ECM Daily Briefs | Page 46 of 118

In today’s briefing:

Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)
Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking

Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)

By Travis Lundy

Rakuten Bank (5838 JP) has priced at a new range of ¥1,300-1,400/share, down from ¥1,630-1,930/share. That lowers TTM PER and PBR to well below where SBI Sumishin was priced.
This will now be universally recognised by pre-IPO analysts as a raging buy. Even at the top end. Important considerations: Rakuten parent TAM, growth, index inclusions, etc.
There are OTHER important considerations going forward which show themselves in the documents.

Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking

By Oshadhi Kumarasiri

Rakuten Bank announced its IPO price range at ¥1,300-1,400 per share, which is 20-29% lower than the initially indicated price range at the time of filling of the IPO prospectus.
The new price puts Rakuten Bank (5838 JP) on 4.9-5.3x FY+2 PE, which is the lowest in Japan’s banking sector.
Japanese banks usually trade at a price-to-book of 0.2x per 1% ROE. This indicates that Rakuten Bank, which is priced at 1.0-1.1x, may deserve a fair price-to-book of over 2.0x.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 06

Daily Brief ECM: Rakuten Bank IPO: New Price Range Is a Steal and more

In today’s briefing:

Rakuten Bank IPO: New Price Range Is a Steal
Rakuten Bank IPO – Lower Range Makes It Even More Attractive
ZJLD Group Pre-IPO Peer Comparison – Smallest but Compensated with Growth. Sentiment Picking Up
Lalatech Holdings Pre-IPO Tearsheet

Rakuten Bank IPO: New Price Range Is a Steal

Rakuten Bank (5838 JP) has set its IPO price at JPY1,300-1,400 per share which is 20%-29% lower than the IPO reference price range of JPY1,630-1,960 per share.
We previously discussed the IPO in Rakuten Bank IPO: The Investment Case, Rakuten Bank Vs SBI Sumishin Net Bank and Rakuten Bank IPO: Valuation Insights.
The new price range values Rakuten Bank at a discount vs peers for the ROE it delivers. SBI Sumishin Net Bank (7163 JP) strong post-IPO performance suggests strong sector sentiment.

Rakuten Bank IPO – Lower Range Makes It Even More Attractive

Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$630m in its Japan listing in April 2023.
RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.

ZJLD Group Pre-IPO Peer Comparison – Smallest but Compensated with Growth. Sentiment Picking Up

By Clarence Chu

ZJLD Group (ZJLD HK) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
In this note, we discuss the industry dynamics and undertake a peer comparison.

Lalatech Holdings Pre-IPO Tearsheet

Lalatech Holdings Co Ltd (LALA HK) is looking to raise about US$1bn in its upcoming HK IPO. The deal will be run by BofA, JP Morgan and Goldman Sachs.
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.
In 2022, Lalatech facilitated over 427.5m fulfilled orders with a global freight GTV of US$6.7bn, with approximately 50.4m merchants served and business brought to approximately 2.3m carriers.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 05

Daily Brief ECM: CUBox IPO Valuation Analysis and more

In today’s briefing:

CUBox IPO Valuation Analysis
Rakuten Bank IPO: Leveraging the Power of the Rakuten Ecosystem to Lead Japan’s Digital Banking
Avalon Technologies IPO- Forensic Analysis
Monde Nissin: The Investment Case
ZJLD Group IPO: The Bear Case
Growatt Update: No Signs of Slowing Down
JD Industrials Pre-IPO Tearsheet

CUBox IPO Valuation Analysis

By Douglas Kim

Our base case valuation of CUBox is target price of 34,172 won per share, which is 47% higher than the high end of the IPO price range of 23,200 won.
Our base case valuation uses our estimated sales of 24.5 billion won for the company in 2023 and P/S multiple of 17.2x.
Given that CUBox is a leading player in the AI technology driven facial recognition in Korea, many investors are likely to pay higher premium for its technology.

Rakuten Bank IPO: Leveraging the Power of the Rakuten Ecosystem to Lead Japan’s Digital Banking

By Oshadhi Kumarasiri

Rakuten Bank (5838 JP) has an advantage over competitors due to its connection with the Rakuten ecosystem, which has 39+ million monthly active users.
It’s NIM has decreased, but the cost-to-income ratio is the lowest among digital banks, and its net-fee and commission-income has grown significantly, thanks to its association with the Rakuten ecosystem.
The IPO price range is reasonable given its advantageous position. Therefore we intend to subscribe to the IPO when it opens.

Avalon Technologies IPO- Forensic Analysis

By Nitin Mangal

Avalon Technologies (6594468Z IN) has launched its Initial Public Offering.
The company states to have one of the highest ROCEs in the industry, one of the important reasons of high ROCE is unusual accounting treatment of capital reserve.
Other forensic concerns include lack of cash generation and some auditor discomforts.

Monde Nissin: The Investment Case

Monde Nissin Corp (MONDE PM) shares are down 18% on the back of FY22 results which revealed a net loss of PHP13 billion mainly due to a large impairment charge.
While softening demand in meat alternatives is a headwind, Monde should benefit from the tailwinds of market share gains (in APAC BFB) and margin improvement (easing cost inflation).
The valuation is undemanding (SOTP valuation of PHP10.21 per share) and will prove attractive to investors with a longer-term investment horizon.

ZJLD Group IPO: The Bear Case

By Shifara Samsudeen, ACMA, CGMA

ZJLD Group (ZJLD HK), a baijiu company in China, is pre-marketing an HKEx IPO to raise up to US$400 million, according to press reports.
In ZJLD Group IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on the sharpest revenue slowdown, lowest operating margin and FCF margin vs peers along with a deterioration in lead growth indicators.

Growatt Update: No Signs of Slowing Down

Growatt is a distributed energy solution provider with the #1 market share for PV inverters and energy storage inverters, allowing them strong potential to benefit from a growing market.
The company has filed for an IPO on the HKEx with a placeholder value of US$1bn and following the lapse of its application, has refiled for an IPO.
In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s latest IPO filing document which contains full-year 2022 results.

JD Industrials Pre-IPO Tearsheet

JD Industrials (2231713D CH) is looking to raise about US$1bn in its upcoming HK IPO. The deal will be run by Bank of America, Goldman Sachs and Haitong International.
JD Industrials (JDI) is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
JDI’s platform offers 48 product categories and approximately 42.5m SKUs as of FY22 (31st Dec 2022).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 04

Daily Brief ECM: Merdeka Battery Materials IPO Peer Comparison & Valuation – Might Be Worth a Shot and more

In today’s briefing:

Merdeka Battery Materials IPO Peer Comparison & Valuation – Might Be Worth a Shot
JD Property Inc IPO: Debt-Loaded and Overvalued at Previous Private Market Valuation
Gigavis IPO Preview
ZJLD Group IPO: The Bull Case
Lalatech IPO Preview: Disrupting The Traditional Logistics Industry

Merdeka Battery Materials IPO Peer Comparison & Valuation – Might Be Worth a Shot

Merdeka Battery Materials (2012725D IJ) is looking to raise around US$580m in its Indonesian IPO.
It has the largest resource globally in terms of contained nickel at the Konawe Nickel Mine (the SCM Mine), according to Wood Mackenzie
In this note, we undertake a quick peer comparison, talk about our earnings assumptions, and share our thoughts on valuation.

JD Property Inc IPO: Debt-Loaded and Overvalued at Previous Private Market Valuation

By Oshadhi Kumarasiri

Just after Alibaba’s big news of a business split and possible fundraising and IPOs for spun-out entities, JD.com announced that they will list its Properties and Industrials businesses in HK.
The pre-IPO funding round of $800m, led by Hillhouse and Warburg Pincus valued Jingdong Property (JDP HK) at RMB 7.15 per-share, which valued the company at RMB 46.8bn market cap.
This implies a price-to-book multiple of 1.1x, which is towards the high side considering that the sector is trading at an average discount of roughly 10% to its book value.

Gigavis IPO Preview

By Douglas Kim

Gigavis is offering 2.22 million shares in this IPO. The expected market cap of the IPO is from 436 billion won to 503 billion won.
The maximum IPO offering amount is 88.1 billion won. The IPO price is between 34,400 won to 39,700 won.
Gigavis makes automatic optical repair equipment (AOR) for the semiconductor industry.

ZJLD Group IPO: The Bull Case

ZJLD Group (ZJLD HK), a baijiu company in China, is pre-marketing an HKEx IPO to raise upto US$400 million, according to press reports.
ZJLD is the fourth largest privately-owned baijiu company and ranked third among all baijiu companies with three or more aroma types, in terms of revenue in 2021.
The key elements of the bull case rest on market share gains, competitive production capacity, premiumization, rising gross margin and inventory days in good shape vs peers.

Lalatech IPO Preview: Disrupting The Traditional Logistics Industry

By Andrei Zakharov

Lalatech Holdings, one of the largest Asia-based providers of on-demand delivery platform, filed for Hong Kong IPO, with Goldman Sachs, BofA Securities and J.P. Morgan leading the offering.
I like profitable growth at tremendous scale, hybrid monetization model and leadership position in Mainland China with a 40%+ share, well ahead of its major peers.
Lalatech Holdings was backed by top-tier VC investors, including Hillhouse Capital Group, Sequoia Capital, Shunwei Capital, MindWorks Capital and Vitruvian Partners, among others.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 03

Daily Brief ECM: ECM Weekly (2nd Apr 2023) – Meituan and more

In today’s briefing:

ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT
TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon

ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Alibaba (ADR) (BABA US)‘s restructuring news caused some exiciting in the IPO market this week, with Hong Kong filings picking up as well.
On the placements front, all eyes remain on Meituan (3690 HK) and whether Prosus (PRX NA) will do a placement.

TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon

By Daniel Hellberg

Alibaba (ADR) (BABA US)‘s multi-faceted logistics unit Cainiao Smart Logistics (1437124D HK) may seek an IPO in Hong Kong before the end of 2023, according to media reports
In this piece we look at why CaiNiao is being spun off now, what the company actually does (and doesn’t do), what its likely comps are, and more
CaiNiao is unique, but we can begin to understand its position and its valuation by comparing it to JD Logistics (2618 HK) and S.F. Holding (002352 CH)

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 02

Daily Brief ECM: Rakuten Bank IPO: Valuation Insights and more

In today’s briefing:

Rakuten Bank IPO: Valuation Insights
ResMed Inc.: Initiation of Coverage – Recent Acquisitions & Other Key Drivers
Quanta Services Inc.: Initiation of Coverage – Business Strategy & Recent Developments

Rakuten Bank IPO: Valuation Insights

Rakuten Bank (5838 JP) is an online bank in Japan. It is looking to raise up to $878m. Pricing is on 5 April and the listing is on 21 April.
We previously discussed the IPO in Rakuten Bank IPO: The Investment Case and Rakuten Bank Vs SBI Sumishin Net Bank.
In this note, we discuss valuation. Our analysis suggests that Rakuten Bank is fairly valued at the IPO price range of JPY1,630-1,960 per share. We would participate in the IPO.

ResMed Inc.: Initiation of Coverage – Recent Acquisitions & Other Key Drivers

This is our first report on ResMed, a leading medical equipment company that specializes in the treatment of sleep apnea and other respiratory disorders.
The company delivered financial results in the last quarter with revenues below par but managed an earnings beat.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Quanta Services Inc.: Initiation of Coverage – Business Strategy & Recent Developments

This is our first report on Quanta Services, a major provider of infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries.
Its revenues for Electric Power Infrastructure Solutions reached significant levels, maintained margins, and grew market share.
In addition, their subsurface utility and infrastructure solutions division continually delivered a strong performance.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 01

Daily Brief ECM: Merdeka Battery Materials IPO – Commercializing One of the World’s Largest Nickel Mines and more

In today’s briefing:

Merdeka Battery Materials IPO – Commercializing One of the World’s Largest Nickel Mines
AECOM: Initiation of Coverage – Recent Restructuring & Other Developments
IAC/InterActiveCorp: Initiation of Coverage – Business Strategy & Key Drivers
PACCAR Inc.: Initiation of Coverage – Business Strategy & Key Drivers

Merdeka Battery Materials IPO – Commercializing One of the World’s Largest Nickel Mines

Merdeka Battery Materials (2012725D IJ) is looking to raise around US$580m in its Indonesian IPO.
It has the largest resource globally in terms of contained nickel at the Konawe Nickel Mine (the SCM Mine), according to Wood Mackenzie.
MBM aims to become a vertically integrated battery materials player. Through a series of acquisitions, it owns one of the world’s largest nickel mines.

AECOM: Initiation of Coverage – Recent Restructuring & Other Developments

This is our first report on AECOM, one of the largest infrastructure consulting players in the world.
AECOM’s management is focusing on its investments to go after transformative growth opportunities where it has a competitive edge.
Organic NSR growth quickened to 8%, with a 9% increase in design, which is on par with their strongest level over the past ten years and robust growth in both categories.

IAC/InterActiveCorp: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on IAC, a major media and internet player publishing original and engaging digital content in the form of articles, illustrations, and videos and images across various fields.
They had a HomeAdvisor that connected customers with service providers based on what the customer wanted to be done and what the service provider was qualified to accomplish.
Looking forward, IAC’s management intends to increase margins by generating additional revenue from a fixed-cost basis and they anticipate double-digit revenue growth in the coming quarters.

PACCAR Inc.: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on PACCAR, the largest manufacturer of medium and heavy-trucks in the world.
Pretax earnings at PACCAR Parts reached $380 million, a 23% increase over the same time in the previous year.
Fourth quarter revenues at PACCAR Parts were a solid $1.47 billion and the company delivered an all-around beat.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 31

Daily Brief ECM: Rakuten Bank IPO – Thoughts on Valuation and more

In today’s briefing:

Rakuten Bank IPO – Thoughts on Valuation
Samsung SDS Placement – Well Flagged and the Last One Did Well
MLT Placement – Small Deal but Recent Deals Didn’t Do Well
Huolala Parent Lalatech Files for Hong Kong IPO

Rakuten Bank IPO – Thoughts on Valuation

Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.
RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we provide our thoughts on valuation.

Samsung SDS Placement – Well Flagged and the Last One Did Well

By Clarence Chu

Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in Samsung Sds (018260 KS) to raise US$132m.
While a relatively large one to digest, the deal is very flagged.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

MLT Placement – Small Deal but Recent Deals Didn’t Do Well