ECM Daily Briefs | Page 28 of 118

In today’s briefing:

Ecopro Materials: Reduces IPO Price Range
EcoPro Materials IPO: The Bear Case
Ingenia Communities Placement – Largest Shareholder Selling Isn’t Particularly Well Flagged

Ecopro Materials: Reduces IPO Price Range

By Douglas Kim

Ecopro Materials reduced the upper end of the IPO price range from 46,000 won to 44,000 won.
The bankers reduced the IPO discount, EV/EBITDA valuation multiple, and outstanding shares.
We maintain our Bearish view of the Ecopro Materials IPO. Our base case valuation of 37,436 won per share is towards to lower end of the IPO price range.

EcoPro Materials IPO: The Bear Case

EcoPro Materials (ECO123 KS) is a leading player in the electrode material industry. It is seeking to raise up to US$477 million in a KRX IPO.
In EcoPro Materials 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 weakening sector market sentiment, margin pressure likely to persist, cash burn, elevated leverage and high related-party transactions.

Ingenia Communities Placement – Largest Shareholder Selling Isn’t Particularly Well Flagged

Sun Communities (SUI US) is looking to raise A$165m (US$106m) via selling its entire stake in Ingenia Communities (INA AU).
With the investor selling down its entire stake, the deal will be a large one for the firm to digest, with shares representing 32.9 days of three month ADV.
While short covering could potentially provide some support for share price post-deal, the selldown here doesn’t seem particularly well flagged.

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Oct 12

Daily Brief ECM: Kokusai Electric IPO: Lower Price Range Is Reasonable and more

In today’s briefing:

Kokusai Electric IPO: Lower Price Range Is Reasonable
Thai Credit Bank Pre-IPO – The Negatives – Although NPLs Are Rising, and Market Seems Fragmented
J&T Global Express Pre-IPO – Thoughts on Valuation

Kokusai Electric IPO: Lower Price Range Is Reasonable

Kokusai Electric (6525 JP) has trimmed its IPO price from JPY1,890 to JPY1,830-1,840 per share to raise up to US$727 million. The IPO price will be determined on 16 October.
We previously discussed the IPO in Kokusai Electric IPO: The Bull Case, Kokusai Electric IPO: The Bear Case and Kokusai Electric IPO: Valuation Insights.
Our base-case DCF valuation is JPY2,058 per share. Peers have modestly re-rated, and a lower IPO price range helps increase the IPO’s attractiveness.

Thai Credit Bank Pre-IPO – The Negatives – Although NPLs Are Rising, and Market Seems Fragmented

Thai Credit Bank PCL (3674238Z TB) is looking to raise US$300m from its upcoming Thailand IPO via selling a mix of primary and secondary shares in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
In this note, we will talk about the not so positive aspects of the deal.

J&T Global Express Pre-IPO – Thoughts on Valuation

J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

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Oct 11

Daily Brief ECM: Kokusai Electric IPO – Weaker Demand Than We Expected and more

In today’s briefing:

Kokusai Electric IPO – Weaker Demand Than We Expected
Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle
Lalatech IPO: 1H2023 Numbers Point to Strong Improvement in Financials
Thai Credit Bank Pre-IPO – The Positives – Loan Book Has Grown While Earnings Expanded
J&T Global Express Pre-IPO – Peer Comparison
Pre-IPO Guoquan Food (Shanghai) – High Growth May Not Be Sustainable; Long Logic Doesn’t Hold Water

Kokusai Electric IPO – Weaker Demand Than We Expected

By Mio Kato

Kokusai Electric announced its pricing range today, setting it rather tightly at ¥1,830-1,840.
This is slightly below the initial indicative price of ¥1,890 pointing to modest demand.
That is a rather more tepid response than we initially expected given that this is the first sizable offering in some time.

Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle

By Shifara Samsudeen, ACMA, CGMA

KKR is looking to raise around US$730m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations.

Lalatech IPO: 1H2023 Numbers Point to Strong Improvement in Financials

Lalatech has refiled for HKEx IPO and the company plans to raise around US$1bn through the IPO. This insight focuses on latest data points from the company’s new filing.
The company has disclosed results for 1H2023 which point to notable improvement in the company’s financials including an operating profit margin of around 21% for 1H2023.
There has been significant reduction in the company’s operating costs, merchant discounts and carrier incentives in particular, which have helped significant improve the company’s margins.

Thai Credit Bank Pre-IPO – The Positives – Loan Book Has Grown While Earnings Expanded

Thai Credit Bank PCL (3674238Z TB) is looking to raise US$300m from its upcoming Thailand IPO via selling a mix of primary and secondary shares in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
In this note, we will talk about the positive aspects of the deal.

