ECM Daily Briefs | Page 18 of 123

In today’s briefing:

Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong
Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected
Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong

SK Square is looking to raise around US$198m via selling 2.1% of Krafton (259960 KS).
The stock has been doing well over the past few months and its earnings and price momentum remain strong.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected

Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.

Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

Remegen’s product revenue fails to cover R&D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.

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Apr 22

Daily Brief ECM: ECM Weekly (22nd Apr 2024) – Kokusai and more

In today’s briefing:

ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar
Xunfei Healthcare Technology Pre-IPO – Appears to Be in the Early Stages of Commercialization

ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar

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, Sichuan Baicha Baidao Industrial (2555 HK)‘s deal launch made it the first large HK IPO for this year.
On the placement front, Vodafone Idea (IDEA IN) deal was live. Also there are lockup expiries in Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) coming up.

Xunfei Healthcare Technology Pre-IPO – Appears to Be in the Early Stages of Commercialization

By Clarence Chu

Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO.
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.
In this note, we look at the firm’s past performance.

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Apr 20

Daily Brief ECM: Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public? and more

In today’s briefing:

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

By Sanghyun Park

The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

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Apr 19

Daily Brief ECM: Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment and more

In today’s briefing:

Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment
Aadhar Housing Finance Pre-IPO – Refiling Updates – Growth Picking Up
Zhubajie Pre-IPO – Profitability Looks like a Long Shot

Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment

By Andrei Zakharov

Mobvoi, an emerging AIGC market player in China, set terms for an IPO and plans to raise ~HK$330M (~$42M) in Hong Kong. CICC and CMB International are leading the offering.
The initial public offering is expected to be between HK$3.70 and HK$4.10. At the midpoint of the range, Mobvoi has a market value of ~HK$5.8B based on 1491.5M outstanding shares.
In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenarios for each business segment under my base case.

Aadhar Housing Finance Pre-IPO – Refiling Updates – Growth Picking Up

Aadhar Housing Finance (AHF) is now looking to raise around US$600m in its India IPO, via selling a mix of primary and secondary shares.
AHF is focused on the low income housing segments (ticket size less than INR1.5m) in India. It offers a range of mortgage-related loan products.
In this note, we look at the updates from the company’s recent filings.

Zhubajie Pre-IPO – Profitability Looks like a Long Shot

By Ethan Aw

Zhubajie Co Ltd (ZHUHKZ HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
Zhubajie (ZBJ) is a customized enterprise services e-commerce platform in China. The firm focuses on matching and facilitating the transactions between enterprise clients and service providers through its ZBJ platform.
In this note, we talk about the firm’s historical performance.

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Apr 18

Daily Brief ECM: Jeil M&S IPO Bookbuilding Results Analysis and more

In today’s briefing:

Jeil M&S IPO Bookbuilding Results Analysis
Cloudchain Pre-IPO – The Negatives – But Still Not Convinced
Mao Geping Cosmetics Pre-IPO Tearsheet
Pre-IPO Belle Fashion Group – Performance Has Picked Up, but Not yet Reversed

Jeil M&S IPO Bookbuilding Results Analysis

By Douglas Kim

Jeil M&S reported excellent IPO bookbuilding results. Jeil M&S’s IPO price has been determined at 22,000 won per share (22% higher than the high end of the IPO price range).
A total of 2,164 institutional investors participated in this IPO book building. The demand ratio was 646 to 1. Samhyun will start trading on 30 April 2024.
Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 11% higher than the IPO price.

Cloudchain Pre-IPO – The Negatives – But Still Not Convinced

By Ethan Aw

Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO.
Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
In this note, we will talk about the not-so-positive aspects of the deal.

Mao Geping Cosmetics Pre-IPO Tearsheet

By Clarence Chu

Mao Geping Cosmetics (1478187D CH) is looking to raise around US$300m in its upcoming Hong Kong IPO. The bookrunner on the deal is CICC.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
As per F&S, MGC was the only domestic market player among the top ten premium beauty groups in China, ranking eighth by 2022 retail sales.

Pre-IPO Belle Fashion Group – Performance Has Picked Up, but Not yet Reversed

The core of Belle’s transformation is to inject “digitalization” into existing massive store assets, with strategy of “omnichannel+multi brands”. Belle also devotes significant resources to online channels and online-to-offline integration.
Benefiting from the DTC retail model, Belle increases the probability of success when launching products. Licensing/acquisition are important ways to empower new brands and promote growth. Belle’s performance has rebounded.
However, the path of transformation hasn’t yet been completed. Belle still mainly relies on heavy asset mode and is exposed to inventory risks. There ‘s still room for further improvement.

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Apr 17

Daily Brief ECM: Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry and more

In today’s briefing:

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
Belle Fashion IPO: The Investment Case
Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model
Cloudchain Pre-IPO – The Positives – Turned Profitable Recently

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry

By Travis Lundy

Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.

Belle Fashion IPO: The Investment Case

Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO.
Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage.

Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model

The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO.

Cloudchain Pre-IPO – The Positives – Turned Profitable Recently

By Ethan Aw

Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO.
Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
In this note, we will talk about the positive aspects of the deal.

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Apr 16

Daily Brief ECM: Baicha Baidao (2555 HK) IPO: Valuation Insights and more

In today’s briefing:

Baicha Baidao (2555 HK) IPO: Valuation Insights
Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains
Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers
Johor Plantations Pre-IPO – Assets in Prime Yield Stage But Industry Isn’t Really Expected to Grow

Baicha Baidao (2555 HK) IPO: Valuation Insights

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case.
There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.

Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains

By Andrei Zakharov

Horizon Robotics, a consumer-centric and fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, filed for an IPO and plans to raise up to $500M in Hong Kong.
Horizon Robotics was founded in 2015 by Dr. Yu Kai, Dr. Chang Huang, Ms. Feiwen Tao, and a group of scientists and tech entrepreneurs.
I have a positive view of an upcoming IPO and believe Horizon Robotics is in a great position to capitalize on rapidly growing smart vehicles market in China and worldwide.

Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers

Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
We have looked at the company’s performance in our past note. In this note, we talk about valuations

Johor Plantations Pre-IPO – Assets in Prime Yield Stage But Industry Isn’t Really Expected to Grow

By Clarence Chu

Johor Plantations Group (2368120D MK) is looking to raise around US$180m in its upcoming Malaysia IPO.
Johor Plantations Group (JPG) is an upstream oil palm plantation firm operating predominantly in Johor, Malaysia.
In this note, we look at the firm’s past performance.

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Apr 15

Daily Brief ECM: Postage Fraud Case Update: Guilty Plea and more

In today’s briefing:

Postage Fraud Case Update: Guilty Plea, Asset Forfeiture, & Restitution Set at a Whopping US$158 Mn!
Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention
ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo
Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Postage Fraud Case Update: Guilty Plea, Asset Forfeiture, & Restitution Set at a Whopping US$158 Mn!

By Daniel Hellberg

A week ahead of trial, a defendant in massive fraud case copped a plea
Terms of deal include guilty plea, asset forfeiture, restitution of US$158 mn
US investigation continues; are other Chinese companies involved in case?

Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention

Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo

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, the focus remained on HD Hyundai Marine Solution (443060 KS), even as Sichuan Baicha Baidao Industrial is gearing up to launch its IPO.
On the placement front, there were deals across India, South Korea and Australia.

Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

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Apr 13

Daily Brief ECM: Baicha Baidao IPO: The Bear Case and more

In today’s briefing:

Baicha Baidao IPO: The Bear Case

Baicha Baidao IPO: The Bear Case

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports.
In Baicha Baidao IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on pedestrian store KPIs, unsustainable historical growth rates, declining contract liabilities, and margin pressure reflecting a fiercely competitive market.

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Apr 12

Daily Brief ECM: Baicha Baidao IPO: The Bull Case and more

In today’s briefing:

Baicha Baidao IPO: The Bull Case
Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss
HD Hyundai Marine Solution IPO Industry Analysis
ICTK IPO Valuation Analysis

Baicha Baidao IPO: The Bull Case

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports.
Biacha is China’s third largest freshly-made tea shop company in terms of retail sales value in 2023, according to Frost & Sullivan.
The bull case rests on a rising market share, high revenue growth, sector-leading margins, cash generation and a strong balance sheet.

Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss