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. Midea Group H Share Listing (300 HK): Valuation Insights

Midea Group Co Ltd A (000333 CH) has launched its H Share listing at HK$52.00-54.80 per share. Pricing will be on 13 September, and the listing on 17 September.
We previously discussed the listing in Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health and Midea Group H Share Listing: AH Discount Views.
Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.

2. Midea Group HK IPO Valuation Analysis

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares.
We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
Pricing of this offering is expected to be completed on 13 September and listing on 17 September.

3. Midea HK Listing: Valuation Insights

Chinese home appliance maker Midea has announced the terms for its IPO. The company plans to raise $3.46bn at an indicative price range of HK$52.0-54.8 per share.
The company has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and a growing robotics business.
As we expected, the HK offering is priced at around 25% discount to it’s A-shares and our analysis suggests that Midea’s HK offering is priced attractively.

4. Midea A/H Listing – Bigger Deal, Better Pricing

Midea Group Co Ltd A (000333 CH) aims to raise up to US$3.5bn in its H-share listing, the deal is somewhat larger than what was being spoken about earlier.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the deal background in our previous notes. In this note, we talk about valuations.

5. K Bank IPO – The Biggest IPO in Korea in 2024

K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million).

6. Pre-IPO Midea Group H Share (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

China’s home appliance industry is facing challenges. Even with large-scale “trade in” activities, its expansion effect on market size still appears limited, making it difficult to trigger significant growth momentum.
However, Midea still achieved strong performance growth in 24H1. Both revenue and net profit showed double-digit growth rates. Midea’s business expansion and product profitability are much better than peers.
Performance drivers are overseas business and air conditioners. Our forecast is Midea’s 2024 net profit would reach about RMB37 billion. Valuation of Midea could be higher than Haier Smart Home.

7. Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind

A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
We have covered the background of the deal in our earlier note, Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics.
In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.

8. Terumo (4543 JP): The Current Playbook

Since the US$1.4 billion secondary placement announcement, Terumo Corp (4543 JP)’s shares are down 3.5% from the undisturbed price of JPY2,771 per share (29 August).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Terumo’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 September. Despite Kokusai and Honda’s disappointing performance, the average large Japanese placement tends to generate positive returns.

9. LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations

By Nitin Mangal, Trudence Capital Advisors

LG Electronics’s India business IPO could be valued above USD 7 billion, exceeding market expectations, driven by its dominant position in India’s growing home appliances market and strong sector valuations.
Favourable market conditions and robust sector growth make now an ideal time for LG Electronics (066570 KS) to launch its India IPO, securing high investor interest and compelling valuations.
In a recent interview, LG Electronics(066570 KS) CEO William Cho mentioned that an Indian market debut is one of several options being considered to revitalise the company’s consumer electronics business.

10. Bajaj Housing Finance IPO- Forensic Analysis

Bajaj Housing Finance (BHF IN) upcoming IPO is worth INR 65.6 bn, comprising of fresh issue worth INR 35.6 bn and offer for sale worth INR 30 bn.
The company reports strong KPIs and has been better than peers in several aspects. AUM growth is strong and is driven by Developer Financing and Lease Rental Discounting.
There are few important cautions regarding the NHB observations and assignments.

Sep 08

Weekly Top Ten Equity Capital Markets – Sep 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. Midea Group H Share Listing: AH Discount Views

Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.

2. Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
Midea is the world’s largest home appliance company in sales volume and revenue in 2023. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
The PHIP update shows that the business is in good health, with accelerating growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.

3. Midea: Thoughts on HK Listing and Valuation

Chinese appliance maker Midea’s application to list its shares on the HKEx has been approved and the company plans to list up to 10% of its shares to raise $4bn.
Midea Group Co Ltd A (000333 CH) has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and M&A’s that have helped significantly grow its business.
Our analysis on previous secondary listings of Chinese-listed companies on HKEx shows that the HK listings were priced at a significant discount to their A-Shares.

4. Key Things to Watch in Ecopro HN’s Big Rights Offering

Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.

