ECM Daily Briefs | Page 66 of 118

In today’s briefing:

CTG Duty Free (601888 CH) H-Share IPO: 2Q22/Outlook Updates and Valuation Views

CTG Duty Free (601888 CH) H-Share IPO: 2Q22/Outlook Updates and Valuation Views

By Osbert Tang, CFA

At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of China Tourism Group Duty Free Corp (601888 CH) is not attractive enough.
2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.
Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.

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Aug 14

Daily Brief ECM: ECM Weekly (14th Aug 2022) – China Tourism and more

In today’s briefing:

ECM Weekly (14th Aug 2022) – China Tourism, A/H Listing, Hongjiu Fruit, Socar, Betagro, ThaiBev, GQG
Weekly Deals Digest (14 Aug) – CTG Duty Free, OZ Minerals, Lifestyle Intl., EVOC, MACA, MyDeal

ECM Weekly (14th Aug 2022) – China Tourism, A/H Listing, Hongjiu Fruit, Socar, Betagro, ThaiBev, GQG

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, China Tourism launched its US$2.5bn IPO.
There were no major placements this week and it likely to remain that way in the near future owing to it being earnings season.

Weekly Deals Digest (14 Aug) – CTG Duty Free, OZ Minerals, Lifestyle Intl., EVOC, MACA, MyDeal

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – China Tourism Group Duty Free Corp Ltd (601888 CH) has launched an H Share listing to raise US$1.9-2.2 billion.
Event-Driven developments at EVOC Intelligent Technology Company Limited H (2308 HK), Lifestyle International Holdings (1212 HK), OZ Minerals Ltd (OZL AU), MACA Ltd (MLD AU), Excelpoint Technology (EXLP SP), MyDeal.

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Aug 13

Daily Brief ECM: China Tourism Group A/H Listing – Discount Is Enticing at the Low-End and more

In today’s briefing:

China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
CTG Duty Free H Share Listing: Valuation Insights

China Tourism Group A/H Listing – Discount Is Enticing at the Low-End

China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
In this note, we talk about the deal pricing and run the deal through our ECM framework.

CTG Duty Free H Share Listing: Valuation Insights

China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.

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Aug 12

Daily Brief ECM: Past A/H Listings Performance – Most of the Deals Haven’t Done Much and more

In today’s briefing:

Past A/H Listings Performance – Most of the Deals Haven’t Done Much
Betagro Pre-IPO – The Negatives – Muted Long Term Track Record and Operating on Razor Thin Margins
Biocytogen Pharma IPO: Large Drug Pipeline but Negatives Outweighs the Positives
Chongqing Hongjiu Fruit IPO – Peer Comparison & Valuations – Growth & Margins Stand Out Among Peers

Past A/H Listings Performance – Most of the Deals Haven’t Done Much

China Tourism Group Duty Free Corporation Limited (CDF) is gearing up to launch Hong Kong’s largest listing so far this year, with a reported deal size of around US$2-3bn.
Prior to the deal launch, we’ve had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
Overall, most of the recent A/H listings haven’t done much over the first month.

Betagro Pre-IPO – The Negatives – Muted Long Term Track Record and Operating on Razor Thin Margins

By Shifara Samsudeen, ACMA, CGMA

Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO.
Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
Margins have fluctuated and operating/net margins are razor thin. Over a longer term period, track record hasn’t been the greatest as well.

Biocytogen Pharma IPO: Large Drug Pipeline but Negatives Outweighs the Positives

Biocytogen Pharmaceuticals (Beijing) (BCP HK) is a biopharmaceutical and pre-clinical research services company with two core products (YH003 and YH001) and 10 other pipeline candidates.
The company currently does not have any commercialised products and earns revenue through offering pre-clinical research services and antibody development.
Biocytogen’s business model comes with inherent risks such as absence of approved drugs. Hence, we would recommend staying on the side line.

Chongqing Hongjiu Fruit IPO – Peer Comparison & Valuations – Growth & Margins Stand Out Among Peers

By Ethan Aw

Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
CHJF had grown at an impressive rate even in the face of COVID-19. In this note, we will undertake a peer comparison of CHJF with its listed peers.

