Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Sanrio (8136 JP): The Current Playbook

Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.

2. Paradigm Biopharmaceuticals (PAR AU): Fund Raising Amidst Pipeline Progress Raises Conviction

By Tina Banerjee

Paradigm Biopharmaceuticals (PAR AU) has requested a trading halt to the ASX pending an announcement in relation to a capital raising. Normal trading will resume on Monday, December 9, 2024.
Assuming quarterly cash burn rate of A$7M, Paradigm’s cash balance should provide a runway through mid-Q3FY25. The company is in a dire need to raise fund.
With lead drug being in late-stage trial and having huge market potential, Paradigm seems to be an attractive biotech investment opportunity. Recently, optimism is growing surrounding Paradigm’s lead drug candidate.

3. Vishal Mega Mart IPO – Showcasing the Wrong Peers, Somewhat Limited Upside

Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

4. Mao Geping Cosmetics IPO Trading – Highest Demand for This Year

Mao Geping Cosmetics raised around US$345m in its Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the trading dynamics.

5. IGI (India) IPO – Unique Exposure but Questionable Acquisition, and 4x Returns for PE in 18 Months

International Gemmological Institute (India) Limited (IGII) is looking to raise about US$500m in its upcoming India IPO.
IGI India is part of the International Gemmological Institute (IGI) group. As of 22nd August 2024, IGI India handled operations of the IGI business in India and Türkiye.
In this note, we will look at the company’s past performance and talk about the IPO valuations.

6. LG CNS IPO Valuation Analysis

According to our valuation analysis, it suggests a base case implied market cap of 7.9 trillion won for LG CNS, representing target price of 81,095 won per share.
Therefore, our base case valuation target price of 81,095 won is 31% higher than the high end of the IPO price range.
We estimate LG CNS to generate sales of 5.99 trillion won (up 6.8% YoY) and net profit of 356.1 billion won (up 7.1% YoY) in 2024.

7. ECM Weekly (9th Dec 2024) – Goodman, Auckland Airport, Kioxia, MNC, DIY, Vishal Mega, Mao Geping

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, the deal flow doesn’t seem to be slowing down much into the year end. The coming two weeks will see some of the past IPOs listing.
On the placements front, Goodman Group (GMG AU)‘s block trade was hogging all of the limelight this week.

8. LG Electronics India IPO Preview

LG Electronics India is getting ready to complete an IPO in India in the next several months. The IPO offering size is expected to be about US$1.8 billion.
LG Electronics (066570 KS) plans to sell 101.8 million shares, accounting for about 15% of the post-offer paid up equity capital shares of LG Electronics India.
If LGEI is valued at US$13 billion, then an 85% of this stake would be worth US$11.1 billion, which would be worth more than LG Electronics’s own market cap.

9. 2025 (“Year of the Snake”) Major IPOs Pipeline in Korea

This is our 10th “Annual Edition of the Major Korean IPOs Pipeline Preview” at Smartkarma.
This insight will feature 50 of the biggest potential IPOs in Korea in 2025.
These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.

10. LG Electronics India Pre-IPO Tearsheet

LG Electronics (066570 KS) is looking to raise US$1.5bn+ via part-selling its stake in LG Electronics India IPO. The deal will be run by MS, JPM, Axis, BofA and Citi.
LG Electronics India (LGEI) was the market leader in India in major home appliances and consumer electronics (excluding mobile phones) in terms of volume in 1Q25, as per Redseer Report.
LGEI has been the number one player in this industry for 13 consecutive years (CY11-CY23) as per the value market share in the offline channel in India, as per Redseer.

Dec 08

Weekly Top Ten Equity Capital Markets – Dec 8, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

2. Kioxia IPO: Peer Comparison and Valuation

Kioxia has announced the terms for its IPO, and plans to raise $730m through issuing new shares as well as offer by existing shareholders, at a market capitalisation of $819bn.
Kioxia Holdings (285A JP) ‘s earnings have been volatile and margins have trailed compared to peers Micron and SK Hynix. Earnings are approaching a new peak.
Kioxia’s implied valuation multiples are at a deep discount to peer multiples, suggesting there is significant upside to the indicative IPO price range.

3. Kioxia (285A JP) IPO: Valuation Insights

Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.

4. Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight

CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
In this note, we will talk about the placement and run the deal through our ECM framework.

5. Auckland Airport Placement – NZ$1.3bn (US$770m) Cleanup Sale Will Remove the Overhang

Auckland Council is looking to raise NZ$1.3bn (US$772m) from selling its entire stake in Auckland Intl Airport (AIA NZ).
Overall, the selldown will be a large one for the stock to digest at 10% of shares outstanding and 62 days of three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

6. Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable

Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

7. DigiCo Infrastructure REIT IPO – Looks Decent – After All the Adjustments

DigiCo REIT (DIGICO AU) is looking to raise around US$1.3bn in its Australian IPO.
DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

8. LG CNS IPO Details Out: My Read on This IPO

The KRW 5T-6T valuation and 13x-16x PER look solid compared to local peers like SDS and Hyundai AutoEver, with CNS possibly getting a premium due to its smaller captive stake.
Instos probably won’t push hard for lock-ups but will aggressively target pricing to secure larger allotments, knowing the company is likely to stick with a market-friendly price.
On a separate note, I wouldn’t expect much of a NAV discount reduction for LG Corp, as LG CNS’s stake isn’t significant enough to move the needle.

9. Mr DIY Indonesia IPO – Has Aggressively Expanded Its Network

PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The firm is the largest home improvement retailer in Indonesia with a 25.2% market share as per 2023 sales
In this note, we look at the firm’s past performance.

10. Mr DIY Indonesia IPO – Aiming to Repeat the Performance of Its Parent’s Listing

PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The entity is the Indonesian entity under the Mr DIY group’s list of subsidiaries.
In this note, we will undertake a peer comparison and discuss our thoughts on valuation.

Dec 01

Weekly Top Ten Equity Capital Markets – Dec 1, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon

Today, Sanrio (8136 JP) announced a large secondary offering where banks would sell down shares and the Tsuji family would sell a few shares at the margin.
The stock has been on a rocket for two years. It’s expensive. Growth slows next year. Will this cause momentum to turn? Maybe. The offering is 38% of Max RWF.
I think one could give this a pass, and even sell it if it opens down small.

2. HULIC (3003 JP) – Crossholders Show Up with a BIG (Relative) Secondary Offering

Today, Hulic Co Ltd (3003 JP) announced a large secondary offering where about a quarter of the crossholdings will sell down holdings. Some exit entirely. Some partially.
After this selldown, there is a fair bit more to go later, but more of that will be corporate. It’s a BIG offering: 55d of ADV and 55% of MRWF.
It is “only” about $800mm and retail gets 80% of it. The high div yield will be a selling point but there is a lot of debt.

3. Kansai Electric Power (9503 JP): The Current Playbook

Since the US$3.5 billion primary/secondary offering announcement, Kansai Electric Power (9503 JP)’s shares have been down 20.6% from the undisturbed price of JPY2,397 per share (13 November).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, KEPCO’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 26 November. The average large Japanese placement tends to generate positive returns.

4. FineToday Holdings (289A JP) IPO: The Bear Case

FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
In FineToday Holdings (289A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.

5. Sanrio Placement – Opportunistic >US$800m Selling at All-Time Highs

A group of domestic financial institutions and the firm’s executives are looking to raise US$840m from trimming their stakes in Sanrio (8136 JP).
While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
In this note, we will talk about the placement and run the deal through our ECM framework.

6. Sanrio (8136 JP): A US$840 Million Secondary Offering

Sanrio (8136 JP) has announced a secondary offering of up to 25.9 million shares (29.8 million including overallotment), worth around US$840 million (US$970 million including overallotment).
Sanrio’s goal with the secondary offering is (i) to reduce cross-shareholdings and (ii) to expand and diversify the shareholder base, which should further enhance liquidity.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 13 December (likely 10 December).

7. Meiji Holdings Placement – Momentum Leading into This Cross-Shareholding Selldown Isn’t the Greatest

A group of investors are looking to raise US$264m from trimming a portion of their stakes in Meiji Holdings (2269 JP).
While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
In this note, we will talk about the placement and run the deal through our ECM framework.

8. Kioxia Pre-IPO – Peer Comparison

Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.

9. Kioxia Pre-IPO – Thoughts on Valuations

Kioxia Holdings (285A JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
We have looked at the company’s past performance in our earlier notes. In this note we talk about valuations.

10. Kioxoa Pre-IPO – The Negatives – Still a Follower of the Cycle

Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
In this note, we talk about the not-so-positive aspects of the deal.

Nov 24

Weekly Top Ten Equity Capital Markets – Nov 24, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. SF Holdings A/H Listing – Lower End Looks Digestable

S.F. Holding (002352 CH), China’s largest express delivery company, is now looking to raise around US$800m in its H-share listing in Hong Kong.
SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
We have covered the company and deal background in our previous notes. In this note, we talk about the IPO pricing.

2. Pony AI IPO – Autonomous Valuation

Pony AI (PONY US), an autonomous mobility solutions provider, is looking to raise up to US$195m in its US IPO.
As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

3. Kansai Electric US$3.5bn Deal Updates – Has Delivered a Decent Correction, as Compared to past Deals

Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
In our earlier note, we talked about the placement and ran the deal through our ECM framework.
In this note, we talk about the updates and share price performance since then.

4. DigiCo REIT – The Positives – Hot Sector with Built in Growth

DigiCo REIT (DIGICO AU) aims to raise over US$1bn in its Australian IPO.
DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
In this note, we talk about the positive aspects of the deal.

5. SF Holding H Share Listing (6936 HK): Valuation Insights

By Daniel Hellberg, Tracking Traffic

S.F. Holding (002352 CH) has launched its H Share listing at HK$32.30-36.30 per share. Pricing will be on 25 November, and the listing on 27 November.
We previously discussed the listing in SF Holding H Share Listing: Updates Point to Improving Fundamentals and SF Holding H Share Listing: AH Discount Views.
Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.

6. SF Holding Pre-IPO: Deal Goes Live in HK, Company Hopes to Raise ~US$800 Mn, Less Than Anticipated

SF Holding’s HKEX listing launched on Tuesday, November 19th; deal to be priced by 26th
SF hopes to raise about US$800 mn, less than originally anticipated in financial media
About one quarter of the offering will be taken up by ten cornerstone investors

7. LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon

The local market’s buzzing that LG Chem could face a 200-300 billion KRW tax hit from Pillar Two next year, with LGES ramping up U.S. production.
LG Chem may be reconsidering its plan to sell 2% of its LGES stake, dropping ownership below 80%, shifting the tax burden to LGES instead of itself.
Flagging this now—LG Chem’s tax burden looms. Consider shorting LGES or a long-short with LG Chem, plus prep for the 2T KRW block deal with the pre-disclosure process.

8. FineToday Holdings (289A JP) IPO: The Bull Case

FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
FineToday has four product categories: Hair care, Skin care, Body care, and others. Hair care is the largest category, accounting for 49.0% of 9M24 revenue.
The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation.

9. Pre-IPO S.F. Holding (6936 HK) – Thoughts on Valuation and the Outlook

By Xinyao (Criss) Wang

One important reason S.F. chose to go public on Hong Kong stock market is due to financial pressure, which mainly comes from its heavy asset development model and internationalization strategy.
Considering the discount of the H-share price versus the A-share price, if the IPO pricing is at the lower limit of the range, then the safety margin would be higher.
In the short term, S.F. is better than JD Logistics, so its valuation should be higher than JD Logistics and industry average. Future valuation expansion depends on international business performance.

10. KDC REIT Placement – Accretive Acquisitions Should Garner Strong Support

Keppel DC REIT (KDCREIT SP) is looking to raise S$600m (US$450m) from a primary placement. The proceeds will be used to acquire interest in two data centers in Singapore.
The deal will be a large one to digest, accounting for 47 days of the stock’s three month ADV. That said, the acquisitions appear to be accretive to bottomline.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

Nov 17

Weekly Top Ten Equity Capital Markets – Nov 17, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail

The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

2. Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged

Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.

3. Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering

Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).

4. Swiggy IPO Trading – Decent Anchor but Tepid Overall Demand

Swiggy Limited raised around US$1.35bn in its India IPO, although the demand wasn’t great.
Swiggy Limited is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the trading dynamics.

5. SF Holdings A/H Listing – Thoughts on A/H Premium and past A/H Listings

S.F. Holding (002352 CH) (SFH), China’s largest express delivery company, is now said to be looking to raise around US$1-1.5bn in its H-share listing in Hong Kong.
SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premium.

6. ECM Weekly (11th Nov 2024)-SF Holdings, Swiggy, ACME, NivaBupa, Sagility, Eternal Beauty, Shuangdeng

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPOs front, Indian deals flow seemed to be the only one continuing unbated despite the US elections overhang from the past week.
On the placements front, there weren’t many large deals but we did look at upcoming lockup expiries.

7. Sagility India IPO Trading – Lackluster Demand

Sagility India (2058883D IN) raised US$250m in its India IPO.
Sagility India (Sagility) is a pure-play healthcare focused solutions and services provider to Healthcare Payers and Providers.
We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the trading dynamics.

8. ISU Petasys Rights Issue: Today’s Wild Price Action Has Opened up a Fresh Trading Angle

I initially skipped this rights issue due to the tight 15% discount and lack of hedge options, but today’s 20% drop opens up a potential angle worth exploring.
Today’s selloff stems from pushback on ISU Petasys entering the battery business, not just dilution concerns. This means there’s a high chance we’ll see a lot of leftover, unsold shares.
The strategy is to grab stock rights cheaply or go for the public offering. The main risk is whether the 15% spread holds until listing, but the case is strong.

9. Initial Thoughts on the Klarna IPO

By Daniel Hellberg, Tracking Traffic

On 12 November, Klarna announced that it confidentially filed public offering paperwork. The company is getting ready for an IPO in 1H 2025.
Klarna’s valuation reached as high as $45 billion in 2021 which declined to as low as $6.5 billion. Its valuation has recently risen to about $14.6 billion.
Klarna generated 13.27 billion SEK in revenue (US$1.2 billion) in 1H 2024 (up 27% YoY). Operating margin improved significantly from -18% in 1H 2023 to -2% in 1H 2024.

10. SF Holding Pre-IPO: Three Important Issues for Long-Term Investors to Consider

SF Holding’s domestic parcel volumes have grown slower than overall market volumes recently; is this strategic, or simply a loss of share?
SF Holding is not closely aligned with any of the large online retail platforms in China; ultimately, is this independence an advantage or a disadvantage?
When will SF Holdings’ varied international operations — and there are a few of them — begin to pull their own weight, in terms of profitability and growth?

Oct 20

Weekly Top Ten Equity Capital Markets – Oct 20, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Hyundai Motor India IPO: Valuation Insights

Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.3 billion at a valuation of US$19 billion.
We previously discussed the IPO in Hyundai Motor India IPO: The Bull Case, Hyundai Motor India IPO: The Bear Case and Hyundai Motor India IPO: The Investment Case.
Our valuation analysis suggests that the IPO price range of Rs1,865-1,960 per share is attractive. Therefore, we would participate in the IPO.

2. Horizon Robotics Pre-IPO – PHIP Updates – More of the Same, Lots to Watch Out For

Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO.
Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
In this note, we talk about the recent updates from its filings.

3. ECM Weekly (14th Oct 2024) – Tokyo Metro, Rigaku, Hyundai, China Res, Swiggy, USS, Akeso, Shiyue

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the live IPOs front, the two Japanese IPOs, Tokyo Metro (9023 JP) and Rigaku Holdings (268A JP) appeared attractively priced. The same couldn’t be said about Hyundai Motor India.
On the placements front, there were deals in Hong Kong, Japan and India.

4. China Resources Beverage IPO – Volatility Makes Pricing a Bit Tricky

China Resources Beverage (CRB HK) is looking to raise up to US$650m in its Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

5. Akeso Biopharma Placement – The Placing Price Is Not Cheap Despite Positive Business Progress

By Xinyao (Criss) Wang

HARMONi-2 results are impressive and the overall data is solid and reliable. The NMPA has approved NDA of ebronucimab and sNDA of cadonilimab. Akeso’s fundamentals have indeed undergone positive changes.
Akeso’s current market capitalization already partially reflects the positive expectation about the future successful FDA approval of AK112. In our view, the Placing Price is not cheap.
When the market value falls back to below RMB45 billion is a more comfortable valuation to buy Akeso, and below RMB35 billion market value provides a golden opportunity.

6. Hyundai Motor India IPO: The Good, The Bad and The Valuation. Not for Quick Gain Seekers

By Devi Subhakesan, Investory

Hyundai Motor India (HMIL) ‘s USD 3 billion+ IPO opens today, 15th October, at 10:00 am IST. The bidding will remain open until 4:30 pm IST on 17th October.
Near-Term Outlook: Limited Short-Term Gain Potential. While Hyundai is likely to outperform Maruti Suzuki given the valuation discount, it may underperform the broader sector in the near term.
Long-Term Opportunity: For investors with a longer-term horizon, Hyundai presents a relatively low-risk opportunity. Its established brand and world-class manufacturing facilities offer the potential for steady, long-term growth.

7. FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won

On 14 October, FCP Capital sent a proposal to KT&G to purchase Korea Ginseng Corp for 1.9 trillion won.
Although KT&G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&G.
The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&G revealed as the intrinsic value of Korea Ginseng Corp.

8. CR Beverage (2460 HK) IPO: Valuation Insights

China Resources Beverage (CRB HK), China’s largest purified drinking water company, has launched its HKEx IPO to raise up to US$650 million.
We previously discussed the IPO in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case and CR Beverage IPO: The Investment Case.
Our valuation analysis suggests that CR Beverage is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

9. Horizon Robotics IPO – Peers Are Down a Lot, Its Valuation Isn’t

Horizon Robotics is looking to raise up to US$696m in its Hong Kong IPO.
Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

10. Horizon Robotics (9660 HK) IPO: The Bull Case

Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
Horizon ranked fourth among all global ADAS and AD solution providers in China by solution installation volume in 2023 and 1H24, with a market share of 9.3% and 15.4%, respectively.
The bull case rests on a large TAM, a blue-chip customer base, a robust backlog, a core business in good health, a high gross margin, and a strong balance sheet.

Oct 13

Weekly Top Ten Equity Capital Markets – Oct 13, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Rigaku Holdings IPO – Upside Remains Attractive

Rigaku Holdings (268A JP) is looking to raise up to US$756m in its Japan IPO.
Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
In our earlier notes, we looked at the firm’s past performance and discussed our thoughts on valuation. In this note, we look at Rigaku’s valuation at the final indicative range.

2. Tokyo Metro IPO Valuation Analysis

Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.

3. Hyundai Motor India Sets IPO Price Range

Hyundai Motor India (1342Z IN) has set an IPO price range of 1,865 to 1,960 rupees per share, aiming for a valuation as high as US$19 billion.
Hyundai Motor (005380 KS) is selling a 17.5% stake in Hyundai Motor India in this public offering. Hyundai Motor India IPO is scheduled to trade starting 22 October.
Our updated base case valuation of Hyundai Motor India is market cap of US$19.7 billion based on P/E of 25.9x our estimated net profit of 64.1 billion INR.

4. USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%

Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering.
Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

5. Hyundai Motor India IPO – RHP Updates, Valuation Getting Tricky

Hyundai Motor (005387 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
In our previous notes, we looked at the company’s past performance. In this note, we will talk about its RHP updates and valuations.

6. Hyundai Motor India IPO: Analysis of Latest Financials Signal Challenging Year Ahead

By Devi Subhakesan, Investory

After 3 years of strong revenue and profits growth, Hyundai Motor India is likely to face a challenging year ahead based on the analysis of 1QFY2025 financials provided in RHP.
Hyundai Motor India (1342Z IN)‘s strong exports growth in FY2025 will not offset the weakness in domestic sales. This could result in low single-digit revenue growth for the year.
Increased royalty costs starting in FY2025, coupled with impact of lower cash reserves after special dividend paid out to parent will likely compress profit margins compared to the previous year.

7. Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.4bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

8. Akeso Placement – Opportunistic Raise, past Deal Record Has Been Mixed but Relative Size Is Small

Akeso Biopharma Inc (9926 HK) is looking to raise around US$200m from its primary placement. Proceeds from the placement will be used for R&D.
Past deals in the name haven’t done well recently but the shares have been doing well and the deal size remains small.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

9. CR Beverage IPO: Valuation First-Look

China Resources Beverage (CRB HK), China’s largest purified drinking water company, is premarketing an HKEx to raise US$0.5-1 billion.
We previously discussed the IPO in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case and CR Beverage IPO: The Investment Case.
In this note, we present our forecasts and examine CR Beverage’s potential valuation range for the first time.

10. Rigaku Holdings (268A JP) IPO: Valuation Insights

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement, and testing instruments. It is seeking to raise up to US$737 million.
We previously discussed the IPO in Rigaku Holdings (268A JP) IPO: The Bull Case and Rigaku Holdings (268A JP) IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Rigaku is attractively valued at the IPO price compared to peer multiples.

Oct 06

Weekly Top Ten Equity Capital Markets – Oct 6, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

2. Tokyo Metro (9023 JP) IPO: Valuation Insights

Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case and Tokyo Metro (9023 JP) IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Tokyo Metro is attractively valued at the IPO price compared to peer multiples.

3. Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous note. In this note, we will undertake a peer comparison.

4. Rigaku Holdings (268A JP) IPO: The Bull Case

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
In Japan, Rigaku’s XRD (X-ray diffraction) has a high market share of 75%. Around 70% of its revenue is derived from customers outside Japan.
The bull case rests on high customer switching costs, peer-leading revenue growth, top-quartile profitability, FCF generation, and low leverage.

5. Rigaku IPO – Peer Comparison – Compensating for Smaller Scale with Better Growth and Margins

Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
In our earlier notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison.

6. K Bank IPO – Should Price Below Its Range

By Akshat Shah, Aequitas Research

K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.

7. Swiggy Pre-IPO Tearsheet

Swiggy (1255298D IN) Swiggy is looking to raise about US$1.25bn in its upcoming India IPO. The deal will be run by Kotak, Citi, Jefferies, Avendus, JPM, BofA and ICICI.
Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
The platform can also be used to make restaurant reservations (Dineout), event bookings (SteppinOut), product pick-up/drop-off services (Genie) and other hyperlocal commerce activities (Swiggy Minis).

8. China Resources Beverage Pre-IPO – Updated Thoughts on Valuation

China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In our earlier notes, we talked about the company’s past performance and provided our initial thoughts on valuations. In this note, we will relook at valuations post its PHIP updates.

9. China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing

China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.

10. Rigaku Holdings (268A JP) IPO: The Bear Case

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
In Rigaku Holdings (268A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on weakening forward growth indicators, China revenue risk, rising cash conversion cycles, mid-tier FCF margin and large post-IPO share overhang.

Sep 29

Weekly Top Ten Equity Capital Markets – Sep 29, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Tokyo Metro (9023 JP) IPO: The Bull Case

Tokyo Metro (TKYMETRO JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government.
The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout.

2. Tokyo Metro IPO – The Positives – Quasi-Monopoly Status

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its upcoming Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
In this note, we talk about the positive aspects of the deal.

3. New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up

Besides ranking in the top 50 by market cap, it must also meet a minimum float-adjusted cap for K200 fast entry: at least 50% of the 50th-ranked stock’s market cap.
Even if new stocks meet KRX’s float cap, their actual float share volume may still be low, risking inflation from local pension funds’ preemptive passive inflows post-listing.
This could reduce predictability for KOSPI 200 fast entry, increasing price swings post-listing and forcing traders to develop new volatility strategies after IPOs.

4. K Bank IPO – Peer Comparison – Lags Its Main Peer on Most Fronts

K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
In our previous note, we have looked at the company’s past performance. In this note, we will undertake a peer comparison.

5. Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive

Sino American Silicon Products (5483 TT) is looking to raise US$287m in its GDRs offering. Proceeds will be used to purchase overseas raw materials, repay bank loans and purchase machinery.
Similar to previous GDR listings, the deal has had a long drawn out approval process. Thus, the deal is a very well flagged one.
The deal is a relatively large one to digest at 15.7 days of the stock’s three month ADV.

6. ECM Weekly (23rd Sep 2024) – Tokyo Metro, Midea, Intermestic, Sagility, Belstar, Kuaishou, Bajaj HF

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, Midea Group Co Ltd A (000333 CH) and Bajaj Housing Finance (BHF IN) hogged much of the limelight this week as well.
On the placements front, there were a few large US$400m+ placements across the region this week.

7. Tokyo Metro (9023 JP) IPO: The Bear Case

Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
In Tokyo Metro (9023 JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on mid-tier revenue growth, low revenue diversification, the highest leverage among peers and a sizeable post-IPO share overhang.

8. Rigaku IPO – The Positives – Catering to a Range of End Industries, and Track Record Has Been Strong

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
In this note, we will talk about the positive aspects of the deal.

9. Rigaku Holdings IPO: Initial Thoughts

Rigaku Holdings (268A JP) provides cutting-edge analytical solutions centered on X-ray technology globally. The company is one of the largest players globally in X-ray diffraction instrument market.
The company has filed for an IPO on the Tokyo Stock Exchange and plans to raise proceeds of around US$900m from the IPO at a potential valuation of US$2bn.
In this insight, we discuss Rigaku’s business model, key drivers, financials and outlook for the company.

10. K Bank IPO: Valuation Insights

K Bank (279570 KS) is a Korean internet bank. It has launched an IPO to raise up to US$734 million.
We previously discussed the IPO in K Bank IPO: The Bear Case and K Bank IPO: The Bull Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that K Bank is unattractively valued in the IPO price range. We would pass on the IPO.

Sep 22

Weekly Top Ten Equity Capital Markets – Sep 22, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Midea Group H Share Listing (300 HK): Trading Debut

Midea Group Co Ltd A (000333 CH) priced its H Share at HK$54.80 to raise HK$31,014 million (US$4.0 billion) in gross proceeds. The H Share will be listed tomorrow.
The H Share listing price implies an AH discount of 21.4% at the A Share price of RMB63.51. This compares to Haier Smart Home (6690 HK)‘s AH discount of 13.8%.
Futu grey market data shows that the H Shares closed 5.1% higher at HK$57.60. Our valuation analysis suggests that the H Share listing price is attractive.

2. Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis

By Devi Subhakesan, Investory

Midea Group(000333 CH) has increased the shares on offer in Hong Kong by 15% to 565.9 million shares, priced at the top end of the range at HKD54.8 per share.
With strong investor interest, the company may exercise an over allotment option that could take the deal size to USD 4.6 billion.
Midea’s Hong Kong pricing reflects a nearly 21% discount to its A-share closing price, compared to the average 33% discount for dual-listed companies between Hong Kong and Shanghai or Shenzhen.

3. Pre-IPO Midea Group H Share – Here Are the Risks Behind

By Xinyao (Criss) Wang

For the reasons why Midea is eager to IPO in HK, investors shouldn’t just look at the surface of its glory, but delve into the “real motives” behind capital operations.
The policy of subsidizing the trade-in of home appliances belongs to “early overdraft of demand” and is unsustainable. Valuation logic for the performance increment brought by such policy is P/B.
If Midea cannot achieve the expected breakthroughs in To B business or internationalization in 2025-2026 to hedge against the weak domestic business, Midea’s performance/valuation in following years would inevitable decline.

4. Auckland Airport Placement – Large NZ$1.4bn Raising, with ACC’s Overhang to Contend With

Auckland Intl Airport (AIA NZ) is looking to raise NZ$1.4bn (US$863m) in its primary follow-on offering. The offering includes a NZ$1.2bn underwritten placement, together with a NZ$200m non-underwritten retail offer.
The underwritten placement alone is a large one for the stock to digest at 168 days of three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

5. Kuaishou Placement – US$480m Secondary Block Deal a Small One to Digest

DCM Investments is looking to raise US$484m via selling its remaining stake in Kuaishou Technology (1024 HK).
While the current block deal isn’t entirely well flagged per se, it appears that DCM has since been trimming its stake on the open market.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

6. Bajaj Housing Finance IPO – Valuation Might Get Stretched from Demand Overflow

Bajaj Housing Finance (BHF IN) raised around US$800m in its India IPO.
BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
In our previous notes, we looked at the company’s past performance and valuation. In this note, we will talk about the trading dynamics.

7. K Bank IPO – The Positives – Fast Growth

K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
In this note, we talk about the positive aspects of the deal.

8. K Bank IPO Valuation Analysis

Our base case valuation of K Bank is target price of 9,151 won per share, which is 4% lower than the low end of the IPO price range.
Given the lack of upside in our target price relative to the IPO price range, we would avoid in subscribing to the IPO.
Our base case valuation is based on 1.6x P/B multiple using the company’s equity post IPO (2.35 trillion won).

9. ECM Weekly (16th Sep 2024) – Midea, Bajaj Housing, 99 Speed, P N Gadgil, Hozon, Trial, NextDC, Via

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, Midea Group Co Ltd A (000333 CH) hogged much of the limelight this week, although Bajaj Housing Finance (BHF IN) created some history as well.
We covered the Nextdc Ltd (NXT AU) and Terumo Corp (4543 JP) placements and looked at the possible deals in Trial Holdings (5882 JP) and Via Technologies (2388 TT).

10. K Bank IPO: The Bull Case