ECM Daily Briefs | Page 16 of 117

In today’s briefing:

Nippon Express (9147 JP): The Current Playbook
Classys: One of Korea’s Top Beauty Medical Device Makers + Higher Shares Cancellation and Dividends
Astera Labs IPO Valuation Update: Multiples Appear Rich, Limited Post-IPO Upside
Shanghai Zhida Technology Development Pre-IPO Tearsheet

Nippon Express (9147 JP): The Current Playbook

Since the US$260 million secondary placement announcement, Nippon Express Holdings (9147 JP) shares are down 5.3% from the undisturbed price of JPY8,039 per share (1 March).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Nippon Express shares have followed the pattern of previous large placements.
The offering will likely be priced on 11 March. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Classys: One of Korea’s Top Beauty Medical Device Makers + Higher Shares Cancellation and Dividends

Classys is one of the top beauty medical device companies in Korea. Classys’ main products include Shurink Universe and Volnewmer.
We have a positive view of Classys (214150 KS). Classys is trading at relatively reasonable valuations, considering the company’s strong growth in sales and profits.
On 28 February, Classys announced a shareholder return amount of 38 billion won (including share cancellation of about 25 billion won and dividend payout of 13 billion won).

Astera Labs IPO Valuation Update: Multiples Appear Rich, Limited Post-IPO Upside

By Andrei Zakharov

Astera Labs, which offers connectivity solutions tailored for AI accelerators, GPUs, FPGAs and other high-performance computing platforms, announced terms for its IPO today.
California-Based semiconductor company plans to raise ~$392M by offering ~14.8M shares at a price range of $27 to $30. Selling stockholders offer ~3M shares of common stock in this IPO.
At the midpoint of the proposed price range, Astera Labs would command a fully diluted market value of $5B, above their last private round of $3.15B.

Shanghai Zhida Technology Development Pre-IPO Tearsheet

Shanghai Zhida Technology Development Co Ltd (SZTD HK) is looking to raise about US$130m in its upcoming Hong Kong IPO. Shenwan Hongyuan is the sole bookrunner.
Shanghai Zhida Technology Development (SZTD) is a provider of electric vehicle (EV) home charging solutions.
As per F&S, the firm was the world’s largest provider of EV home charging solutions in terms of sales volume of home EV chargers over its track record period.

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Mar 08

Daily Brief ECM: Oriental Land Co Placement – Relatively Small One to Digest and more

In today’s briefing:

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
Angel Robotics: IPO Valuation Analysis
NLC India OFS – Another GoI-PSU Selldown, Well Flagged Coupled with Strong Momentum
Shanghai REFIRE Group Pre-IPO Tearsheet
Lianlian DigiTech IPO: PHIP Updates

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large

Keisei Electric Railway Co (9009 JP) is looking to raise up to US$553m from selling a 1% stake in Oriental Land (4661 JP).
Palliser Capital, has been pushing Keisei Electric Railway to reduce its stake in OLC to unlock shareholder value owing to the wide discrepancy between carrying/market value of the former’s investment.
Selling just 1% of shares outstanding, the deal wouldn’t be a very large one to digest, representing 4.7 days of OLC’s three month ADV.

Angel Robotics: IPO Valuation Analysis

Our base case valuation of Angel Robotics is target price of 20,277 won per share, which represents a 35% upside from the high end of the IPO price range.
We estimate sales of 9 billion won in 2024 (up 75.2% YoY) and 14.9 billion won in 2025 (up 65.3% YoY). Our estimates are more conservative than the company’s estimates.
We like the strong sales growth of Angel Robotics. Many investors are likely to view this positively in this IPO. LG Electronics and Samsung Electronics are customers of Angel Robotics.

NLC India OFS – Another GoI-PSU Selldown, Well Flagged Coupled with Strong Momentum

The GoI is looking to raise up to US$248m from selling its stake in Neyveli Lignite (NLC IN).
This seems to be part of the GoI’s ongoing divestment drive across PSUs, with the recent selldowns in other PSUs having done well.
The GoI had also sold some stake in the firm earlier in Oct 2017.

Shanghai REFIRE Group Pre-IPO Tearsheet

Shanghai REFIRE Group (SRG) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunner for the deal is CICC.
SRG designs, develops, manufactures, and sells hydrogen fuel cell systems, hydrogen production systems, and related components, as well as provides fuel cell engineering and technical services.
According to Frost & Sullivan (F&S), it ranked first in the hydrogen fuel cell system market in China, with a market share of 25.9%.

Lianlian DigiTech IPO: PHIP Updates

Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has begun pre-marketing an HKEx IPO. It previously targeted a US$500 million raise.
We previously discussed the IPO in LianLian DigiTech IPO: The Bull Case and LianLian DigiTech IPO: The Bear Case.
The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.

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Mar 07

Daily Brief ECM: Shinhan Financial Group Placement – Recent Selldowns Have Held up Since and more

In today’s briefing:

Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well
ARM Holdings (ARM US): Lock up Expiry on 12 March
Angel Robotics: IPO Preview
Pre-IPO Auntea Jenny (Shanghai) Industrial – An IPO Is a Must, but Success Is Not Guaranteed

Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well

EQT (EQT SS) , via Supreme, is looking to raise US$311m from selling its stake in Shinhan Financial (055550 KS).
Momentum on the stock has been strong over the past few months, and the recent selldowns in the stock have held up by the end of the week.
The share sale here will be a cleanup one, and a small one to digest at just 5.3 days of ADV.

ARM Holdings (ARM US): Lock up Expiry on 12 March

Softbank Group (9984 JP)’s 180-day lock-up period on its 89.75% ARM Holdings (ARM US) shareholding expires on 12 March. SoftBank’s stake is worth US$124 billion.
SoftBank will likely monetise its ARM stake using the Alibaba (ADR) (BABA US) playbook. This playbook uses prepaid forward contracts to raise capital with eventual settlement through shares.
ARM is currently trading 2.6x its IPO price on AI-driven hype. ARM trades at a premium multiple to NVIDIA Corp (NVDA US), despite forecasted lower growth and margin.

Angel Robotics: IPO Preview

Angel Robotics is getting ready to complete its IPO in KOSDAQ in March. The IPO price range is from 11,000 won to 15,000 won.
The IPO offering amount is from 17.6 billion won to 24 billion won. At the IPO price range, the company’s valuation ranges from 154 billion won to 210 billion won.
Angel Robotics is likely to be compared to Doosan Robotics and Rainbow Robotics.

Pre-IPO Auntea Jenny (Shanghai) Industrial – An IPO Is a Must, but Success Is Not Guaranteed

By Xinyao (Criss) Wang

Auntea Jenny is positioned in the same league as Guming. Both have similar business model/strategy. However, in terms of the number of stores/revenue scale/profitability, Auntea Jenny lags behind its peers.
China’s freshly-made beverage industry has developed to the stage of capitalization. Auntea Jenny has to obtain more funds to strengthen barriers, improve supply chain, accelerate expansion.The real competition just begins.
Pre-IPO valuation of Auntea Jenny was already RMB5.1 billion, but the market seems not optimistic about the franchising model. Valuation of Auntea Jenny should be lower than that of Guming/MIXUE.

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Mar 06

Daily Brief ECM: Ola Electric Pre-IPO Peer Comparison – Increasing Competition and more

In today’s briefing:

Ola Electric Pre-IPO Peer Comparison – Increasing Competition, but It’s Still the Leader
AAMB Holdings Placement – Despite the Overhang, Momentum Has Been Decent
Zomato Placement – Momentum Is Very Strong, Somewhat Well Flagged
Xunfei Healthcare Technology Pre-IPO Tearsheet

Ola Electric Pre-IPO Peer Comparison – Increasing Competition, but It’s Still the Leader

Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
In our previous note we have looked at the company’s past performance. In this note, we will undertake a peer comparison.

AAMB Holdings Placement – Despite the Overhang, Momentum Has Been Decent

ANZ Funds is looking to raise around US$242m from selling a portion of its stake in AMMB Holdings (AMM MK).
Having written down its carrying value earlier, we would argue that the deal now is somewhat well flagged, with ANZ attempting to record some gains on investment.
That being said, there is an overhang and the deal would be a large one to digest at 111 days of AMBank’s three month ADV.

Zomato Placement – Momentum Is Very Strong, Somewhat Well Flagged

AntFin is looking to raise around US$350m by selling around 2% of Zomato (ZOMATO IN).
Ant Group had earlier sold some of its stake in Nov 2023 and Ant just came out of lockup from the previous selldown a few days ago.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Xunfei Healthcare Technology Pre-IPO Tearsheet

Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are Huatai International, GF Capital, and CCB International.
Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
Backed by its healthcare AI solutions matrix, the firm ranked first in the healthcare AI industry in terms of revenue in China in 2022, according to Frost & Sullivan (F&S).

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Mar 05

Daily Brief ECM: Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help and more

In today’s briefing:

Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help
Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later
Reddit IPO Valuation Analysis
Reddit IPO: The Right Time To Go Public At A Reasonable Valuation
Macrotech Developers Placement – Large Deal, and Not Cheap Per Se
Reddit IPO Valuation Analysis: $1B+ Revenue and Profitable Company in 2024

Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help

Trial Holdings (5882 JP) (TH) is now looking to raise up to US$259m in its Japan IPO, after having canceled its prior listing attempt last year.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
We have looked at the company’s past performance in our previous notes. In this note, we talk about implied valuations in the IPO range.

Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later

By Travis Lundy

Sanyo Trading (3176 JP) is a small specialised trading company (rubber, polymers, elastomers, etc). Niche, decent profitability/margins, highish ROE.
Banks in the MUFG and SMBC family are selling. Norinchukin is selling a bit too.
This is small in size but big in impact. 20% of Max RWF. 50d ADV. Unlike other recent, larger, offerings, this has no flow mitigants. But it’s cheap.

Reddit IPO Valuation Analysis

Reddit plans to price its IPO between $31 to $34 a share, which would suggest equity value of US$6.0 billion to US$6.5 billion on a fully diluted basis.
Our base case valuation of Reddit is implied market cap of US$7.9 billion or implied price of US$41.2 per share.
Given the moderate upside relative to the IPO price range, we have a Positive view of the Reddit IPO.

Reddit IPO: The Right Time To Go Public At A Reasonable Valuation

By Andrei Zakharov

Reddit, an American social news aggregation, content rating, and forum social network, filed to go public. The company plans to trade on the NYSE under the ticker “RDDT”.
Reddit was founded in 2005 by Steven Huffman, Aaron Swartz and Alexis Ohanian. The company is forecasted to surpass $1B in total revenue in 2024.
They chose the right time to go public. I have a positive view of the upcoming Reddit IPO and looking forward to seeing them trade as a public company.

Macrotech Developers Placement – Large Deal, and Not Cheap Per Se

Macrotech Developers (LODHA IN) is looking to raise around US$398m via a QIP.
The deal here will be a well flagged one with LODHA’s board having announced its intention of raising up to INR50bn via a QIP earlier in Jan 2024.
That being said, while representing just 3% of LODHA’s shares outstanding, the deal would be a large one to digest at 30 days of its three month ADV.

Reddit IPO Valuation Analysis: $1B+ Revenue and Profitable Company in 2024

By Andrei Zakharov

According to Pitchbook and their S-1, Reddit has raised ~$1.5B in equity financing. Their last private round, a Series F led by Fidelity in August 2021, was around ~$10B valuation.
I derive a target valuation for Reddit using a ~8x EV/Revenue multiple on my 2024 estimates. The multiple represents a top-range multiple of the peer group.
I arrived at my ~$9.6B target valuation, which implies 50% upside to indicative IPO valuation at the midpoint. I expect Reddit will trade above their last round valuation of $10B.

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Mar 04

Daily Brief ECM: Trial Holdings IPO: Valuation Thoughts and more

In today’s briefing:

Trial Holdings IPO: Valuation Thoughts
Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price
Chongho Bridge Pre-IPO Tearsheet
ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct

Trial Holdings IPO: Valuation Thoughts

Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$236 million at the IPO reference price of JPY1,550 per share.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case.
In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY1,550. We would participate in the IPO.

Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price

A group of shareholders are looking to raise US$220m from selling their stakes in Nippon Express Holdings (9147 JP).
Overall, the deal would be a relatively large one to digest at 11 days of Nippon Express’ three month ADV, and 4.8% of the firm’s total shares outstanding.
Together with the announcement, the firm has also guided towards a share buyback program which should provide some share price support a month post-deal, in our view.

Chongho Bridge Pre-IPO Tearsheet

By Ethan Aw

Chongho Bridge (2314866D CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC.
Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.
According to F&S, CB is the largest non-traditional financial institution targeting China’s rural market in terms of total loan balance as of FY22 (31st Dec 22).

ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, we took an early look at the possible summer 2024 listing of Tokyo Metro.
For placements, there was another large selldown in Renesas Electronics (6723 JP), while ITC Ltd (ITC IN) could see one as well soon from British American Tobacco (BATS LN).

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Mar 03

Daily Brief ECM: Nippon Express (9147 JP): A US$260 Million Secondary Offering and more

In today’s briefing:

Nippon Express (9147 JP): A US$260 Million Secondary Offering

Nippon Express (9147 JP): A US$260 Million Secondary Offering

Nippon Express Holdings (9147 JP) has announced a secondary offering of up to 4.8 million shares (including overallotment). There are seven selling shareholders.
The secondary offering comes ahead of the implementation of regulatory restrictions on truck drivers’ overtime in April 2024, which is widely known as the ‘2024 Problem’.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 11 and 13 March (likely 11 March).

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Mar 02

Daily Brief ECM: Nippon Express (9147) Secondary Offering – Banks and more

In today’s briefing:

Nippon Express (9147) Secondary Offering – Banks, Sompo, Others Sell – “2024 Problem” Looms

Nippon Express (9147) Secondary Offering – Banks, Sompo, Others Sell – “2024 Problem” Looms

By Travis Lundy

Today post-close, Nippon Express Holdings (9147 JP) announced a secondary offering. Total size is ~¥30bn before considering where it will price; 11-12 days of ADV, 4.6% of shares out.
Various banks, Toyota-related auto cos, and Sompo Japan will sell. This is a start to the unwind, but it is a very small portion of the total cross-holding position.
NX also announced an on-market buyback of up to ¥10bn to run from 11April -31July 2024. This, and index demand, mitigate some heaviness. But The 2024 Problem looms large.

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Mar 01

Daily Brief ECM: Woori Financial Placement – While the Overhang Remains and more

In today’s briefing:

Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested
Pre-IPO TYK Medicines – Survival Risk Is Imminent, with Limited Highlights in the Pipeline

Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested

IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now.
Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.

Pre-IPO TYK Medicines – Survival Risk Is Imminent, with Limited Highlights in the Pipeline

By Xinyao (Criss) Wang

Among core/key products, TY-302 and TY-2136b have to face fierce competition, with R&D progress lagging behind competing products.TY-9591 for brain metastases from NSCLC could be a breakthrough point for TYK.
There would be a long time for the first product to generate revenue, but TYK is cash shortage.So, the survival risk is high. Such companies are less attractive to investors.
Valuation of TYK after six rounds of financing was RMB3.08 billion. However, considering the weak sentiment and concerns on pipeline, valuation of TYK after IPO could fall below this level.

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Feb 29

Daily Brief ECM: Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec and more

In today’s briefing:

Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec
Renesas Electronics Block – Smaller than Recent Deals but Still Likely Well Flagged
Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID
Precinct Properties NZ Placement – While the Deal Will Be a Clean-Up, Momentum Hasn’t Been Strong
Pre-IPO Hangzhou Jiuyuan Gene Engineering – Old Pipelines Are Difficult to Bring New Breakthroughs
Bharat Highways InvIT IPO – Hardly Attractive Given the Lackluster Sentiment

Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec

By Travis Lundy

Today after the close, Mitsubishi Electric (6503 JP) announced the sale of its position in Renesas Electronics (6723 JP). That’s 50,706,800 shares.
This is the third large block in four months (Renesas in November for 223mm shares, NEC and Hitachi in January 2024 for 123mm shares).
This is smaller, and reasonably well-flagged. Index demand is longer-dated.

Renesas Electronics Block – Smaller than Recent Deals but Still Likely Well Flagged

By Ethan Aw

Mitsubishi Electric (6503 JP) is looking to raise approximately US$800m through an accelerated secondary block deal, via selling 50.71m shares (2.6% of TSO) of Renesas Electronics (6723 JP) stock.
The deal will be an easy one to digest at only three days of three month ADV.
In this note, we will talk about the placement and run the deal through our ECM framework.

Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID

Tokyo Metro (TKYMETRO JP)’s shareholders, the Japanese and Tokyo Metropolitan Governments, could look to raise up to US$2bn by selling half of their stake via an IPO.
Tokyo Metro is one of the two metro network operators in the Tokyo region. It operates nine subway lines.
In this note, we take an early look at the possible listing.

Precinct Properties NZ Placement – While the Deal Will Be a Clean-Up, Momentum Hasn’t Been Strong