5. Hamamatsu Photonics Placement – Peculiar Timing

Toyota Motor (7203 JP) aims to raise around US$190m via selling over a 4% stake in Hamamatsu Photonics Kk (6965 JP).
This is another cross-shareholding unwind and hence, won’t be a huge surprise. Although given the recent share price weakness, the timing appears peculiar.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

6. Bajaj Housing Finance IPO – Will Trade at a Premium

By Ethan Aw, Aequitas Research

Bajaj Housing Finance (BHF IN) is looking to raise 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. In this note, we will talk about valuations.

7. Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop

Premier Energies Limited (0377949D IN) raised around US$337m after pricing the deal at the top end of the range at INR450 / share.
It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services.
We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.

8. CICT Placement – Accretive Acquisition, Should Be Favored by Existing Unitholders

Capitaland Integrated Commercial Trust (CICT SP) is looking to raise around S$350m (US$267m) in its primary placement. Included in the issuance is a preferential offering to raise an additional S$757m.
The proceeds will be geared towards acquiring a 50% interest in the ION Orchard mall from its Sponsor.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

9. Midea Group: Initial Thoughts on the Hong Kong IPO Listing

Midea Group Co Ltd A (000333 CH) is getting ready for a Hong Kong IPO listing, trying to raise at least US$3 billion.
Midea Group is trading a relatively attractive valuations. It is trading at P/E of 11.8x, EV/EBITDA of 8.1x, and P/B of 2.5x based on 2024 consensus earnings estimates.
In the past five days, Midea’s price is down 2.3%. Some investors have been selling shares in Midea due to concerns about higher discount price offered at HK IPO listing.

10. The Born Korea IPO Preview

The Born Korea is getting ready to complete its IPO in Korea in November. The total IPO offering is expected to range from 69 billion won to 84 billion won.
Based on the bankers’ valuation, the expected market cap of the company ranges from 357 billion won to 419 billion won.
The Born Korea was founded by Baek Jong-Won, the most famous celebrity chef in Korea.

Sep 01

Weekly Top Ten Equity Capital Markets – Sep 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. Terumo (4543 JP) Secondary Offering – Smaller Than It Looks

On Thursday 29 August, Terumo Corp (4543 JP) announced a secondary offering where 7 major cross-holders would sell just under 5% of the shares outstanding to international investors.
In recent quarters, Terumo has seen better consensus EPS growth than Peers in recent quarters, and Peers have underperformed. Right now, Terumo isn’t ‘cheap’ but consensus growth is strong.
This back-end demand in this case has enough moving parts that it bears a closer look.

2. Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics

A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 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.

3. Initial Thoughts on the Kioxia IPO – Impact on SK Hynix and Samsung Electronics

Kioxia is getting ready to complete its IPO in Japan as soon as in October. Kioxia’s valuation is expected to exceed JPY 1.5 trillion (about USD 10.3 billion).
SK Hynix’s stake in Kioxia (through Bain led consortium) is 19%. SK Hynix’s stake in Kioxia would rise to 34% if the CBs are converted into equity.
The IPO of Kioxia has mixed implications for SK Hynix which is a major shareholder. However, the IPO of Kioxia has a more direct negative impact on Samsung Electronics.

4. Kioxia IPO Early Re-Look – Better Placed This Time Around

Kioxia Holdings (6600 JP) aims to list in Japan by Oct 2024 at a valuation of over US$10bn, as per media reports.
Kioxia is a manufacturer and a global leader in flash memory and solid state drives for smartphones, PCs, enterprise servers and data centers
In this note, we take an early look at the possible listing.

5. Terumo (4543 JP): A US$1.4 Billion Secondary Offering

Terumo Corp (4543 JP) has announced a secondary offering of up to 73.2 million shares, worth JPY203 billion (US$1.4 billion) at the last close.
The secondary offering facilitates the exit of large shareholders. Terumo also announced a buyback worth a maximum of JPY30 billion or 15 million shares.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 12 September (likely 10 September).

6. Interglobe Aviation (Indigo) Placement – Another US$800m+ Deal, This Time by the Correct Co-Founder

InterGlobe Aviation Ltd (INDIGO IN)’s co-founder, Rakesh Gangwal, aims to raise around US$850m via selling around 3.8% stake in Indigo.
He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. He has sold many times before.
In this note, we will talk about the lockup dynamics and possible placement.

7. Keppel Infra Trust Placement – While the Raising Is Relatively Large, Its past Deals Have Done Well

Keppel Infrastructure Trust (KIT SP) is looking to raise around S$206m (US$158m) in its primary placement.
Proceeds will be used to pay down its bridge loan facility linked to its Ventura acquisition. KIT also appears to have secured its unitholders’ approval for the raising earlier.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

8. Hyundai Motor India IPO Valuation Analysis

Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25.
There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.
According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.

9. STCube: Rights Offering Capital Raise of 89 Billion Won

STCube announced it plans to increase capital by 89 billion won (13 billion won through a third party rights offering and 75.7 billion won through shareholder preferred capital increase).
We have a positive view of STCube’s capital raise and there could be some alpha generating returns in our view.
The fact that the company’s share price surged nearly 5x from the last rights offering in May 2022 (to October 2022) is likely to positively impact capital raise this time.

10. Hamamatsu Photonics (6965) – Toyota Selling Yet Another Cross-Holding

Today after the close we got news that after a year-plus of Hamamatsu Photonics Kk (6965 JP)‘s sliding stock price, Toyota Motor (7203 JP) is selling their 5+% stake.
The offering is standard. Probably prices 9 Sep 2024. HP’s amended buyback program and probable index upweights offset most of the offering size over the next several months.
So investors have to decide whether they want to catch the falling knife.

Aug 25

Weekly Top Ten Equity Capital Markets – Aug 25, 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. COLOWIDE (7616) – UGLY Register On Expensive Co Needs a Capital Construct Upgrade, Won’t Get It Here

Colowide Co Ltd (7616 JP) is an industrial fastish-food operator in Japan. They sell several dozen kinds of cuisine under several dozen brands, owned and franchised in Japan and overseas.
The company “philosophy” is “Everything we do is for our customers and employees.” The stock is up 30% in 10yrs. It pays no dividend, but it pays a big yutairimawari.
This means Real World Float is 100% owned by retail who want restaurant coupons. This offering will be bought by index, short covers, and another 20-30k coupon holders.

2. Colowide Placement – Needs a Very Large Correction

Colowide Co Ltd (7616 JP) aims to raise around US$230m in order to fund its prospective M&A transactions over the next few years
While the company has undertaken a number of M&A transactions in the past, it hasn’t clearly stated its intended targets for this round.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

3. Peptron Rights Issue: The 25% Discount Is an Attractive Outright Position Opportunity

Peptron’s lack of single-stock futures means no risk-free arbitrage but also less speculative selling, making the 25% discount an attractive outright position opportunity.
The low capital increase rate may stabilize the stock price, and more forfeited shares could lower the cost of securing subscription rights during the trading window.
Consider buying rights during the trading period or targeting forfeited shares. Conservatively estimate the final offering price range to set a profitable cost for securing rights.

4. Lumir IPO Preview

Lumir is getting ready to complete its IPO on KOSDAQ in September. The IPO which is expected to raise between 49.5 billion won to 61.5 billion won.
Lumir specializes in the development of observation satellite technology including image data processing devices and onboard computers for a number of government satellite series.
Lumir had sales of 12.1 billion won (up 90.5% YoY) in 2023. Its sales surged by 477% YoY to reach 8.2 billion won in 1H24.

5. Bajaj Housing Finance Pre-IPO – Peer Comparison – Bigger and Faster

Bajaj Housing Finance (BHF IN) is looking to raise around US$830m in its upcoming 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.
We have looked at the company’s past performance in our earlier notes. In this note we will undertake a peer comparison.

