ECM Daily Briefs | Page 18 of 118

In today’s briefing:

Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
Azure Minerals Block – Removal of Overhang but Still a Risky Bet
Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion
Brainbees Solutions (FirstCry) IPO | Channel Feedback
Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation
Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain

Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out

Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.

Azure Minerals Block – Removal of Overhang but Still a Risky Bet

Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up.
The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion

Union Bank Of India (UNBK IN) is looking to raise up to US$370m (INR30bn) via its QIP.
The company last undertook a QIP in Aug 2023, which we covered in Union Bank of India QIP – Well-Flagged Deal, Recent Momentum Has Been Strong.
This deal too is a very well flagged one, with the firm having earlier reported that it would look to do a QIP to boost its free float and capital.

Brainbees Solutions (FirstCry) IPO | Channel Feedback

By Pranav Bhavsar

We visited FirstCry Franchisee stores in Ajmer (Rajasthan), and Hosur (Tamil Nadu).
FirstCry has a high brand recall, limited competition, and healthy franchisee relations.
The ability to leverage FirstCry and Baby Oye is a good margin lever.

Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation

Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m 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 provide our updated thoughts on valuation.

Pre-IPO Numans Health Food Holdings – Due to Flawed Business Model, Future Growth Is Uncertain

By Xinyao (Criss) Wang

Numans values light asset model, which helps reduce cost/expenditures, and thereby increase profits. However, such business model has flaws – no R&D/production, only terminal sales/brand operation, no control over upstream.
Revenue growth of core business Algal oil DHA products declined.Numans attempts to change its monotonous product line and enter milk powder industry, but the results weren’t ideal. Numans suffered losses.
If Numans only plays the role of a “porter” of finished products from abroad and lacks core competitiveness/technological content, it will face multiple challenges to achieve sustained high performance growth.

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Feb 21

Daily Brief ECM: Juniper Hotels IPO – Looks Somewhat Fairly Valued and more

In today’s briefing:

Juniper Hotels IPO – Looks Somewhat Fairly Valued
Orica Placement – Keeping the Acquisition Momentum Going

Juniper Hotels IPO – Looks Somewhat Fairly Valued

Juniper Hotels is looking to raise up to US$217m in its upcoming India IPO.
Juniper Hotels is the largest owner by no. of keys of Hyatt affiliated hotels in India as of 2Q23 (30th Jun 23), according to Horwath.
We have looked at the company’s past performance in our previous note. In this note, we provide our thoughts on valuations.

Orica Placement – Keeping the Acquisition Momentum Going

Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco.
The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

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Feb 20

Daily Brief ECM: Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering and more

In today’s briefing:

Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
Heiwado (8276 JP) – Banks and Insurers Unwinding Cross-Holdings In Offering
Amman Mineral International Lockup Expiry – Large Lockup Expiry, Sitting on Sizeable Profits
Initial Thoughts on the Webtoon Entertainment IPO
Waaree Energies IPO- Forensic Analysis
Auntea Jenny (Shanghai) Industrial Pre-IPO Tearsheet
Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses

Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering

SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what.
In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.

Heiwado (8276 JP) – Banks and Insurers Unwinding Cross-Holdings In Offering

Heiwado Co Ltd (8276 JP) today announced a Secondary Offering sell-down by cross-holders, combined with a buyback post-offering to mitigate some of the effects of overhang.
Banks and insurers are selling, and that will leave the stock with a lot of cross-holders left, but investors should look at the model given he zeitgeist.
Companies with lots of cross-holders have to be “fair” to them. Those without copious cash have to spread it around so this transaction model looks likely to be continued.

Amman Mineral International Lockup Expiry – Large Lockup Expiry, Sitting on Sizeable Profits

Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Initial Thoughts on the Webtoon Entertainment IPO

By Douglas Kim

Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024.
The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO.
The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).

Waaree Energies IPO- Forensic Analysis

By Nitin Mangal

Waaree Energies Limited (0656504D IN) (WEL) has filed its DRHP. The company is the largest player in the Solar PV Modules manufacturing space in the country.
The company has seen a sharp growth in sales in F23, backed by China plus one phenomemon.
However, the financials do have a few talking points, such as high RPT, large inventory in transit, faster depreciating newer assets, etc.

Auntea Jenny (Shanghai) Industrial Pre-IPO Tearsheet

Auntea Jenny (Shanghai) Industrial (AJI HK) is looking to raise US$300m in its upcoming Hong Kong IPO. The bookrunners on the deal are CITIC Securities, Haitong, and DFZQ.
Auntea Jenny (Shanghai) Industrial (Auntea) is a freshly-made beverage producer.
As per CIC, the firm operates the fourth largest network of freshly-made tea shops in China as of Sept 23, with an extensive reach into the lower-tier markets

Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses

Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m 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 past performance in our previous notes. In this note, we talk about the updates from its recent filings.

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Feb 19

Daily Brief ECM: ECM Weekly (19th Feb 2024) – Toei Ani and more

In today’s briefing:

ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy

ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy

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, Trial Holdings (5882 JP) was back in the market, a year after ditching its previous attempt, while Juniper Hotels is trying to ride the India wave.
For placements, more signs of REIT coming back to life, this time in Japan. A relatively large deal in Toei Animation (4816 JP) as well was launched.

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Feb 18

Daily Brief ECM: Weekly Deals Digest (18 Feb) – Toei and more

In today’s briefing:

Weekly Deals Digest (18 Feb) – Toei, Outsourcing, YSK, Altium, Ansarada, China TCM, Vinda

Weekly Deals Digest (18 Feb) – Toei, Outsourcing, YSK, Altium, Ansarada, China TCM, Vinda

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Toei Animation (4816 JP)‘s US$550 Million secondary offering.
Event-Driven developments: Outsourcing Inc (2427 JP), Altium Ltd (ALU AU), Ansarada Group Ltd (AND AU), China Traditional Chinese Medicine (570 HK), Vinda International (3331 HK).

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Feb 16

Daily Brief ECM: Initial Thoughts on Hyundai Motor India IPO and more

In today’s briefing:

Initial Thoughts on Hyundai Motor India IPO
CICC-Backed Chinese Chip Design Firm Fined Over Fraudulent IPO Application
Industrial & Infrastructure Investment Corp Placement – Back to the Markets for the 12th Time
Northern Arc Capital Pre-IPO Tearsheet
OceanaGold Philippines Pre-IPO Tearsheet
Pre-IPO Cloudbreak Pharma – The Business, the Concerns and the Outlook

Initial Thoughts on Hyundai Motor India IPO

By Douglas Kim

Hyundai Motor India has been taking initial steps for an IPO. We believe this IPO could be completed sometime in 4Q 2024.
Hyundai Motor India Limited (HMIL) IPO offering size is estimated to be at least US$3 billion, which would be one of the largest in India and the world this year.
If HMIL is valued at US$25 billion and HMC sells a 15% stake, its remaining 85% stake would be worth US$21 billion, representing 55% of HMC’s market cap.

CICC-Backed Chinese Chip Design Firm Fined Over Fraudulent IPO Application

By Caixin Global

A semiconductor company sponsored by China International Capital Corp. Ltd. (CICC), one of the country’s top investment banks, has been fined over IPO application fraud, the China Securities Regulatory Commission (CSRC) said in a statement Friday.
S2C Ltd., which specializes in electronic design automation, has been fined 4 million yuan ($563,095) for fraudulent activities in its attempt to list on Shanghai’s tech-heavy STAR Market.
The move marks the CSRC’s latest effort to enforce strict information disclosure requirements and tough penalties for market violations under its registration-based IPO mechanism.

Industrial & Infrastructure Investment Corp Placement – Back to the Markets for the 12th Time

Industrial & Infrastructure Fund Investment (3249 JP) is looking to raise around US$341m in its primary follow-on offering to acquire 28 properties and an equity interest in a silent partnership.
The deal is a somewhat large one to digest, at 83 days of three month ADV and 16.2% dilution.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Northern Arc Capital Pre-IPO Tearsheet

Northern Arc Capital (0542390D IN) is looking to raise at least US$100m in its upcoming India IPO. The bookrunners on the deal are Citigroup, Axis Capital, and ICICI Securities.
Northern Arc Capital (NAC) is a retail-focused non-banking financial company (NBFC) catering its banking services to the under-served households and businesses in India.
According to CRISIL, NAC was one of the leading players amongst India’s diversified NBFCs in terms of AUM as of Mar 23.

OceanaGold Philippines Pre-IPO Tearsheet

OceanaGold Philippines (OGCP000D PM) is looking to raise up to US$140m in its upcoming Philippines IPO. The deal will be run by BDO Capital and CLSA.
OceanaGold Philippines (OGPI) is a producer of gold and copper in the Philippines, and a subsidiary of OceanaGold Corporation, a Toronto Stock Exchange (TSX) listed gold mining and exploration company.
Based on the Mines and Geosciences Bureau (MGB), OGPI was the second largest producer of gold and copper in the Philippines for FY22 and 9M23.

Pre-IPO Cloudbreak Pharma – The Business, the Concerns and the Outlook

By Xinyao (Criss) Wang

Surgery is doctors’ first choice in many cases. Ophthalmic medical devices are also popular. Compared to the market size of ophthalmic surgeries/medical devices, market size of ophthalmic drugs is small.
Although CLOUDBREAK’s pipeline has the potential to become first-in-class/best-in-class therapies to address unmet medical needs, considering fierce competition, the real market opportunities for its drug candidates may be smaller-than-expected
In last funding round before the IPO, CLOUDBREAK was valued at US$469 million.Valuation of CLOUDBREAK should be lower than Ocumension Therapeutics. So, premium space for IPO pricing may be limited.

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Feb 15

Daily Brief ECM: Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly and more

In today’s briefing:

Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come
Toei Animation Placement – Looks Ripe for a Correction
KB Financial Placement – Momentum Has Been Strong and the Last Clean-Up Sale Has Done Well
Toei Animation (4816 JP): A US$550 Million Secondary Offering
Pre-IPO Beijing Yuanxin Technology Group (PHIP Update) – Risk of Overvaluation and Poor Profit Model
Octillion Energy Holdings Pre-IPO – Over-Reliance on Top Customer and Lack of Competitive Edge
Bharti Hexacom Pre-IPO – The Negatives – No Clear Rationale for Listing

Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come

In December 2021, when companies were required to file statements with the TSE as to plans to meet continuing listing requirements, Toei Animation (4816 JP) had a Plan.
That plan? Get from a then-current 15.5% Tradable Shares level to 25.0% by 31 March 2025. That was “OK” though later, the TSE asked companies to speed it up.
Today, shareholders Sony and Bandai Namco announced an equity offering to sell down up to 4.48mm shares in a domestic+overseas offering. It’s big, heavy, and there is more to come.

Toei Animation Placement – Looks Ripe for a Correction

Bandai Namco (7832 JP) and Sony Pictures are looking to raise up to US$525m via selling around 10.66% of Toei Animation (4816 JP) (TA).
The purpose of the placement is to unwind some of the cross-shareholding, as well as help TA to maintain its listing in the Standard Segment.
In this note, we will talk about the placement and run the deal through our ECM framework.

KB Financial Placement – Momentum Has Been Strong and the Last Clean-Up Sale Has Done Well

The Carlyle Group / (CG US) via Kingsman Investment, is looking to raise US$244m from selling its entire stake in KB Financial (105560 KS).
Carlyle has been invested in the firm since mid-2020, where it then expressed that it would hold on to its stake for at least three and a half years.
The deal would be a small one to digest at just 3.8 days of KB Financial’s three month ADV, representing 1.2% of its current mcap.

Toei Animation (4816 JP): A US$550 Million Secondary Offering

By Arun George

Toei Animation (4816 JP) has announced a secondary offering of up to 4.5 million shares (including overallotment). Bandai Namco Holdings (7832 JP) and Sony Corp (6758 JP) are the sellers.
The offering will allow Toei Animation to maintain its listing in the TSE Standard Market and enable Bandai Namco and Sony to reduce and liquidate cross-shareholdings.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 27 February and 4 March (likely 27 February).

Pre-IPO Beijing Yuanxin Technology Group (PHIP Update) – Risk of Overvaluation and Poor Profit Model

By Xinyao (Criss) Wang

The essence of Yuanxin’s business is selling drugs.Although Yuanxin is backed by Tencent, it’s difficult to come up with more outstanding advantages to compete with Alibaba Health and JD Health.
We have doubts about Yuanxin’s core competitiveness and sustainable profitability, which are also far behind its peers. In our view, the market/investors may find it difficult to accept such stories.
Pre-IPO valuation level of Yuanxin has greatly exceeded the valuation of its drugstore business model. Yuanxin’s valuation should be lower than peers, or for example, P/S ratio of below 1x.

Octillion Energy Holdings Pre-IPO – Over-Reliance on Top Customer and Lack of Competitive Edge

Octillion Energy Holdings (OE HK) is looking to raise US$400m in its upcoming Hong Kong IPO.
Octillion’s main revenue driver has been its EV battery systems with battery cells over the track record period, with a healthy balance sheet to support its cash burn.
However, its revenue growth fell off a cliff in 1H23 due to its heavy reliance on a single customer, which doesn’t appear sustainable, in our view.

Bharti Hexacom Pre-IPO – The Negatives – No Clear Rationale for Listing

Bharti Hexacom is looking to raise up to US$1bn in its upcoming India IPO.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
In this note, we talk about the not-so-positive aspects of the deal.

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Feb 14

Daily Brief ECM: APR IPO Book-Building Results Analysis and more

In today’s briefing:

APR IPO Book-Building Results Analysis
Zhejiang Taimei Medical Technology Pre-IPO Tearsheet
Bharti Hexacom Pre-IPO – The Positives – Earnings Have Been Recovering Well

APR IPO Book-Building Results Analysis

By Douglas Kim

APR reported a very strong IPO book-building results. APR IPO price has been determined at 250,000 won, which is 25% higher than the high end of the IPO price range.
A total of 1,969 institutional investors participated in this IPO book-building. The demand ratio was 663 to 1. APR IPO will start trading on 26 February.
Our base case valuation of APR is target price of 370,809 won per share which represents a 48% upside from the IPO price of 250,000 won.

Zhejiang Taimei Medical Technology Pre-IPO Tearsheet

Zhejiang Taimei Medical Technology Co Ltd (1482194D CH) is looking to raise >US$100m in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley and CICC.
Zhejiang Taimei Medical Technology (ZTMT) is a digital solution provider for the life sciences R&D and commercialization sector.
As per the CIC report in the application proof, the firm was the largest digital solution provider for life sciences R&D and commercialization in China in terms of 2022 revenue.

Bharti Hexacom Pre-IPO – The Positives – Earnings Have Been Recovering Well

Bharti Hexacom is looking to raise up to US$1bn in its upcoming India IPO.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
In this note, we talk about the positive aspects of the deal.

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Feb 13

Daily Brief ECM: Dramatic Growth of SHEIN & Temu Having Noticeable Impact On Segments Outside Of US Retail and more

In today’s briefing:

Dramatic Growth of SHEIN & Temu Having Noticeable Impact On Segments Outside Of US Retail

Dramatic Growth of SHEIN & Temu Having Noticeable Impact On Segments Outside Of US Retail

By Daniel Hellberg

The effects of SHEIN’s and Temu’s growth on US retail are already well known
But recent data points show the companies impacting other industries, too
Through their dramatic growth the two companies are gaining influence in US

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Feb 12

Daily Brief ECM: ECM Weekly (12th Feb 2024) – Nissan/Renault and more

In today’s briefing:

ECM Weekly (12th Feb 2024) – Nissan/Renault, Metcash, Digital Core, SBFC, Thai Credit, Park Hotel

ECM Weekly (12th Feb 2024) – Nissan/Renault, Metcash, Digital Core, SBFC, Thai Credit, Park Hotel