ECM Daily Briefs | Page 67 of 118

In today’s briefing:

China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation
Kingsoft Cloud: Thoughts on HK Dual Primary Listing

China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation

By Shifara Samsudeen, ACMA, CGMA

China Tourism Group Duty Free Corporation Limited (CDF) now aims to raise US$2-3bn 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 will talk about the recent updates from its revised filings and revisit valuations.

Kingsoft Cloud: Thoughts on HK Dual Primary Listing

Kingsoft Cloud (KC US) is the largest independent cloud service provider in China in terms of revenue in 2021 and its clientele includes the likes of ByteDance and Xiaomi.
KC is listed in NASDAQ and has filed for a dual primary listing on HKEx and has not disclosed the amount that it plans to raise from the stock issuance.
We are broadly positive on the company’s growth prospects and discuss the details below.

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Aug 01

Daily Brief ECM: Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time and more

In today’s briefing:

Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

By Xinyao (Criss) Wang

Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
Lepu’s expansion mainly relies on continuous M&A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&D,which is good for sustainable long-term growth. Such business transformation takes time.

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Jul 30

Daily Brief ECM: Cryofocus Medtech (康灃生物科技) Pre-IPO: Unimpressive Fundamentals and more

In today’s briefing:

Cryofocus Medtech (康灃生物科技) Pre-IPO: Unimpressive Fundamentals

Cryofocus Medtech (康灃生物科技) Pre-IPO: Unimpressive Fundamentals

By Ke Yan, CFA, FRM

Cryofocus Medtech is a China based medical device company with a focus on cryoablation. The company is look to raise $50-100m to list in Hong Kong.
We take a quick look at Cryofocus’ key products, including AF cryoablation system and bladder cryoablation system.
We think its products are not impressive. Neither does its investor line-ups and management team impress us much.

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Jul 29

Daily Brief ECM: Manila Electric Block – Selldown by One of the Largest Shareholders and more

In today’s briefing:

Manila Electric Block – Selldown by One of the Largest Shareholders
PSMC Placement – Well Flagged and SI on the Rise, but Momentum Has Been Very Weak
WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable
Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

Manila Electric Block – Selldown by One of the Largest Shareholders

JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.
This appears to be the first selldown by JG Summit and doesn’t appear to have been very well flagged either.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

PSMC Placement – Well Flagged and SI on the Rise, but Momentum Has Been Very Weak

Powerchip Semiconductor Manufacturing Corp (6770 TT) (PSMC) is looking to raise US$420m via its GDS offering.
The firm is offering 23.3m GDSs (350m common shares at a 1 GDS to 15 common shares ratio) at a 6-9% discount to last close.
The deal is well flagged via both media reports and the company’s announcements. Short interest has been growing in tandem as well.

WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable

By Arun George

WCP (WCP KS), a lithium-ion batteries separator company, has pushed back its KRW900 billion (US$692 million) KRX IPO timeline from August to mid-September.
We previously discussed the IPO In WCP IPO: Hooked on Lithium and WCP IPO: Valuation Insights.
In this note, we benchmark WCP vs its peers in terms of historical and forecasted financials along with multiples. Our valuation analysis suggests that the IPO price range remains unattractive.

Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

Growatt Technology (1833969D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO.
Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption and energy digitalization.
The firm has seen strong revenue growth on the backdrop of global PV inverter and energy storage industry tailwinds despite the effects of COVID-19.

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Jul 28

Daily Brief ECM: WCP Delays IPO and more

In today’s briefing:

WCP Delays IPO
Sula Vineyards Pre-IPO Tearsheet
Digital Turbine Inc.: Initiation of Coverage – Partnerships With Google & AccuWeather
Concord Healthcare Group (CHG HK) Pre-IPO: Accumulated Loss and Cash Burn Cloud Growth Prospects
WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

WCP Delays IPO

By Douglas Kim

WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August previously).
Our guess for the delay is because the company may have tapped some major institutions and they may not have been so bullish on the IPO at current IPO valuation.
Our base case valuation of WCP is price of 87,805 won. Given the lack of upside relative to the IPO price range, we would PASS on this IPO deal.

Sula Vineyards Pre-IPO Tearsheet

Sula Vineyards (1332009D IN) is looking to raise about US$175m in its upcoming India IPO. The deal will be run by Kotak, CLSA and IIFL Securities.
Sula Vineyards (SV) distributes wines under a bouquet of brands. In addition to its flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” & “Dia”.
Currently, it produces 56 different labels of wine at four owned and two leased production facilities located in the Indian states of Maharashtra and Karnataka.

Digital Turbine Inc.: Initiation of Coverage – Partnerships With Google & AccuWeather

This is our first report on the mobile growth platform provider, Digital Turbine.
Digital Turbine is now in an expansion mode as evident from its recent results as well as its acquisition-oriented strategy.
However, in recent quarters, the investors of Digital Turbine have turned against various technology-focused assets, and its stock price also lost much value.

Concord Healthcare Group (CHG HK) Pre-IPO: Accumulated Loss and Cash Burn Cloud Growth Prospects

By Tina Banerjee

Concord Healthcare Group (CHG HK), the second largest private oncology healthcare company in China, has submitted application proof for an IPO on the HK Stock Exchange in May 2022.
The company has an accumulated loss of RMB1.7 billion during the last three years, with current net debt-to-capital ratio of 170.1%. Its finance cost account for 92.5% of total revenue.
Concord has a cash balance of just RMB136 million, which makes it hard to grab the growth opportunities in China’s capital-intensive oncology healthcare services segment.

WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

WCP aims to raise around US$690m via selling a mix of primary and secondary shares in its Korean IPO.
WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries
In this note, we talk about the recent refiling updates, peer comparison and valuations.

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Jul 27

Daily Brief ECM: Legend Biotech Follow-On – A Little Opportunistic. Last Deal Did Well and more

In today’s briefing:

Legend Biotech Follow-On – A Little Opportunistic. Last Deal Did Well, After a Large Correction
Plus Digital Technologies Pre-IPO Tearsheet
Fidelity National Information Services: Initiation of Coverage – Core Processing Business Upside & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
Jabil Inc.: Initiation of Coverage – Collaborations With SolarEdge, Cardo Systems, & Other Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (07/22)
Onewo Space-Tech Pre-IPO – The Negatives – Acquisition Led Growth, Related Party, Margin Issues
Viavi Solutions Inc.: Initiation of Coverage – The NTT DOCOMO Partnership, New Product Launches & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (07/22)

Legend Biotech Follow-On – A Little Opportunistic. Last Deal Did Well, After a Large Correction

Legend Biotech Corp (LEGN US), a non-wholly owned subsidiary of Hong Kong-listed Genscript Biotech (1548 HK), is planning to raise up to US$250m in its follow-on offering.
The company last raised cash in Dec 2021 in a similar sized deal, which ended up doing very well after a sharp share price correction.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Plus Digital Technologies Pre-IPO Tearsheet

Plus Digital Technologies (PDT CH) is looking to raise about US$150m in its upcoming Hong Kong IPO. The deal will be run by Jefferies and Guotai Junan.
Plus Digital Technologies provides digitalised sales and marketing and SaaS+ services to its customers to enhance their offline sales and marketing efficiency and drive their offline retail sales.
Its provision of services is supported by its Field Management Ecology System (FMES) platform, which contains a variety of digitalised products with different functionalities to meet customers’ various requirements.

Fidelity National Information Services: Initiation of Coverage – Core Processing Business Upside & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

This is our first report on the leading global technology solutions provider to the banking and finance industry – Fidelity National Information.
The company’s annual organic growth expectations were all exceeded with a 9% organic top-line growth.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Jabil Inc.: Initiation of Coverage – Collaborations With SolarEdge, Cardo Systems, & Other Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (07/22)

This is our first report on diversified manufacturing services and solutions provider, Jabil Inc.
The company has maintained a strong diversification strategy which has helped it perform despite a difficult supply chain environment and widely reported shutdowns in China.
During the quarter, the company further collaborated with two companies, SolarEdge and Cardo Systems, to expand its supply chain.

Onewo Space-Tech Pre-IPO – The Negatives – Acquisition Led Growth, Related Party, Margin Issues

Onewo Space-Tech (OST) aims to raise around US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK).
As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
In this note, we will talk about the positive aspects of the deal.

Viavi Solutions Inc.: Initiation of Coverage – The NTT DOCOMO Partnership, New Product Launches & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (07/22)

This is our first report on Viavi Solutions, a major player within the network test solutions and monitoring space.
As North American service providers upgraded and expanded their networks with fibre, fibre grew by double-digit percentages from the same time the previous year.
We initiate coverage on Viavi Solutions with a ‘Hold’ rating with a revised target price.

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Jul 26

Daily Brief ECM: Gotion High Tech GDR Listing – Recent GDRs Have Seen Narrowing Discounts and more

In today’s briefing:

Gotion High Tech GDR Listing – Recent GDRs Have Seen Narrowing Discounts
GEM Co., Ltd. GDR Listing – Better Discount than Last Two and Ming Yang Has Held Up
Sebit Chem IPO Book Building Results
Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out
Onewo Space-Tech Pre-IPO – The Positives – One of the Largest and Still Growing Fast

Gotion High Tech GDR Listing – Recent GDRs Have Seen Narrowing Discounts

Gotion High-Tech Co Ltd (002074 CH) (GHT) is looking to raise US$1bn from its Swiss GDR listing. Bookrunners on the deal are CICC and Haitong International.
The shares offered in GHT’s GDR offering ranges between 16.65m – 33.29m GDRs (83.24m – 166.47m A-shares), ranging the deal size between US$499m-US$1bn.
At the top end, in terms of number of GDRs offered, the deal would represent 4.7 days of ADV on the A-share market and 9.6% of current mcap.

GEM Co., Ltd. GDR Listing – Better Discount than Last Two and Ming Yang Has Held Up

Gem Co Ltd A (002340 CH) is looking to raise around US$245m in its Swiss GDR listing.
Proceeds will be used mainly for overseas expansion, such as the development of the Indonesian Nickel Resource Base and development of its production base and recycling center in Europe.
In terms of discount, relative to the most recent two deals, Keda Industrial and Ningbo Shanshan, GEM’s GDRs are offered at a more enticing 11.7-14.2% discount to its A-shares,

Sebit Chem IPO Book Building Results

By Douglas Kim

Sebit Chem had excellent IPO book building results. The demand ratio from the institutional investors was 1,671 to 1.
The IPO price has been determined at 35,000 won, which is higher than the high end of the IPO price range (25,000 won to 30,000 won).
Our base case valuation is implied market cap of 256 billion won or target price of 50,775 won per share (45% higher than the IPO price of 35,000 won).

Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out

Shenzhen Pagoda Industrial (1317437D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
Shenzhen Pagoda Industrial (SPI) is a fruit retail operator in China. According to Frost & Sullivan, it ranked first among all fruit specialty retail operators in China in 2021.
However, the firm operates in a highly fragmented industry with low market share of 1.0%, even as the largest player.

Onewo Space-Tech Pre-IPO – The Positives – One of the Largest and Still Growing Fast

Onewo Space-Tech (OST) aims to raise around US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK).
As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
In this note, we will talk about the positive aspects of the deal.

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Jul 25

Daily Brief ECM: Weekly Deals Digest (24 Jul): Thai Life and more

In today’s briefing:

Weekly Deals Digest (24 Jul): Thai Life, Bharat FIH, Link, DTAC/True, Pendal, Tassal, Ramsay, AOF
Thai Life Insurance IPO: Trading Debut

Weekly Deals Digest (24 Jul): Thai Life, Bharat FIH, Link, DTAC/True, Pendal, Tassal, Ramsay, AOF

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, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
On the ECM front, Thai Life Insurance (TLI TB) will start trading on 25 July, Bharat FIH (BFIH IN) aims to launch an August IPO to raise US$625 million.
Event-Driven developments at DTAC/True, Link Administration (LNK AU), Pendal Group (PDL AU), Tassal (TGR AU), Suncorp (SUN AU), Hwa Hong Corp (HWAH SP), Excelpoint Technology (EXLP SP), Cocoaland.

Thai Life Insurance IPO: Trading Debut

By Arun George

Thai Life Insurance (TLI TB) will start trading on 25 July. Thai Life raised US$975 million at the IPO price of THB16.00 per share.
We previously discussed the IPO in Thai Life Insurance IPO: The Bull Case, Thai Life Insurance IPO: The Bear Case and Thai Life Insurance IPO: Valuation Insights.
The average of our DDM and relative valuation methodology suggests a price of THB15.43 per share. Remain on the sidelines as the IPO price is fair.

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Jul 24

Daily Brief ECM: ECM Weekly (24th Jul 2022) – ANZ and more

In today’s briefing:

ECM Weekly (24th Jul 2022) – ANZ, Zomato, LG Energy, Xtep, SoCar, WCP, Thai Life, Beneunder, Ubox
Thai Life Insurance IPO Trading – One for Domestics and Cornerstones

ECM Weekly (24th Jul 2022) – ANZ, Zomato, LG Energy, Xtep, SoCar, WCP, Thai Life, Beneunder, Ubox

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
There were no major IPO launches during the week. Thai Life will list early next week
There were no major placements apart from ANZ and a smallish one in Xtep. There are two major lock-up expiries coming up.

Thai Life Insurance IPO Trading – One for Domestics and Cornerstones

Thai Life Insurance (TLI) raised around US$975m in its Thailand IPO. Cornerstone investors, including GIC, took up around 54% of the deal.
Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
In this note, we talk about allocation and the trading dynamics

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Jul 22

Daily Brief ECM: Xtep International Placement – Parent Trimming at ATHs and more

In today’s briefing:

Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well
WCP IPO: Additional Important Considerations
Signature Global (India) Pre-IPO Tearsheet
Pre-IPO Best Wellness Innovation Group – Here Are the Concerns

Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well

Group Success Investments is looking to raise up to US$133m by trimming its holdings in Xtep International (1368 HK).
We can’t say that the deal is expected and short interest on the stock hasn’t been creeping up as well.
While the deal won’t be a large one, representing just 5.7 days of three month ADV, the firm’s last deal hasn’t done well.

WCP IPO: Additional Important Considerations

By Douglas Kim

We remain Bearish on the WCP IPO. Our base case valuation of WCP is implied market cap of 3.0 trillion won and target price of 87,805 won per share.
In this insight, we highlight four additional important considerations to the WCP IPO including comparison to SK IE Technology, 1Q22 earnings comparison, higher IPO discount, and overly optimistic EBITDA estimates.
We would categorize WCP as an excellent company but not exceptional as HPSP. Therefore, the weak market conditions will likely have a negative impact on the WCP IPO pricing.

Signature Global (India) Pre-IPO Tearsheet