J&T Global Express Pre-IPO – Peer Comparison

J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
We have looked at the company’s past performance and its PHIP updates in our earlier notes. In this note we will undertake a peer comparison.

Pre-IPO Guoquan Food (Shanghai) – High Growth May Not Be Sustainable; Long Logic Doesn’t Hold Water

By Xinyao (Criss) Wang

Guoquan’s model is easy to replicate.The so-called “moat” is all based on scale effects, without which Guoquan would lose competitiveness.This is why Guoquan has been striving to expand franchised stores.
With the increasing frequency of people dining out after China reopens, the high-speed expansion in 2020 seems unsustainable. To B model has less growth space/potential than To C model.
In such a fiercely competitive market, Guoquan’s long-term development logic is not solid. The current temporary improvement in financial performance is likely to be a flash in the pan.

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Oct 10

Daily Brief ECM: EcoPro Materials IPO: The Bull Case and more

In today’s briefing:

EcoPro Materials IPO: The Bull Case
Seoul Guarantee Insurance IPO Industry Analysis
Tianju Dihe Technology IPO Preview: Data Drives The Future
As a Group, Typical SHEIN & Temu Users in the US Lack Political Clout; Why It Matters
Lalatech Holdings Pre-IPO – Refiling Updates – Growth and Profit Pickup but Valuation Gap Remains
Juniper Hotels Pre-IPO Tearsheet

EcoPro Materials IPO: The Bull Case

EcoPro Materials (ECO123 KS) is a leading player in the electrode material industry. It is seeking to raise up to US$500 million in a KRX IPO.
EcoPro Materials is offering 14.5 million shares at an IPO price range of KRW36,200-46,000 per share. Book building runs from 30 October to 3 November, with pricing on 7 November.
The bull case rests on attractive addressable markets, aggressive production capacity expansion, ambition to be the leading non-Chinese player, strong revenue growth and improving cash conversion cycle.

Seoul Guarantee Insurance IPO Industry Analysis

By Douglas Kim

In this insight, we provide additional industry analysis of Seoul Guarantee Insurance Corp which is getting ready to complete its IPO in Korea in the next several weeks.
The IPO of Seoul Guarantee Insurance is an important signal that the Korean government may allow greater competition in the local surety insurance market in 2-3 years.
SGIC has promised high dividends. If we assume the IPO price at the low end of the IPO price range (39,500 won), this would suggest a dividend yield of 8%.

Tianju Dihe Technology IPO Preview: Data Drives The Future

By Andrei Zakharov

Tianju Dihe Technology, more commonly known as Juhe Data, filed to go public in Hong Kong. The company provides standard API services through its APIHub marketplace in China.
Tianju Dihe Technology plans to trade on the HKSE, and CITIC Securities is leading the IPO. The company was backed by JD Technology, a fintech unit of JD.com.
With a market leadership position and a mission to empower the digital economy with data technologies, I have no doubt that Tianju Dihe Technology will have a successful IPO.

As a Group, Typical SHEIN & Temu Users in the US Lack Political Clout; Why It Matters

By Daniel Hellberg

US users of the popular SHEIN and Temu shopping apps tend to be relatively young
Compared to older Americans, younger Americans (18-34) tend to have less political clout
What does this mean for SHEIN and Temu, and how will they respond to political challenges?

Lalatech Holdings Pre-IPO – Refiling Updates – Growth and Profit Pickup but Valuation Gap Remains

Lalatech Holdings Co Ltd (LALA HK) is looking to raise about US$1bn in its upcoming HK IPO.
Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
We have looked at the company’s past performance in our earlier notes. In this note we will talk about the updates from its refiling.

Juniper Hotels Pre-IPO Tearsheet

Juniper Hotels (6593708Z IN) is looking to raise up to US$217m in its upcoming India IPO. The deal will be run by JM Financial, CLSA and ICICI Securities.
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.
The company is jointly held by Saraf Hotels and its affiliate, Juniper Investments and Two Seas Holdings (an indirect subsidiary of Hyatt Hotels Corporation).

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Oct 09

Daily Brief ECM: Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety and more

In today’s briefing:

Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
In our previous note, we covered the company’s performance and undertook a peer comparison. In this note, we will share our thoughts on valuation.

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Oct 08

Daily Brief ECM: ECM Weekly (8th Oct 2023) – Kokusai and more

In today’s briefing:

ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu

ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu

Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Doosan Robotics (454910 KS) lived up to its hype, while JSW Infrastructure continued India’s strong run.
In the placement space, IDFC First Bank Limited (IDFCBK IN) launched its well flagged QIP, while CALB Group (3931 HK)‘s shareholders were released from their IPO lockup.