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Aug 11

Daily Brief ECM: GQG Partners IPO Lock-Up – Tightly Held by Founders and more

In today’s briefing:

GQG Partners IPO Lock-Up – Tightly Held by Founders, PAC Could Exit
CTG Duty Free H Share Listing: Another False Dawn?
Betagro Pre-IPO – The Positives – Vertically Integrated and Weathered COVID Well

GQG Partners IPO Lock-Up – Tightly Held by Founders, PAC Could Exit

GQG Partners (GQG) raised US$868m in its Australia IPO in Oct 2021. Its IPO linked lockup is set to expire soon.
GQG is a global investment boutique with a focus on managing active equity portfolios.
In this note, we will talk about the lock-up dynamics and updates since our last note.

CTG Duty Free H Share Listing: Another False Dawn?

China Tourism Group Duty Free Corp Ltd (601888 CH)/CTGDF, the largest travel retail operator in the world, aims to launch an H Share listing to raise US$2-3 billion on Friday.
CTGDF is a play on the normalization of domestic travel. However, the H Share listing timing is not ideal as a vital summer travel market, Sanya, is under renewed lockdown.
The recovery timing has again shifted, with expectations of a 4Q recovery, but 2022 consensus expectations look slightly optimistic. We prefer to remain on the sidelines.

Betagro Pre-IPO – The Positives – Vertically Integrated and Weathered COVID Well

Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO.
Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
Betagro operates a vertically integrated model with its own production and processing capabilities. Furthermore, it utilizes a range of distribution channels for both domestic and international sales.

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Aug 10

Daily Brief ECM: SOCAR IPO Book Building Results and more

In today’s briefing:

SOCAR IPO Book Building Results
SOCAR IPO: Order Table, Revised Terms, & Thinking Points

SOCAR IPO Book Building Results

By Douglas Kim

SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).
Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won.
We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.

SOCAR IPO: Order Table, Revised Terms, & Thinking Points

By Sanghyun Park

SOCAR’s institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.
SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.
Since Lotte Rental’s buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.

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Aug 09

Daily Brief ECM: Magic Empire Global: The Second Biggest Bubble in 2022 and more

By Shifara Samsudeen, ACMA, CGMA

In today’s briefing:

Magic Empire Global: The Second Biggest Bubble in 2022
Chongqing Hongjiu Fruit IPO: Not Very Fruitful

Magic Empire Global: The Second Biggest Bubble in 2022

By Douglas Kim

Magic Empire Global (MEGL US) is the second biggest bubble in 2022, after AMTD Digital (HKD US).
We believe there are two major reasons for MEGL’s surging share price including US retail investors’ buying frenzy post AMTD Digital and the “scarcity effect” of new Chinese IPOs.
Sell MEGL as it makes little sense to put any of your valuable amounts of capital into this stock. The bubble has already started to burst on MEGL.

Chongqing Hongjiu Fruit IPO: Not Very Fruitful

Chongqing Hongjiu Fruit (CHF HK) focuses on managing the entire supply chain for quality fruits grown in China, Thailand and Vietnam.
The company has a portfolio of 49 fruit categories and has filed for an IPO on HKEx and plans to raise proceeds of US$300m.
CHF’s earnings growth is slowing down while margins are trending downwards and the company’s cashflow burn is increasing

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Aug 07

Daily Brief ECM: Messed up Korea IPO Pipeline and Unexpected Beneficiaries and more

In today’s briefing:

Messed up Korea IPO Pipeline and Unexpected Beneficiaries
Visit to a Haidilao Restaurant in London & Listing of Super Hi International in Hong Kong
ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar

Messed up Korea IPO Pipeline and Unexpected Beneficiaries

By Sanghyun Park

Hyundai Oilbank, this year’s biggest fish, dropped the IPO. Another big fish, CJ Olive Young, also officially announced that it would give up its listing.
The bookbuilding results of SOCAR turned out to be disastrous, suggesting an increased possibility that a higher-than-typical flow level will likely be seen in WCP and K Bank.
In particular, despite the valuation issues, we should pay attention to the possibility of an unexpected level of local institutional flows flocking to WCP, which has less schedule risk.

Visit to a Haidilao Restaurant in London & Listing of Super Hi International in Hong Kong

By Douglas Kim

In this insight, we discuss our recent visit to a Haidilao restaurant in London and the listing of Super Hi International in Hong Kong.
On 13 July, Haidilao (6862 HK) provided the IPO prospectus of Super Hi International for a separate listing in Hong Kong bourse.
By spinning off Super Hi and listing this newco in Hong Kong, Haidilao is capitalizing on its best known global brand for hot pots amid zero COVID policy in China.

ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Placements continued to take center stage this week, beginning with Uber’s clean-up sale of Zomato.
Socar launched its one-day bookbuild earlier in the week. We continued looking at the upcoming deals in our pipeline.

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Aug 05

Daily Brief ECM: Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+ and more

In today’s briefing:

Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+
Hongjiu Fruit IPO: A Bitter Fruit
Sai Silk Kalamandir Pre-IPO Tearsheet
Biocytogen (百奥赛图) Pre-IPO: Prospectus and Valuation Updates
Pre-IPO Cali Biosciences – The Industry, the Business and the Concerns

Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+

Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
In this note, we talk about the not-so-positive aspects of the deal.

Hongjiu Fruit IPO: A Bitter Fruit

Chongqing Hongjiu Fruit (CHF HK), a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.
The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.
Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.

Sai Silk Kalamandir Pre-IPO Tearsheet

By Ethan Aw

Sai Silk Kalamandir (SSKL IN) is looking to raise about US$150m in its upcoming India IPO. The deal will be run by Motilal Oswal, Edelweiss and HDFC Bank.
Sai Silk Kalamandir (SSK) is one of the largest retailers of ethnic apparel in South India, particularly in sarees, according to Technopak.
Through its four store formats, it offers ethnic and value fashion products to various segments across different price points. As of 31 May 2022, it has 46 network stores.

Biocytogen (百奥赛图) Pre-IPO: Prospectus and Valuation Updates

By Ke Yan, CFA, FRM

Biocytogen, a China-based pre-clinical research and biopharmaceutical company, will pre-market its IPO to raise USD 25m, which is a significant downsize from the previous USD 300m fundraising target.
In our previous note, we covered the company’s fundamentals and compared its business with its peers.
We will provide an update on its latest prospectus and its peer performance in this note.

Pre-IPO Cali Biosciences – The Industry, the Business and the Concerns

By Xinyao (Criss) Wang

Both the postoperative pain management and the expansive application of anesthetics in various fields would increase the market demand for ropivacaine.
Cali Biosciences (CALI HK)’s core product, the ropivacaine long-acting analgesic injection drug candidate CPL-01, would have to face the challenges of fierce competition, uncertain market acceptance, and negative policy impact.
Together with other concerns such as slow development progress, “not rich enough” pipeline and potential liquidity risk, we are conservative about Cali’s outlook at the current stage.

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Aug 03

Daily Brief ECM: AMTD Digital: Irrational Frenzy 2.0 and more

In today’s briefing:

AMTD Digital: Irrational Frenzy 2.0
Zomato Placement – Opportunistic Selldown, Momentum Hasn’t Been the Greatest
Chongqing Hongjiu Fruit Pre-IPO – PHIP Updates
Giant Biogene Pre-IPO – The Positives – Fast Growth and Juicy Margins

AMTD Digital: Irrational Frenzy 2.0

AMTD Digital (HKD US) shares are up 230x since its listing at US$7.80 per ADS on 15 July. Its market cap is a staggering US$334 billion.
AMTD Idea Group (AMTD US) accounts for 99.4% of the voting power. In January 2022, it increased its AMTD Digital shareholding to 97.1% of outstanding shares at US$1.2 billion valuation.
AMTD Digital’s financials are uninspiring and cannot justify the share price ramp. No sane valuation methodology can support the share price.

Zomato Placement – Opportunistic Selldown, Momentum Hasn’t Been the Greatest

Uber (UBER US) is looking to raise US$420m in its share sale in Zomato (ZOMATO IN). The selldown will be a clean-up sale.
Uber had earlier inherited its stake in Zomato in 2020 when it sold UberEats India to the latter.
We had earlier flagged the possibility of a selldown given that most of Zomato’s investors would come off their respective one-year lockups.

Chongqing Hongjiu Fruit Pre-IPO – PHIP Updates

By Ethan Aw

Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
It appears that CHJF had benefited from a slight increase in margins of certain core fruit products. However, we continue to remain doubtful of its long-term prospects.

Giant Biogene Pre-IPO – The Positives – Fast Growth and Juicy Margins