6. Hyosung Siblings’ Cross-Transfers Are Done: The 10%+ Hyosung Corp Stake Block Deal Remains

The Hyosung siblings swapped ₩60B in shares over August 13-14, raising the elder brother’s Hyosung Corp stake to 40.9% and lowering HS Hyosung below 3%.
The younger brother must sell additionally at least 11.2% of his 14.2% Hyosung Corp stake. The elder brother may buy, but his cash position and 40% stake limit his need.
This block deal will be the first to apply the new pre-disclosure rule. So, we should use it to test how the rule affects price movements for better entry timing.

7. Ecom Express Pre-IPO Tearsheet

Ecom Express Limited (1062300D IN) is looking to raise about US$310m in its upcoming India IPO. The deal will be run by Axis, IIFL Securities, Kotak and UBS.
Ecom Express operates a pan-India express logistics network covering first-mile pick-up, mid-mile transportation and last-mile delivery as well as reverse logistics (returns) and fulfilment services (warehousing).
According to Redseer, the company had the widest pan-India coverage and in Tier 2+ regions compared to its peers, covering over 27,000 PIN codes, as of March 31, 2024.

8. Hero Fincorp Pre-IPO – The Positives – Riding on the Parent’s Brand

Hero FinCorp (HF) is looking to raise around US$438m in its upcoming India IPO.
HF is a non-deposit taking NBFC. It offers a suite of financial products catering primarily to the retail segment and the MSME customer segment in India.
In this note, we talk about the positive aspets of the deal.

9. Zomato Placement – Momentum Is Very Strong, past Ant Related Deals Have Been Mixed

AntFin is looking to raise around US$400m by selling around 2% of Zomato (ZOMATO IN).
Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024, with the deals producing a mixed bag result.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

10. 99 Speedmart Holdings IPO – Digestible Valuation

99 Speed Mart Retail Holdings (99SPD MK) is looking to raise US$530m in its Malaysia IPO. The IPO will be a mix of primary and secondary shares.
99 Speed Mart Retail Holdings (99 Speedmart) operates the “99 Speedmart” chain of mini-market outlets, retailing daily necessities across Malaysia.
In our previous notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison and discuss our thoughts on valuation.

Aug 18

Weekly Top Ten Equity Capital Markets – Aug 18, 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. WeRide IPO: High-Risk Venture Investment and Unproven Business Model

By Andrei Zakharov

WeRide, a pure-play autonomous driving company with operations in 7 countries, may raise up to $120M in upcoming IPO in the United States.
WeRide is expected to IPO this week. The company’s amended prospectus puts the price range per ADS at $15.50 to $18.50, implying a market cap of ~$4.6B at the midpoint.
The company has raised ~$1.4B in equity financing to date and was backed by Qiming Venture Partners and the venture capital fund of the Renault Nissan Mitsubishi Alliance, among others.

2. Brainbees (FirstCry) IPO Trading – Decent Subscription and Valuation

BrainBees Solutions (FirstCry) raised around US$500m in its India IPO.
FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

3. WeRide IPO – Stiff Competition and Bleak Sentiment. Premium Valuation Doesn’t Help

WeRide (WRD US) is looking to raise US$119m in its US IPO.
WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
We had looked at the firm’s past performance in our earlier notes. In this note, we discuss our thoughts on valuation.

4. China Resources Beverage Pre-IPO – Thoughts on Valuation

China Resources Beverage is looking to raise 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 undertook a peer comparison. In this note, we will look at valuations.

5. Hindustan Zinc OFS Early Look – Due for a Correction, Large Selling Pressure Looming

Vedanta Ltd (VEDL IN) is looking to raise US$760m from selling some stake in Hindustan Zinc (HZ IN).
Overall, while the deal would represent just 2.6% of the firm’s outstanding shares, the deal is a large one to digest at 41 days of the stock’s three month ADV.
In this note, we take an early look at the deal, and comment on the deal dynamics.

6. ECM Weekly (12th Aug 2024) – Ola Electric, Brainbees, WeRide, Akum, CR Beverages, Eternal Beauty

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 prior week witnessed a number of listings with divergent results.
Given the market volatility, there was only one large placements in the prior week.

7. WeRide (WRD US) IPO: The Bear Case

WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
In WeRide (WRD US) 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 a volatile revenue profile, high customer concentration risk, widening losses that raise doubts on the path to profitability, elongated cash collection cycles and cash burn.

8. P N Gadgil Jewellers Pre-IPO – Strong Revenue Growth but Margin Worry Persists

P N Gadgil Jewellers (1742652D IN) looking to raise up to US$132m in its upcoming India IPO.
P N Gadgil Jewellers (PNGJ) is an Indian organized jewellery player. Its product offerings include traditional as well as modern and functional jewellery designs, in gold, diamond, silver and platinum.
In this note, we look at the company’s historical performance.

9. Ola Electric (OLAELEC IN) : Soaring High – How Much Higher Can It Go?

By Ethan Aw, Aequitas Research

Ola Electric’s stock has surged since its Friday listing, despite a lukewarm IPO response. We look at a possible base-to-bullish case valuation range for Ola Electric’s stock price.
With the e2W market up 96% YoY in July and Ola Electric’s sales soaring 114%, the momentum is strong. Likely catalyst on the horizon adds to investor optimism.
Currently, on FY2026E EV/Revenue, Ola Electric trades on par with its closest Indian e2W peer.

10. ACME Solar Holdings – Strong Sector Tailwinds but Need to Keep an Eye on Profitability

ACME Solar Holdings (1700918D IN) is looking to raise US$360m in its upcoming India IPO.
ACME Solar (ACME) is a renewable energy firm with a portfolio of solar, wind, hybrid and firm and dispatchable renewable energy (FDRE) projects.
In this note, we talk about the company’s historical performance.

Aug 11

Weekly Top Ten Equity Capital Markets – Aug 11, 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. Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand

Ola Electric managed to raise around US$734m in its India IPO.
Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

2. BrainBees Solutions IPO: Five Facts Why FirstCry Is Not a First Class Company

We highlight several red flags with regard to BrainBees Solutions (0172540D IN) operations, business strategy and governance for investors’ careful consideration.
At the announced IPO price band of Rs440 – Rs465, Brainbees implied EV/Revenues (FY24) works out to 3.5X – 3.7X – a significant discount to India listed online retail verticals.
Despite seemingly inexpensive relative valuations, we do not see a compelling reason to invest in the company, specially given the several red flags discussed below.

3. ECM Weekly (5th Aug 2024) – Ola Electric, Brainbees, WeRide, Sanil, CR Beverages, Carote, Fortescue

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 coming week will see see the listing of Akums Drugs while books will be open for Ola Electric, BrainBees Solutions and Black Sesame Technologies.
On the placement front, there were two large deals in Fortescue Metals (FMG AU) and Adani Transmission (ADANIT IN).

4. Eternal Beauty Pre-IPO Tearsheet

Eternal Beauty Holdings Limited (EBHL12 HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by BNP Paribas, Citic, CMBI and DBS.
Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.
The company has a diverse portfolio of iconic brands of not only perfumes, but also color cosmetics, skincare products, personal care products, eyewear and home fragrances under management.

5. Brainbees Solutions (FirstCry) IPO: Key Facts, Financials and Valuations

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

BrainBees Solutions (0172540D IN) that operates FirstCry, India’s leading Online Mom and Child vertical, has launched a USD500 mn IPO that closes on August 8th.
The IPO pricing suggest a post-money equity valuation of around USD 2.8 billion and an EV/Revenue multiple in the range of 3.5X-3.7X.
Brainbees operates in an attractive online vertical noted for its high frequency purchases and long term customer relationship. However it has not built significant competitive advantages versus leading horizontal platforms.

6. Ola Electric IPO: Forecasts and Valuation

Ola Electric (1700674D IN) plans to raise INR55bn through fresh issue of shares while existing shareholders will offer 84.9m shares at an indicative IPO price band of INR72-76 per share.
We expect the company’s revenues to continue to expand and grow at much higher rates during the next few years compared to competitors in the Indian two-wheeler market.
Our valuation analysis suggests that Ola Electric’s IPO is attractively priced compared to peers and we would suggest subscribing for the company’s IPO.

7. Black Sesame IPO Trading – Lackluster Demand, Combined with Bad Timing

Black Sesame Technologies (BLACKSES HK) raised around US$133m in its Hong Kong IPO, after pricing its IPO at the low-end.
Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

8. Paras Healthcare Pre-IPO Tearsheet

Paras Healthcare Limited (0490145D IN) is looking to raise about US$180m in its upcoming India IPO. The deal will be run by ICICI, IIFL and Motilal Oswal.
Paras Healthcare is the fifth largest healthcare provider, in terms of bed capacity in North India, Bihar and Jharkhand, with an aggregate of 2,135 beds, as of March 31, 2024.
The company offers several clinical specialties across its hospitals including cardiac sciences, oncology, neuro sciences, gastro sciences and orthopedics and joint replacement.

9. Brainbees Solutions (FirstCry) IPO: Valuation Insights

BrainBees Solutions (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, will launch an IPO to raise up to US$500 million.
We previously discussed the IPO in Brainbees Solutions (FirstCry) IPO: The Bull Case, Brainbees Solutions (FirstCry) IPO: The Bear Case and Brainbees Solutions (FirstCry) IPO: The Investment Case.
Our valuation analysis suggests that the IPO price range of Rs440-465 per share is attractive. Therefore, we would participate in the IPO.

10. Initial Thoughts on the K Bank IPO

In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea.
A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank.
K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

Aug 04

Weekly Top Ten Equity Capital Markets – Aug 4, 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. Ola Electric IPO: The Investment Case

Ola Electric (1700674D IN), the largest Indian player in electric two-wheel vehicles (E2W), will launch a US$660 million IPO at a lower US$4.5 billion valuation (vs. the previous US$7-8bn target).
We previously discussed the IPO in Ola Electric IPO: The Bull Case and Ola Electric IPO: The Bear Case. In this note, we examine the latest updates in the RHP.
The investment case rests on rising market share in a growing market, rapid growth aided by product diversification, path to profitability supported by lower losses and declining cash burn.

2. Fortescue Placement – Discount Appears Attractive, but Momentum Has Been Very Weak

An undisclosed shareholder is looking to raise US$1.25bn (A$1.91bn) from selling some stake in Fortescue Metals (FMG AU).
The deal is a large one to digest at 13 days of the stock’s three month ADV. The selling shareholder will be locked up for 45 days.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

3. Ola Electric IPO – RHP Updates – Growing Faster than Expected, Driven by GoI Policy

Ola Electric is now looking to raise about US$730m in its upcoming India IPO.
Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
In our previous notes, we looked at the company’s performance, undertook a peer comparison and talked about valuations. In this note, we look at the updates from its recent filings.

4. ECM Weekly (29th July 2024) – ASICS, Kokusai, Amer, Hyundai, Timee, Sanil, Akum, Bloks, Ola Electric

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 coming week will see Sanil Electric (062040 KS) list, while Akums Drugs and Pharmaceuticals books will open and Ola Electric too might be launched.
On the placement front, the past week was relatively quiet after a few hectic weeks.

5. Ola Electric: India’s First EV IPO – Key Facts, Financials & Valuation

Ola Electric (1700674D IN) , India’s leading electric 2-wheeler backed by Softbank Group ‘s Vision Fund, will launch its USD 735 million IPO on Friday, August 2.
The IPO pricing suggests a post-money equity valuation of around USD 4 billion, significantly lower than its earlier funding levels.
Government incentives for EVs are being revised, with the current scheme valid only until the end of September, creating uncertainty that has possibly impacted valuations.

6. Ola Electric IPO – Thoughts on Valuation

Ola Electric is now looking to raise about US$730m in its India IPO.
Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.

7. Ola Electric IPO: Valuation Insights

By Ethan Aw, Aequitas Research

Ola Electric (1700674D IN), the largest Indian player in electric two-wheel vehicles (E2W), is seeking to raise up to US$734 million.
We previously discussed the IPO in Ola Electric IPO: The Bull Case, Ola Electric IPO: The Bear Case and Ola Electric IPO: The Investment Case.
Our valuation analysis suggests that the IPO price range of Rs72-76 per share is attractive. Therefore, we would participate in the IPO.

8. Sanil Electric IPO Trading – Strong Institutional Demand, Highest Subscription Rate This Year

Sanil Electric (062040 KS) raised around US$193m in its Korea IPO, after pricing the deal above the top end of the range at KRW35,000/share.
Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
In this note, we will talk about the demand for the deal and other trading dynamics.

9. WeRide Pre-IPO – The Positives – Large Monetisation Opportunity on the Horizon

WeRide Corp (WER CH) is looking to raise around US$300m in its upcoming US IPO.
WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
In this note, we will talk about the positive aspects of the deal.

10. WeRide Pre-IPO – The Negatives – Losses Have Widened, Still in the Early Stages of Commercialization

WeRide Corp (WER CH) is looking to raise around US$300m in its upcoming US IPO.
WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
In this note, we will talk about the not so positive aspects of the deal.

Jul 28

Weekly Top Ten Equity Capital Markets – Jul 28, 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. ASICS (7936 JP): The Current Playbook

Since the US$1.4 billion secondary placement announcement, ASICS Corp (7936 JP)’s shares are up 0.9% from the undisturbed price of JPY2,564 per share (12 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asics’ shares have deviated from the pattern of previous large placements.
The offering will likely be priced on 23 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

2. ASICS Placement Updates – Share Pop Done, Now Needs to Correct

A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
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.

3. Timee IPO Trading – Garnered a Strong Demand, Should Pop

Timee Inc (215A JP) raised US$300m in its Japan IPO. The IPO had been a 100% secondary selldown by existing shareholders.
Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

4. Hyundai Motor India Pre-IPO – Thoughts on Valuation

Hyundai Motor (005385 KS) is looking to raise around US$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 have looked at the company’s past performance and undertaken a peer comparison. In this note, we talk about valuations.

5. ECM Weekly (22nd July 2024) – Kokusai, Honda, ASICS, ZIP, Invincible, Hyundai, Premier, Timee, Sanil

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 coming week to see two more listing, with both likely to do well.
On the placement front, Japan continued to dominate the ECM flows, with India, Taiwan and Australia joining in.

6. Korea’s New IPO Bookbuilding & Lockup Results Disclosure Rule, Effective from August

FSS’s leaked IPO guidelines include new, highly attention-grabbing additions: specifically, the disclosure of extra information from the bookbuilding and lockup results not mentioned in May.
Institutions submitting prices outside the indicative band must be disclosed by KRX investor type. Additionally, average placed price information for lockup-pledged investors must be disclosed.
FSS will distribute new IPO guidelines this week and apply them from next month. Major IPOs like K Bank must disclose more detailed bookbuilding and lockup results, impacting trading dynamics.

7. Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

By David Mudd

BYD (1211 HK) shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.
POWER ASSETS HOLDINGS (6 HK) has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield.
WH GROUP (288 HK) has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US.

8. Amer Sports IPO Lock-Up Expiry – PE Investor Might Look to Trim US$750m Stake

By Money of Mine, Money of Mine

Amer Sports (AS US) raised around US$1.3bn in its US IPO in Feb 2024, after pricing its IPO below its initial range.
Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
In this note, we talk about the upcoming lock-up expiry and deal dynamics.

9. CONFIRMED: Bellevue raising

Bellevue is raising capital through a placement and share purchase plan at a discount to the last close
The purpose of the capital raise is to pay off debt and fund future growth, with operational pressure and hedges in place
The company is shifting to a long-term growth story, with guidance for increased production and costs going forward

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

10. Bloks Group Pre-IPO – The Positives – Wide Portfolio of Established IPs

Bloks Group (1850960D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
In this note, we will talk about the positive aspects of the deal.

Jul 21

Weekly Top Ten Equity Capital Markets – Jul 21, 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. The Honda (7267) Offering – Much Easier Than It Looks

At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

2. ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact

A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
For the two large banks, this will be a cleanup of their cross-shareholding.
In this note, we will talk about the placement and run the deal through our ECM framework.

3. Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

4. Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out

Hyundai Motor (005380 KS) is looking to raise around US$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 note, we looked at the company’s past performance. In this note, we undertake a peer comparison.

5. Honda (7267 JP): The Current Playbook

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

6. Timee IPO: Forecasts and Valuation

Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

7. Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction

A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
The possibility of such a selldown was flagged by Reuters prior to the deal launch.
In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.

8. ECM Weekly (15th July 2024) – Kokusai, Wiwynn, Kelun-Biotech, Timee, Shift Up, Sanil, Avanse

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, there were a number of listing in the past week, most of which performed as per our expectations.
On the placement front, Japan continued to dominate the ECM flows.

9. Sanil Electric IPO Book Building Results Analysis

Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024.
Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).

10. Gigabyte GDR Offering – Not Wholly Convinced, but Discount at Wide End Is Inline with the Average

Gigabyte Technology (2376 TT) is looking to raise up to US$307m in its global depository receipts (GDRs) offering. The firm is also looking to raise another US$300m via convertible bonds.
Similar to previous GDR listings, the firm has undergone a long drawn out process prior to launching the deal, having to jump through a number of board/shareholder/regulatory approval loops.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Jul 14

Weekly Top Ten Equity Capital Markets – Jul 14, 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. KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?

Today, a Reuters article came out saying that KKR would sell down half its 43% stake in Kokusai Electric (6525 JP) according to “two people familiar with the matter.”
The article also said Kokusai Electric would buy back shares. Kokusai responded with a TDNET release saying “we did not release this info but we are considering various capital policies.
It pays to look at the Shareholder Structure as it stands. This is bigger than it looks.

2. Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO

Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international.
This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.

3. Timee Pre-IPO – Thoughts on Valuation – Primed for a Decent Upside at the Current Range

Timee Inc (215A JP) is looking to raise US$290m in its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
In an earlier note, we looked at the firm’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.

4. Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering

Reuters reported that KKR & Co (KKR US), the largest Kokusai Electric (6525 JP) shareholder, plans to sell about half of its 43% stake, worth around JPY300 billion.
As Kokusai’s shares are trading at 3.2x the IPO price of JPY1,840, KKR would be tempted to reduce its stake further. The 180-day IPO lock-up period expired on 22 April.
Kokusai anticipates a return to growth and margin improvement. However, Kokusai trades at a material premium to peer multiples and is fully priced.

5. HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

6. Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong

Wiwynn Corp (6669 TT) is looking to raise around US$850m in its global depository receipts (GDRs) offering.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

7. ECM Weekly (8th July 2024) – Japan Cross-Shareholding, Honda, Aisin, Timee, Chenqi, Cirrus, Emcure

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, we looked at the recently launced offerings of Timee Inc , Chenqi Technology Limited and Cirrus Aircraft.
On the placement front, this week too was dominated by the cross-shareholding unwinds, this time in Honda Motor (7267 JP).

8. Trading Strategy of Shift Up on the First Day of IPO

In this insight, we discuss a trading strategy for Shift Up which starts trading on 11 July. Shift Up is one of the most anticipated IPOs in Korea this year.
Our base case (6 months – 1 year) target price of Shift Up is 95,510 won, which is 59% higher than the IPO price.
We recommend investors to take some profits (about 50% of invested capital) if the share price shoots higher by 100% or more from the IPO price on the first day.

9. Kelun-Biotech IPO Lock-Up Expiry – Strong Performance Leaves Pre-IPO Investors with Large Gains

Kelun Biotech (KB) raised around US$170m in its IPO in July 2023, the lockup on its pre-IPO shareholders is set to expire soon.
KB is a China-based integrated innovative biopharmaceutical company. It has accumulated more than ten years of experience in antibody drug conjugates (ADC) development.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

10. ASICS (7936 JP): A US$1.4 Billion Secondary Offering