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Oct 07

Daily Brief ECM: Barito Renewables IPO Trading – Peers Look More Attractive Instead and more

In today’s briefing:

Barito Renewables IPO Trading – Peers Look More Attractive Instead

Barito Renewables IPO Trading – Peers Look More Attractive Instead

Barito Renewables (2306028D IJ) raised around US$200m in its Indonesian IPO, after pricing at the top end of its IPO range at IDR780/share.
Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
In our previous notes, we covered the company’s performance, had undertaken a peer comparison and shared our thoughts on valuation. In this note, we will talk about the trading dynamics.

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Oct 06

Daily Brief ECM: Tian Tu Capital IPO Trading – Subscription Rates Were Lukewarm and more

In today’s briefing:

Tian Tu Capital IPO Trading – Subscription Rates Were Lukewarm
Ecoeye IPO Valuation Analysis

Tian Tu Capital IPO Trading – Subscription Rates Were Lukewarm

Tian Tu Capital (1390587D CH) raised around US$144m in its Hong Kong IPO.
Tian Tu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
We have covered various aspects of the deal in our previous notes. In this note, we will talk about the demand and trading dynamics.

Ecoeye IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Ecoeye IPO is 45,421 won per share, representing 31% higher than the high end of the IPO price range.
Given the solid upside, we have a positive view of Ecoeye IPO. The target P/E multiple of 28.8x is based on a 20% premium to the comps’ average valuation multiple.
We believe this premium valuation multiple is appropriate given higher sales growth rate and operating margin for Ecoeye as compared to the comps.

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Oct 05

Daily Brief ECM: StubWorld: NWD (17 HK) Is Cheap. It May Get Cheaper Still and more

In today’s briefing:

StubWorld: NWD (17 HK) Is Cheap. It May Get Cheaper Still
Doosan Robotics IPO Trading – Strong Insti Subscription Rates but Still Feels like a Punt
Kokusai Electric IPO: Valuation Insights
Kokusai Electric Pre-IPO – Thoughts on Valuation
IDFC First Bank QIP – Well Flagged but Valuations Appear Lofty
J&T Global Express IPO: Updates Tilts the Balance Positively
Pre-IPO Concord Healthcare Group – Business Challenges Are Greater than Expected

StubWorld: NWD (17 HK) Is Cheap. It May Get Cheaper Still

By David Blennerhassett

New World Development (17 HK) nudges an all-time low P/B and implied stub; as the privatisation of NWS Holdings (659 HK) moves gradually forward.
Preceding my comments on NWD/NWS are the current setup/unwind tables for Asia-Pacific Holdcos
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Robotics IPO Trading – Strong Insti Subscription Rates but Still Feels like a Punt

Doosan Robotics (454910 KS) raised around US$318m in its Korea IPO, after pricing its IPO at the top end of the range at KRW26,000/share.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In this note, we will talk about the demand for the deal and other trading dynamics.

Kokusai Electric IPO: Valuation Insights

Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR & (KKR US) seeks to raise about US$745 million through listing Kokusai.
We previously discussed the IPO in Kokusai Electric IPO: The Bull Case and Kokusai Electric IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Kokusai is fully valued at the IPO reference price of JPY1,890 per share. We would pass on the IPO.

Kokusai Electric Pre-IPO – Thoughts on Valuation

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance and undertaken a peer comparison. In this note, we talk about valuations.

IDFC First Bank QIP – Well Flagged but Valuations Appear Lofty

IDFC First Bank Limited (IDFCBK IN) is looking to raise up to INR30bn (US$361m) via a Qualified Institutional Placement (QIP).
The deal is a relatively small one to digest at 6.3 days of three month ADV and 4.9% dilution.
In this note, we will talk about the placement and run the deal through our ECM framework.

J&T Global Express IPO: Updates Tilts the Balance Positively

J&T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China, is pre-marketing a HKEx IPO to raise US$500 million, according to press reports.
We previously discussed the IPO in J&T Global Express IPO: The Bull Case and J&T Global Express IPO: The Bear Case.
The PHIP filing favours the bull case due to a return to organic growth across the main geographies, maiden profitability, stabilization in contract liabilities and declining FCF burn.

Pre-IPO Concord Healthcare Group – Business Challenges Are Greater than Expected

By Xinyao (Criss) Wang

Concord Healthcare Group (CHG HK)’s hospital business is not strong enough to contribute strong performance consistently, leading to unsatisfactory profit margin considering its weak hospital operation and management capability.
The network business could face some legal risks based on our analysis. In the context of anti-corruption campaign in China healthcare, Concord’s business and patients flow could be affected.
Together with potential policy risks such as DRGs/centralized procurement, we tend to be conservative about Concord’s outlook. In terms of valuation, Concord’s valuation should be lower than Inkon Life Technology.

