ECM Daily Briefs | Page 57 of 118

In today’s briefing:

NRI (4307) Likely Prices Today – Expect Weakness Then Strength
Recap of Our IPO Research in 2022
Daiei Kankyo (9336): TSE Prime IPO and Index Demand

NRI (4307) Likely Prices Today – Expect Weakness Then Strength

By Travis Lundy

On 25 November Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would conduct a Secondary Offering of NRI Shares.
The sale is 36.97mm shares plus a greenshoe. It’s a big deal ($1bn) including greenshoe after JPY has just strengthened, but underperformance both before and after announcement sets up well.
Expect weakness today, but the stock is now at a two-year low, and the PER multiple premium is now at the lowest 3mo average premium in 5yrs. Expect retail buying.

Recap of Our IPO Research in 2022

By Douglas Kim

In this report, we review our IPO investment research in 2022, including the performance of our calls.
The accuracy rate of our calls on IPOs this year was 79% (15 calls right, 4 calls wrong), higher than our average accurate rate of 77% from 2017 to 2022.
In 2022, the 12 stocks (positive ratings) were up 50.1% on average from their IPO prices. The 7 stocks (negative ratings) were down 11.2% on average from their IPO prices.

Daiei Kankyo (9336): TSE Prime IPO and Index Demand

By Travis Lundy

Daiei Kankyo (9336 JP) – designer, builder, operator/maintainer of waste management/recycling, soil purification, waste-to-energy, and similar infrastructure – will IPO on the TSE Prime market on 14 December.
The business is somewhat unexciting, but likely a non-growing, non-shrinking business which could roll up others.
The TSE Prime listing will mean it will have a TOPIX Inclusion at the end of January.

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Dec 04

Daily Brief ECM: ECM Weekly (4th Dec 2022) – Skymark and more

In today’s briefing:

ECM Weekly (4th Dec 2022) – Skymark, Daiei, Sunshine, Lygend, Weilong, NRI, Zomato, Goto, Bobcat
Palo Alto Networks: Acquisition of Cider Security & Other Drivers

ECM Weekly (4th Dec 2022) – Skymark, Daiei, Sunshine, Lygend, Weilong, NRI, Zomato, Goto, Bobcat

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 two Japanese IPO set the ball rolling for the year end rush, with a few more lined up in Hong Kong along with Sunshine.
There were a few largish selldowns in Japan and India and given Hong Kong’s recent performace, it will see some deals soon as well.

Palo Alto Networks: Acquisition of Cider Security & Other Drivers

Palo Alto had a strong first quarter and managed to surpass Wall Street expectations in terms of top-line growth as well as profitability.
As the macroeconomic situation shifts, the company is ramping up its efforts to create incremental operating leverage in its business.
Another interesting fact is that Palo Alto has consistently outperformed other tech and cybersecurity stocks even in market lows.

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Dec 03

Daily Brief ECM: Pre-IPO 3D Medicines (3DM HK) – Some Points Worth the Attention; Our Thoughts on Valuation and more

In today’s briefing:

Pre-IPO 3D Medicines (3DM HK) – Some Points Worth the Attention; Our Thoughts on Valuation

Pre-IPO 3D Medicines (3DM HK) – Some Points Worth the Attention; Our Thoughts on Valuation

By Xinyao (Criss) Wang

The NRDL negotiation has completely changed the pricing method and valuation logic of innovative drugs. Based on the 3D Alphamab Simcere Agreements, 3D Medicines would have limited profits from envafolimab.
The majority candidates are based on license-in model. The intention to “pile up” a nice pipeline based on license-in model before IPO is obvious. 3D Medicines’s R&D capability is questionable.
The overall quality and core competitiveness of 3D Medicines are not high. Mr. Market is not friendly to the valuation of companies based on license-in model.

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Dec 02

Daily Brief ECM: Skymark IPO – Valuation and more

In today’s briefing:

Skymark IPO – Valuation
Pre-IPO MedSci Healthcare Holdings – The Investment Logic, the Business Analysis and the Risks
Analog Devices Inc: New SPoE PESE & PD Solutions & Other Drivers
Gap Inc: Gap Store On Amazon & Other Developments
Ross Stores: Store Additions & Other Drivers

Skymark IPO – Valuation

By Mio Kato

Skymark is a little difficult to value given wide dispersions in peer multiples and earnings recovery trajectories.
However, on balance we believe the issue looks to be on the cheap side.
In addition, there are several quirks to the balance sheet, not all of which are negative.

Pre-IPO MedSci Healthcare Holdings – The Investment Logic, the Business Analysis and the Risks

By Xinyao (Criss) Wang

The large physician network is actually the cornerstone for MedSci Healthcare (MHH HK)’s precision omni-channel marketing solutions and RWS solutions, and also the key to support the overall investment logic.
In fierce competition, how to retain physician network for a long time, convert them into business value continuously and achieve the high growth trend expected by the market is challenging.
In terms of valuation, MedSci’s valuation could be higher than Medlive due to its stronger physician platform solutions business and medical professional network, but could be lower than HUAYIWANG.

Analog Devices Inc: New SPoE PESE & PD Solutions & Other Drivers

Analog Devices delivered another all-around beat in the recent quarterly result.
In Communications, Analog Devices expanded its 5G radio systems leadership with its transceiver portfolio, winning some additional share at key suppliers.
We provide the stock of Analog Devices with a ‘Hold’ rating with a revision in the target price.

Gap Inc: Gap Store On Amazon & Other Developments

Gap delivered a strong set of results in the quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
The company has taken steps to maximize profitability and cash flow while rebalancing and lowering inventory to drive short-term and long-term improvements across its entire business.
However, the company is proving strength in lifestyle segments, which are growing at an accelerated rate in the current market.

Ross Stores: Store Additions & Other Drivers

Ross Stores’ results were well above market expectations in terms of revenues as well as earnings as it increased storewide values.
On the other hand, given their third-quarter sales growth and enhanced holiday assortments, they face their easiest sales and earnings comparisons in the fourth quarter.
We maintain our ‘Hold’ rating on Ross Stores with a revised target price.

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Dec 01

Daily Brief ECM: Lygend Resources & Technology IPO: Trading Debut and more

In today’s briefing:

Lygend Resources & Technology IPO: Trading Debut
Sunshine Insurance Group IPO: Valuation Insights
Lava International IPO: Forensic Analysis
Esco Lifesciences Pre-IPO Tearsheet
Lygend Resources & Technology IPO Trading – Tepid Subscription but Potential Upside Remains
Marketingforce Management Pre-IPO Tearsheet
Weilong Delicious Global Pre-IPO – Updated Peer Comp and Valuation

Lygend Resources & Technology IPO: Trading Debut

Lygend Resources & Technology (2245 HK) priced its IPO at HK$15.80 per share to raise net proceeds of HK$3.5 billion (US$450 million). The shares will start trading tomorrow.
We previously discussed the IPO in Lygend Resources & Technology IPO: Riding the Wave and Lygend Resources & Technology IPO: Valuation Insights.
Peers have re-rated and the IPO price continues to imply a discount to the median peer CY2023 P/E multiple. Therefore, the IPO price remains attractive.

Sunshine Insurance Group IPO: Valuation Insights

Sunshine Insurance (6963 HK) has launched its HKEx listing at HK$5.83-6.45 per share to raise up to US$951 million. Books are open from 30 November to 5 December.
We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case and Sunshine Insurance Group IPO: The Bear Case.
At the IPO price range, Sunshine trades at a significant premium to median peer multiples. Therefore, we would avoid the IPO.

Lava International IPO: Forensic Analysis

By Nitin Mangal

Lava International (9263793Z IN) is one of the leading end-to-end focused mobile handset and mobile handset Solutions Company based in India, with operations in a number of countries.
Major business risk arises from external environment, as Lava is one of the prominent leaders in feature phone segment, where the market is dying.
Key forensic takeaways pertain to ECL provisioning and some absurd trend in line items. There are several discomforts on the governance end as well which must not be ignored.

Esco Lifesciences Pre-IPO Tearsheet

Esco Lifesciences Group (1891571D SP) is looking to raise about US$300m in its upcoming HK IPO. The deal will be run by JP Morgan, BofA and Jefferies.
Esco Lifesciences (EL) is a global provider of life sciences, pharmaceutical and bioprocessing tools, with an aim to develop, discover and commercialize technology-driven life sciences, pharmaceutical and bioprocessing tools.
According to CIC, it is the second largest supplier of biosafety cabinets and the third largest supplier of time-lapse incubators globally as measured by revenue in 2021.

Lygend Resources & Technology IPO Trading – Tepid Subscription but Potential Upside Remains

By Clarence Chu

Lygend Resources & Technology (2245 HK) raised US$470m in its Hong Kong IPO.
Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
In this note we will talk about the trading dynamics.

Marketingforce Management Pre-IPO Tearsheet

Marketingforce Management (MFM HK) is looking to raise about US$100m in its upcoming HK IPO. The deal will be run by CICC and CCB International.
Marketingforce Management (MFM) is a domestic marketing and sales SaaS solution provider in China and considered the largest in terms of revenue in 2021, according to Frost & Sullivan.
Through its Marketingforce platform, MFM delivers integrated cloud-based solutions that cover the entire marketing and sales management process of enterprises, from content and experience to strategy and management, amongst others.

Weilong Delicious Global Pre-IPO – Updated Peer Comp and Valuation

Weilong Delicious Global (WDG HK), a spicy snack food company in China, aims to raise around US$200m in its Hong Kong IPO.
According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
In this note, we provide an update to our earlier peer comparison and valuations.

