2019 IPO of global ride-hailing giant Uber Technologies (0084207D US) and Lyft. Please read the earlier two pieces in the series for better contexts:

Uber IPO Preview: Its Sprawling Empire and Battle Lines (Part 1) written by me.

Uber IPO Preview: Fast-Growing Uber Eats Has Become a Material Part of Uber (Part 2) written by Daniel Hellberg

In this briefing:

1. Maoyan Entertainment IPO: The Trouble with Blockbusters
2. Weimob IPO: Prospectus Point to Mixed Fundamentals
3. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)

1. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

2. Weimob IPO: Prospectus Point to Mixed Fundamentals

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business. It is backed by Tencent Holdings (700 HK), which is 3% shareholder and its largest customer. Weimob has started book building to raise gross proceeds of $108-135 million. Cornerstone investors which include a close associate of Tencent and Huifu Payment Limited (1806 HK) have agreed to purchase $42 million worth of shares in the offering.

3. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)

Although Uber aims to be an Amazon for transport, we will focus on the ride-hailing market in part 3 of this series. Here, we try to answer the following questions:

1. What are the indicative ride-hailing market shares of Uber vs Lyft in North America?
2. What is Uber’s share in other key countries?
3. What are the lawsuits investors should watch out for?
4. How do Uber’s revenue drivers compare with Lyft’s?
5. What are the timelines and key figures for both companies’ IPOs?

This is the third note in a series about the expected 2019 IPO of global ride-hailing giant Uber Technologies (0084207D US) and Lyft. Please read the earlier two pieces in the series for better contexts:

Uber IPO Preview: Its Sprawling Empire and Battle Lines (Part 1) written by me.

Uber IPO Preview: Fast-Growing Uber Eats Has Become a Material Part of Uber (Part 2) written by Daniel Hellberg

In this briefing:

1. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
2. Weimob IPO Valuation: Optically Cheap
3. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation
4. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor
5. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

1. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting

Chengdu Expressway Company Limited (1785 HK) is looking to raise US$112m in its upcoming IPO. 

The expressways that CEC operate are integral in Chengdu’s transport network. The expressways have been upgraded and expanded consistently over the past three years which has led to an increase in traffic and toll revenue. However, in terms of valuation, CEC will likely trade at a valuation closer to small expressway peers which implies a 10% downside.

In this insight, we will look at the company’s financial and operational performance, toll payment model, and compare its valuation to Hong Kong-listed expressway peers. We will also run the deal through our IPO framework.

2. Weimob IPO Valuation: Optically Cheap

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business which has started book building to raise gross proceeds of $108-135 million. According to press reports, Weimob is being viewed favourably by investors as it is being offered at a “cheap” valuation of 18-23x 2019 P/E.

3. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation

Weimob.com (1260480D CH),  a Tencent Holdings (700 HK) and GIC investee company, plans to raise up to US$135m in its Hong Kong IPO.

I’ve covered most aspects of the deal in my earlier insight, Weimob Pre-IPO – Can Be Steamrolled by Tencent, Anytime, where I spoke about the over-reliance on Tencent, high attrition rates and acquisition costs for SMBs, and the increasing contribution of its ads business.

In this insight, I’ll provide an update from the latest filings, comment on valuations and run the deal through our IPO framework.

4. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor

Viva Biotechnology, a China-based drug discovery company, is seeking to raise USD 200m to list on the Hong Kong Stock Exchange. In this insight, we cover the following topics:

• Services provided by Viva. 
• Revenue model of the company.
• The CRO market.
• The company’s history and shareholders.
• Our initial thoughts on valuation.

• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different
• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect

5. Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

Hansoh Pharma, a leading generic pharmaceutical manufacturer, filed an application to list on the Hong Kong Stock Exchange. In our previous insight, we have covered the company’s core products and pipeline candidates. We also mentioned the recent regulatory development that affects the industry of generic drug manufacturers, in particular, the recent 4+7 City Centralized Tender Results (4+7 城市药品集中采购). 

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

In this briefing:

1. Maoyan Entertainment IPO: The Trouble with Blockbusters
2. Weimob IPO: Prospectus Point to Mixed Fundamentals
3. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)
4. Chunbo Co. IPO Preview

1. Maoyan Entertainment IPO: The Trouble with Blockbusters

Maoyan Entertainment, formerly Entertainment Plus (EPLUS HK), is the largest online movie ticketing service provider in China. According to press reports, Maoyan has started pre-marketing to raise $0.3 billion (down from earlier indication of $0.5-1.0 billion) through a Hong Kong IPO. Maoyan is backed by Beijing Enlight Media (300251 CH) (20.0% shareholder), Tencent Holdings (700 HK) (16.3% shareholder) and Meituan Dianping (3690 HK) (8.6% shareholder).

2. Weimob IPO: Prospectus Point to Mixed Fundamentals

Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business. It is backed by Tencent Holdings (700 HK), which is 3% shareholder and its largest customer. Weimob has started book building to raise gross proceeds of $108-135 million. Cornerstone investors which include a close associate of Tencent and Huifu Payment Limited (1806 HK) have agreed to purchase $42 million worth of shares in the offering.

3. Uber IPO: Its Sprawling Empire And Battle Lines (Part 3)

Although Uber aims to be an Amazon for transport, we will focus on the ride-hailing market in part 3 of this series. Here, we try to answer the following questions:

1. What are the indicative ride-hailing market shares of Uber vs Lyft in North America?
2. What is Uber’s share in other key countries?
3. What are the lawsuits investors should watch out for?
4. How do Uber’s revenue drivers compare with Lyft’s?
5. What are the timelines and key figures for both companies’ IPOs?

This is the third note in a series about the expected 2019 IPO of global ride-hailing giant Uber Technologies (0084207D US) and Lyft. Please read the earlier two pieces in the series for better contexts:

Uber IPO Preview: Its Sprawling Empire and Battle Lines (Part 1) written by me.

Uber IPO Preview: Fast-Growing Uber Eats Has Become a Material Part of Uber (Part 2) written by Daniel Hellberg

4. Chunbo Co. IPO Preview

• Chunbo Co Ltd (278280 KS) is a provider of fine chemical materials in Korea, and it is expected to complete its IPO in January 2019. Its chemical materials are used in numerous industries including the display, semiconductors, rechargeable batteries, and pharmaceutical. 
• The bankers used nine comparable companies, including Sk Materials (036490 KS), Foosung Co Ltd (093370 KS), and Iljin Materials (020150 KS), to value Chunbo Co Ltd (278280 KS). The bankers used the annualized net profit of these companies from 1Q-3Q18 in their valuation analysis. The average P/E multiple of the comps were 25.3x. The bankers then applied Chunbo’s annualized net profit of 19.8 billion won from 1Q18 to 3Q18 and applied the P/E multiple of 25.3x to derive an implied market cap of 501.3 billion won. After applying an IPO discount of 20.2% to 30.2%, the bankers derived an IPO range of 35,000 to 40,000 won. 
• The company has a consistent record of generating solid growth in sales and profits in the past few years. The company’s sales increased 18.4% CAGR from 2014 to 2017. Its operating margin averaged 21% from 2014 to 3Q18.