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Oct 04

Daily Brief ECM: Vertex Technology’s Hybrid Arb and more

In today’s briefing:

Vertex Technology’s Hybrid Arb
Ecopro Materials IPO – Peer Comparison – Doesn’t Particularly Stand Out
Vertex Technology Acquisition (VTAC SP)/17LIVE: Turn Off
J&T Global Express IPO: PHIP Updates
Beijing UBOX Online Technology Pre-IPO – PHIP Updates – Signs of Recovery, but Still Making Losses
J&T Global Express Pre-IPO, Part 5 | Analysis of H123 Performance | Updated EV Estimate US$9.1 Bn
Pre-IPO Malo Medical Management – Profit Model Is Not Mature; Future Expansion Is Worrying
Luyuan Group IPO: Likely To Be Priced At The Low-End Of Range As E-Bikes Sales Have Slowed in Asia
J&T Global Express Pre-IPO – PHIP Updates – Managed to Grow but Isn’t Sustainable Yet

Vertex Technology’s Hybrid Arb

By David Blennerhassett

Temasek-Backed Vertex Technology Acquisition Corporation (VTAC SP), the first of three SPACs (so far) to list on the SGX, has announced a transaction to buy Taiwanese live-streaming platform, 17Live.
Assuming the deal completes, potentially by year-end, the merged entity would be valued at ~S$1.16bn.
All independent shareholders are entitled to redemption rights. That is, you’ll get ~$5 back if redeeming against $4.96/share now. But liquidity is not great. Plus this appears a related-party transaction.

Ecopro Materials IPO – Peer Comparison – Doesn’t Particularly Stand Out

EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
In our previous note, we covered the company’s performance. In this note, we will undertake a peer comparison.

Vertex Technology Acquisition (VTAC SP)/17LIVE: Turn Off

By Shifara Samsudeen, ACMA, CGMA

Vertex Technology Acquisition Corporation (VTAC SP) agreed to a De-SPAC transaction with 17LIVE, the top pure-play live streaming platform (by revenue) in Japan and Taiwan combined.
Industry data and the financials suggest that 17LIVE does not have a sustainable competitive advantage to translate its position into high earnings quality.
The purchase consideration of 17LIVE in the De-SPAC transaction is S$925.1 million (US$682.2 million). Our valuation analysis suggests that this consideration is full.

J&T Global Express IPO: PHIP Updates

Global logistics and express delivery service provider J&T Express’ HKEx IPO application has been approved and this insight focuses on new data points from the PHIP filings.
SEA segment’s GPM has further declined during 1H2023, however, gross losses of the other two segments have declined significantly resulting in GPM for the company.
Our analysis suggests that with falling SEA margins, J&T Global Express (1936374D CH) may not be able to generate operating profits in the medium-term.

Beijing UBOX Online Technology Pre-IPO – PHIP Updates – Signs of Recovery, but Still Making Losses

Beijing UBOX Online Technology (1741985D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
Beijing UBOX Online Technology (UBOX) is an unmanned retail operator (vending machine) in China.
We had looked at its past performance earlier. In this note, we look at the updates from its recently filed PHIP.

J&T Global Express Pre-IPO, Part 5 | Analysis of H123 Performance | Updated EV Estimate US$9.1 Bn

By Daniel Hellberg

In this insight we focus on J&T’s improved H123 performance in China and SE Asia
How did the company achieve these gains? And do the improvements appear sustainable?
We conclude with an updated estimate of J&T’s Enterprise Value: US$9.1 Bn

Pre-IPO Malo Medical Management – Profit Model Is Not Mature; Future Expansion Is Worrying

By Xinyao (Criss) Wang

Malo’s revenue had good growth, but revenue scale is still small. At the current gross margin level, it would be difficult to generate decent profits considering the large SG&A expenses.
Dental care expansion is difficult. Malo would face the challenging such as lack of high-quality dentists and centralized procurement. Both would drag down profits and cash flow.
We are not optimistic about Malo’s share price performance after IPO. This industry’s profit mode is not mature. Most of chain dental services providers are still in cash-burning expansion stage.

Luyuan Group IPO: Likely To Be Priced At The Low-End Of Range As E-Bikes Sales Have Slowed in Asia

By Andrei Zakharov

Luyuan Group, a pioneer in the e-bike industry in China, set terms for an upcoming IPO. The company offers ~106.7M shares at the expected price range of HK$6.00 to HK$8.00.
The IPO price range implies a market cap of roughly HK$3B at the midpoint. Cornerstone investors have agreed to subscribe and purchase ~71% of the Offer Shares.
Shares will begin trading on the HKSE next week. I believe the IPO will be priced at the low end of the range as e-bikes sales have slowed in Asia.

J&T Global Express Pre-IPO – PHIP Updates – Managed to Grow but Isn’t Sustainable Yet