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Nov 30

Daily Brief ECM: Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag and more

In today’s briefing:

Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag
Sunshine Insurance Group Pre-IPO – Peer Comparison – Fastest in One Segment, Slowest in the Other
Fangzhou Group Pre-IPO Tearsheet
Sunshine Insurance Group IPO: The Bear Case
Sunshine Insurance Group IPO – Needs to Correct by Only 50%

Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag

Doosan Bobcat Inc (241560 KS) aims to sell a US$145m block. Its recent price momentum is strong but past deals have shown mixed results.
The deal doesn’t appear to be well flagged and is a relatively large one to digest, representing 20.9 days of its three month ADV.
In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

Sunshine Insurance Group Pre-IPO – Peer Comparison – Fastest in One Segment, Slowest in the Other

Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
We have looked at the company’s past performance in our previous notes. In this note, we will undertake a peer comparison.

Fangzhou Group Pre-IPO Tearsheet

Fangzhou Group (FANGZHOU HK) is looking to raise about US$300m in its upcoming HK IPO. The deal will be run by Citibank, UBS and ABC International.
Fangzhou Group is an online chronic disease management platform in China, considered the largest in terms of average MAU in 2021, according to CIC.
It focuses on common and chronic diseases such as hypertension, cardiovascular and respiratory chronic diseases, providing tailored medical care and precision medicine covering the full disease cycle for patients.

Sunshine Insurance Group IPO: The Bear Case

Sunshine Insurance (SUN HK), a Chinese life and P&C insurance company, is pre-marketing a US$1.0 billion HKEx IPO, according to press reports.
In Sunshine Insurance 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 Sunshine Life’s VNB margin decline and agent channel pressure; Sunshine P&C’s regulatory pressure on premiums and the group’s declining investment yield.

Sunshine Insurance Group IPO – Needs to Correct by Only 50%

Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise around US$950m in its HK IPO.
SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
We have looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.

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Nov 29

Daily Brief ECM: Skymark Airlines IPO – Peer Comparison & Valuation – Asking Too Much for Clipped Wings and more

In today’s briefing:

Skymark Airlines IPO – Peer Comparison & Valuation – Asking Too Much for Clipped Wings
Nexus Select Trust Pre-IPO Tearsheet
Sunshine Insurance Group IPO: The Bull Case
Daiei Kankyo IPO – Final Thoughts on Valuation

Skymark Airlines IPO – Peer Comparison & Valuation – Asking Too Much for Clipped Wings

Skymark Airlines (9204 JP) is looking to raise approximately US$235m in its Japan IPO.
Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
In our previous notes, we looked at the company’s past performance. In this note, we talk about peer comparison and valuations.

Nexus Select Trust Pre-IPO Tearsheet

By Clarence Chu

Nexus Select Trust (NST IN) is looking to raise up to US$500m in its upcoming India IPO.
The bookrunners on the deal are Axis, BofA, Citi, HSBC, IIFL, JM Fin, JPM, Kotak, MS and SBI Cap.
Nexus Select Trust (NST) is a REIT with a portfolio of 17 Grade A urban consumption centers.

Sunshine Insurance Group IPO: The Bull Case

Sunshine Insurance (SUN HK), a Chinese life and P&C insurance company, is pre-marketing a US$1.0 billion HKEx IPO, according to press reports.
In 2020, Sunshine P&C ranked seventh and Sunshine Life ranked 12th as measured by original premiums income market share, according to the CBIRC and the Insurance Association of China.
The key elements of the bull case rest on Sunshine Life’s robust premium growth and high persistency ratio; Sunshine P&C’s underwriting profits in 9M22 and its high group solvency ratio.

Daiei Kankyo IPO – Final Thoughts on Valuation

Daiei Kankyo (9336 JP) (DK), a waste management company, aims to raise around US$314m in its Japan IPO.
Daiei Kankyo is involved in the waste management and related businesses in Japan. The core of its operations consists of its waste management and recycling business.
In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about final valuations.

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Nov 28

Daily Brief ECM: Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications and more

In today’s briefing:

Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
Growatt Technology IPO: Valuation First Look
Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak

Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications

By Travis Lundy

On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares.
At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.

Growatt Technology IPO: Valuation First Look

Growatt Technology (1833969D CH), a leading PV inverters manufacturer, is pre-marketing a US$1.0 billion HKEx IPO, according to press reports.
We previously discussed the IPO in Growatt Technology IPO: The Bull Case, Growatt Technology IPO: The Bear Case and Growatt Technology IPO: Growing Watts.
In this note, we present our forecasts and take the first look at Giant Biogene’s potential valuation range.

Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak

Nomura Holdings (8604 JP) and Jafco Co Ltd (8595 JP) are looking to raise around US$850m via selling 5.7% of Nomura Research Institute Ltd (4307 JP).
This is not the first sale by Nomura and marks a clean up for Jafco. Hence it might not come as a complete surprise.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

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Nov 27

Daily Brief ECM: ECM Weekly (27th Nov 2022) – Growatt and more

In today’s briefing:

ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo

ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo

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, things are picking up again going into the year end.
There were no large placement or blocks this week, although prior lockup linked blocks kept flowing through.

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Nov 26

Daily Brief ECM: Growatt Technology Pre-IPO – Still Looks Good and more

In today’s briefing:

Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation
TS Group (Global) Pre-IPO Tearsheet

Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation