ECM Daily Briefs | Page 6 of 114

In today’s briefing:

Quantgroup Technology Pre-IPO Tearsheet
QuantumPharm (Xtalpi) Pre-IPO – PHIP Updates – Strong Growth, Although Losses Continue to Pile Up
Pre-IPO Mokingran Jewellery Group – Disappointing Profit Margin and Potential Risk in Business Model
Waystar Holding: IPO Price (Midpoint): $21.50. PT: $17.50, ~19% Downside. Move To Sidelines

Quantgroup Technology Pre-IPO Tearsheet

Quantgroup Technology (1467534D CH) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by CICC and CMB International.
Quantgroup Technology is a digitalization solutions provider in China. Its digitalization solutions primarily include digitalized marketing, including precision marketing for financial institutions and local merchants, and goods transaction facilitation.
The apps that Quantgroup operates can be largely categorized into two Quant-enabled proprietary apps, namely Yangxiaomie and Consumption Guide.

QuantumPharm (Xtalpi) Pre-IPO – PHIP Updates – Strong Growth, Although Losses Continue to Pile Up

QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
In our previous note we looked at the company’s past performance. In this note, we discuss QuantumPharm’s PHIP updates.

Pre-IPO Mokingran Jewellery Group – Disappointing Profit Margin and Potential Risk in Business Model

MOKINGRAN’s revenue fluctuated in the past three years. Profit margin was much lower than that of peers/industry average, which may not necessarily have big improvement even with upward gold price.
MOKINGRAN once applied for IPO in A-share but failed. The concerns of SZSE included “unusual” gold trade-in business, large inventory balance and the risk of “false increase” in profits/revenues.
The gold boom should not mask the risks of MOKINGRAN. Even if MOKINGRAN successfully goes public, it still faces many challenges. Valuation of MOKINGRAN should be lower than peers.

Waystar Holding: IPO Price (Midpoint): $21.50. PT: $17.50, ~19% Downside. Move To Sidelines

By Andrei Zakharov

Waystar Holding, provider of mission-critical cloud software to healthcare organizations, set terms for an IPO and plans to raise ~$970M in the upcoming Nasdaq offering.
The initial public offering is expected to be between $20.00 and $23.00. At the midpoint, Waystar Holding has a market value of ~$3.7B based on 173.4M fully diluted shares.
In my insight, I discuss valuation framework for comparable company analysis and research multiples of M&A transactions, including Athenahealth, Cerner and Change Healthcare.

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May 29

Daily Brief ECM: ASMedia GDR Offering – Well Flagged and more

In today’s briefing:

ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering
Shift Up IPO: The Investment Case
Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull
Pre-IPO Jiangxi Rimag Group (PHIP Updates) – Some Points Worth the Attention

ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering

Asmedia Technology (5269 TT) is looking to raise up to US$335m in its global depository receipts (GDRs) offering.
Overall, the deal would be a relatively small one for the stock to digest at just 5.6 days of its three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Shift Up IPO: The Investment Case

By Arun George

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
Shift Up now focuses only on game development and has a policy of publishing games in cooperation with global partners such as Tencent (700 HK) and Sony Corp (6758 JP).
The investment case rests on a stellar game development track record, several growth drivers, high profitability and cash generation.

Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull

Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
We have looked at the company’s performance in our past notes. In this note, we talk about valuations.

Pre-IPO Jiangxi Rimag Group (PHIP Updates) – Some Points Worth the Attention

Considering the dominant position of medical imaging centers in public hospitals and challenges from other players, future development space of Rimag would be squeezed,and even will soon encounter growth bottlenecks.
Although Rimag turned losses into profits, we still have doubts about its future profitability due to increasing costs and potential price decline.This business may fail to bring investors decent profits.
Rimag’s post-investment valuation after last round financing isn’t cheap.Given the uncertainty of future revenue growth prospects and the real market space, P/S of below 3 is a more comfortable range.

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May 28

Daily Brief ECM: Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance and more

In today’s briefing:

Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance
Exedy Corporation Placement – Relatively Large One, Although Buyback Should Aid Share Price
Barito Renewables Lockup Expiry – US$8bn Lockup Expiry for Largest Indonesian Market Cap Stock
Lalatech Compared to Full Truck Alliance, SF Intra-City, and GOGOX in Eleven Easy Charts
Telix Pharmaceutical US ADS – Past Deal Record Hasn’t Been Strong, but Fortune Could Be Turning
Shift Up IPO – Peer Comparison – Small in Size but Ranks High on Growth and Margins

Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance

By Steve Zhou, CFA

Alibaba Group Holding (9988 HK) and JD.com (9618 HK) both announced the issuance of convertible debt last week (Alibaba on May 23 and JD.com on May 21).
Both have mentioned that the reasons for the issuance are the low funding cost (0.25% coupon for JD.com and 0.5% for Alibaba) and to fund their current share repurchase program.
I think the convertible debt structures makes sense and it is beneficial for both companies to buy back as much as possible at the current share price.

Exedy Corporation Placement – Relatively Large One, Although Buyback Should Aid Share Price

Aisin (7259 JP) is looking to raise US$290m from selling its entire stake in Exedy Corp (7278 JP).
While the selldown doesn’t seem to be particularly well-flagged, this appears to be another cross-shareholder unwind in Japan.
In this note, we will talk about the placement and run the deal through our ECM framework.

Barito Renewables Lockup Expiry – US$8bn Lockup Expiry for Largest Indonesian Market Cap Stock

Barito Renewables Energy (BREN IJ) raised around US$200m in its Indonesian IPO, after pricing at the top end at IDR780/share. Its eight-month lockup will expire on 29th May 2024.
Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Lalatech Compared to Full Truck Alliance, SF Intra-City, and GOGOX in Eleven Easy Charts

By Daniel Hellberg

We compare Lalatech’s scale, P&L, Balance Sheet, and Cash Flow to peers
On several measures, Lalatech is comparable to Full Truck Alliance, SF-Intra
Small, unprofitable GOGOX not an appropriate comp for Lalatech, in our view

Telix Pharmaceutical US ADS – Past Deal Record Hasn’t Been Strong, but Fortune Could Be Turning

Telix Pharmaceuticals (TLX AU) aims to raise at least US$100m in its US ADS listing. The bookrunners on the deal are Jefferies, Morgan Stanley, Truist Securities, and William Blair.
TLX is a commercial-stage biopharmaceutical company focused on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals.
In this note, we talk about the deal dynamics and the listing impact.

Shift Up IPO – Peer Comparison – Small in Size but Ranks High on Growth and Margins

Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In our previous note, we looked at the company’s past performance. In this note, we will undertake a peer comparison.

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May 27

Daily Brief ECM: Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition and more

In today’s briefing:

Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition
ECM Weekly (27th May 2024) – Renesas, AUB, Modec, Tata Tech, MUFG, Shift Up, Novelis, Shulan
Jiangxi Rimag IPO: FCF Generation and Margin Expansion. Expect ~30 New Imaging Centers By 2026

Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition

Hoshino Resorts Reit (3287 JP) is looking to raise US$125m from a primary follow-on. Proceeds will be used to acquire the OMO7 Osaka asset.
The REIT has been active on the acquisition front, undertaking a number of capital raisings in recent years.
In this note, we will talk about the placement and run the deal through our ECM framework.

ECM Weekly (27th May 2024) – Renesas, AUB, Modec, Tata Tech, MUFG, Shift Up, Novelis, Shulan

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, Go Digit managed to do well despite somewhat tepid subscription rates, while Shift Up (462870 KS) was looking to be the next hot listing in Korea.
On the placement front, Renesas Electronics (6723 JP) mega-block kept the cross-shareholding unwind going.

Jiangxi Rimag IPO: FCF Generation and Margin Expansion. Expect ~30 New Imaging Centers By 2026

By Andrei Zakharov

Jiangxi Rimag Group, China’s largest medical group with focus on medical imaging services, updated its PHIP and may enter the public market in June.
Terms of an IPO have not yet been set. The expected price range and the size of the offering were not disclosed in the company’s filings.
I’m positive on Jiangxi Rimag Group given the fast-growing TAM: third-party medical imaging center market accounts only for ~1% of the PRC medical imaging service market today.

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May 26

Daily Brief ECM: Weekly Deals Digest (26 May) – Henlius and more

In today’s briefing:

Weekly Deals Digest (26 May) – Henlius, HKTV, SciClone, KFC, Best World, PropertyGuru, Modec

Weekly Deals Digest (26 May) – Henlius, HKTV, SciClone, KFC, Best World, PropertyGuru, Modec

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: Modec Inc (6269 JP) prices its US$535 million secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Hong Kong Television Network (1137 HK). Sciclone Pharmaceuticals (6600 HK), Kfc Holdings Japan (9873 JP), Best World International (BEST SP), PropertyGuru (PGRU US).

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May 24

Daily Brief ECM: Shift Up IPO – The Positives – All Games Have Done Well and more

In today’s briefing:

Shift Up IPO – The Positives – All Games Have Done Well
Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
Allied Blenders and Distillers Pre-IPO – Refiling Updates and Initial Thoughts on Valuation

Shift Up IPO – The Positives – All Games Have Done Well

Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In this note, we talk about the positive aspects of the deal.

Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues

Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In this note, we talk about the not-so-positive aspects of the deal.

Allied Blenders and Distillers Pre-IPO – Refiling Updates and Initial Thoughts on Valuation

Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.
ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
In this note, we provide a summary of its refiling updates, undertake a quick peer comparison and share our initial thoughts on valuation.

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May 23

Daily Brief ECM: Go Digit IPO Trading – Low Subscription Rate and more

In today’s briefing:

Go Digit IPO Trading – Low Subscription Rate, Not All Shares Are Locked Up
Shift Up IPO Valuation Analysis
Pre-IPO Shanghai Cell Therapy Group – Commercialization Prospects and Profitability Are Pessimistic

Go Digit IPO Trading – Low Subscription Rate, Not All Shares Are Locked Up

Go Digit General Insurance raised around US$315m in its India IPO.
Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.

Shift Up IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Shift Up is target price of 95,510 won, which is 59% higher than the high end of the IPO price range (60,000 won).
We believe Shift Up deserves higher valuation multiples than its peers mainly due to higher sales growth, much higher operating margins, and higher ROE.
Since its launch in April of this year, Stellar Blade (PS console game) has ranked first in sales in eight countries, including the United States, United Kingdom, Canada, and Japan.

Pre-IPO Shanghai Cell Therapy Group – Commercialization Prospects and Profitability Are Pessimistic

The biggest problem of cell therapy in China is the uncertain prospect of commercialization. Medical practitioners also have reservations regarding the usefulness of cryopreserved cells for clinical application.
Shanghai Cell Therapy could be in a long-term loss making state, and both of its R&D and commercialization capabilities need to be verified. Then, how would investors obtain expected returns?
Post-Investment valuation already reached above RMB7.1 billion after Series D financing. However, market value of comparable companies are quite low, which makes us worry about stock price performance after IPO.

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May 22

Daily Brief ECM: MODEC (6296 JP): The Current Playbook and more

In today’s briefing:

MODEC (6296 JP): The Current Playbook
Raspberry Pi IPO Preview
AUB Group Placement – Good Track Record, Accretive Acquisition

MODEC (6296 JP): The Current Playbook

By Arun George

Since the US$535 million secondary placement announcement, Modec Inc (6269 JP)’s shares are down 15% from the undisturbed price of JPY3,320 per share (14 May).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Modec’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 22 May. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Raspberry Pi IPO Preview

By Douglas Kim

Established in 2012, Raspberry Pi is getting ready to complete its IPO in London soon. Raspberry Pi provides small, single-board computers.
Raspberry Pi is backed by Sony and ARM Holdings. Nearly 72% of the company’s sales come from commercial customers embedding its products into various consumer devices and other systems.
The company generated sales of US$265.8 million (up 41.5% YoY) and operating profit of US$37.5 million (up 87% YoY) in 2023.

AUB Group Placement – Good Track Record, Accretive Acquisition

AUB Group Limited (AUB AU) is looking to raise up to AUD200m (US$133m) to fund the acquisition of Pacific Indemnity.
The company has a good track record and the deal will be accretive to EPS.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

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May 21

Daily Brief ECM: Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come) and more

In today’s briefing:

Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come)
Renesas Block – While Not Particularly Well Flagged, Recent Selldowns in the Stock Have Done Well
Shift Up IPO Preview
Novelis Pre-IPO – Leader in Most Categories, Although End Markets’ Aren’t Really Growing Much
Pre-IPO China Resources Beverage – Here Are the Concerns and the Risks Behind
Shulan Health Management Pre-IPO – Still Ramping up but Only a Small Player
Citicore Renewable Energy IPO – Needs a Wider Discount to Be Attractive

Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come)

By Travis Lundy

Today post-close, Denso Corp (6902 JP) (via BofA) announced a selldown of 78,127,800 shares of Renesas Electronics (6723 JP). This is the latest in a line of block exits.
There was the 130mm offering in November last year by INCJ. There was 123mm shares in Jan 2024 by NEC and Hitachi. A month later, 50mm shares from Mitsubishi Electric.
In general, they have been absorbed, but one hasn’t needed to buy in the market. Some have broken price. Here, the pricing range is aggressive.

Renesas Block – While Not Particularly Well Flagged, Recent Selldowns in the Stock Have Done Well

Denso Corp (6902 JP) is looking to raise US$1.39bn from selling a portion of its stake in Renesas Electronics (6723 JP).
DENSO’s selldown is a small one at just 4.3 days of ADV. While there is an overhang of around 4% of TSO, DENSO will be locked up for 270 days.
In this note, we will talk about the placement and run the deal through our ECM framework.

Shift Up IPO Preview

By Douglas Kim

Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.

Novelis Pre-IPO – Leader in Most Categories, Although End Markets’ Aren’t Really Growing Much

Novelis Corporation (0620365D US) Novelis is looking to raise US$1.2bn in its upcoming US IPO. The firm is owned by Indian-listed Hindalco. The deal will consist of 100% secondary shares.
Novelis is a global provider of aluminum solutions for the beverage packaging, automotive markets, specialties markets and aerospace.
In this note, we look at the firm’s past performance.

Pre-IPO China Resources Beverage – Here Are the Concerns and the Risks Behind

Over 92% of CR Beverage’s revenue is from packaged drinking water products, but YoY growth this business is already below industry CAGR, raising concerns about whether future growth will stall.
The revenue scale/profitability of CR Beverage are far inferior to Nongfu Spring. In terms of cost control, operational efficiency and the strength of supply chain, CR Beverage is lagging behind.
For low-priced packaging water, the nationwide expansion is not a simple task, which will lead to significant cash outflow. Valuation of CR Beverage should be lower than that of peers.

Shulan Health Management Pre-IPO – Still Ramping up but Only a Small Player

Shulan Health Management (1807987D CH) is looking to raise around US$150m in its Hong Kong IPO.
Shulan Health Management (SHM) is a technology-driven healthcare group in China that integrates healthcare services and medical research and education.
In this note, we talk about the firm’s historical performance.

Citicore Renewable Energy IPO – Needs a Wider Discount to Be Attractive

Citicore Renewable Energy (CREC PM) is looking to raise around US$120m in its Philippines IPO.
Citicore Renewable Energy (CREC) is a pure-play renewable energy platform focused on developing and operating renewable energy projects in the Philippines.
We looked at the firm’s past performance in an earlier note. In this note, we will share our thoughts on valuation.

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May 20

Daily Brief ECM: Lalatech Holdings: FCF Growth Accelerated and more

In today’s briefing:

Lalatech Holdings: FCF Growth Accelerated, Margins Improved, Fair Value May Be North of $10B
Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged
ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy

Lalatech Holdings: FCF Growth Accelerated, Margins Improved, Fair Value May Be North of $10B

By Andrei Zakharov

Lalatech Holdings, a technology based global logistics company, has updated its application for Hong Kong IPO and disclosed financial results for 2023.
Lalatech Holdings is aiming to raise up to $1B and the company’s IPO looks imminent in the coming months as cash flow growth accelerated, while margins and profitability improved.
My fair valuation of Lalatech Holdings is close to $10B and investors should buy into upcoming IPO given the company’s substantial scale, massive network effects and operating efficiency.

Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged

Despite high growth in 2023, the accelerated growth of Giant Biogene has entered a turning point, and its performance has begun to slow down. Long-term growth momentum is highly uncertain.
Giant Biogene plans to prioritize the market entry of Class III medical device products.Due to increasing competition/challenges in marketing/promotion, it takes time to verify if the second growth curve works.
Reasonable valuation for Giant Biogene is P/E of 20-30x.If based on RMB1.8 billion 2024, market value is RMB36-54 billion. Short-term catalyst is the Online 618 Shopping Festival and 24H1 report.

ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy