Category

Equity Capital Markets

Dec 03
0

Weekly Top Ten Equity Capital Markets – Dec 3, 2023

By | Equity Capital Markets

1. Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap

By Travis Lundy, Quiddity Advisors

  • 15 minutes after I published what I thought was a considered analysis, Denso dumps the details. I thought it might be a trap. It looks like a trap.
  • A holistic view of the three different documents here suggests, indeed, “It was a trap”. 
  • This giant offering is not bearish overhang but likely tilts bullish with greenshoe support, a large buyback, a new cross-holding reduction policy, and the follow-on effects from that.

2. Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”

By Travis Lundy, Quiddity Advisors

  • Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of Denso Corp (6902 JP) worth ¥700bn in a secondary share sale by year-end.
  • The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and Aisin Seiki (7259 JP) selling its 2% stake. 
  • Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It looks bigger than it probably is.

3. Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback

By Arun George, Global Equity Research Ltd

  • Denso Corp (6902 JP) announced a secondary offering of up to 294.8 billion shares (including overallotment) and a buyback (maximum shares of 125 million or maximum value of JPY200 billion).
  • Denso also announced a cross-holding reduction policy. In an unspecified timeframe, it will sell part of its holdings in Toyota Industries (6201 JP) and Aisin (7259 JP).
  • Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 13 and 18 December (likely 13 December).

4. Asahi Group (2502 JP): The Current Playbook

By Arun George, Global Equity Research Ltd

  • Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements. 
  • The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.

5. Zensho Placement – Good Price to Raise At, at Least for the Company

By Sumeet Singh, Aequitas Research

  • Zensho Holdings (7550 JP) aims to raise around US$300m via a public offering.
  • As per the company it will use the proceeds from the deal for potential M&A transactions.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

6. Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected

By Sumeet Singh, Aequitas Research

7. Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track

By Sumeet Singh, Aequitas Research

  • ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the updates from its recent filings.

8. Tata Technologies IPO: Trading Debut

By Arun George, Global Equity Research Ltd

9. LS Materials IPO Bookbuilding Results Analysis

By Douglas Kim

  • LS Materials IPO price has been determined at 6,000 won per share, which is higher than the high end of the IPO price range (5,500 won). 
  • A total 2,025 institutional investors participated in this IPO book building. The demand ratio was 396.8 to 1. The IPO offering amount is 87.8 billion won. 
  • We believe that its share price is likely to trade higher than the high end of our valuation range (7,953 won per share) post IPO. 

10. Sino-Synergy Hydrogen IPO – High Potential but Comes with Ample Issues

By Sumeet Singh, Aequitas Research

  • Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO. 
  • SHET is a hydrogen fuel cell company in the PRC focusing on research, development, production and sales of hydrogen fuel cell stacks and hydrogen fuel cell systems.
  • In this note, we will look at the company’s background and talk about valuations.

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Nov 26
0

Weekly Top Ten Equity Capital Markets – Nov 26, 2023

By | Equity Capital Markets

1. Large GS Yuasa (6674) Placement – 20% Dilution, Needs Lots of Love

By Travis Lundy, Quiddity Advisors

  • Today after the close, noted Japanese battery maker Gs Yuasa Corp (6674 JP) announced a public equity offering accompanied by a 3rd party placement to Honda Motor (7267 JP). 
  • Total $300mm+ raise is nearly 20.0mm shares against ~80mm shares out now. That’s 20% EPS dilution at a still-decent discount to book value.
  • This creates a weird situation of a low ROE stock becoming lower ROE, at a lower PBR, with “more growth ahead” in a hyper-competitive space.

2. Tata Technologies IPO: Valuation Insights

By Arun George, Global Equity Research Ltd

3. Zeekr Pre-IPO – Thoughts on Valuation

By Sumeet Singh, Aequitas Research

  • ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we will talk about valuations.

4. GS Yuasa Placement – Well Flagged but Relatively Large Deal, Liquidity Might Be an Issue

By Sumeet Singh, Aequitas Research

  • Gs Yuasa Corp (6674 JP) (GSY) is looking to raise around US$240m via a public offering, along with placing shares via third-party allotment with Honda Motor (7267 JP) .
  • The company formed a JV with Honda Motors earlier this year and will use the bulk of the proceeds for investments in the JV.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

5. DS Dansuk IPO Preview

By Douglas Kim

  • DS Dansuk is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is from 79,000 won to 89,000 won. 
  • The book building for the institutional investors will be from 5-11 December. The IPO offering amount is from 96.4 billion won to 108.6 billion won. 
  • According to the bankers’ valuation, DS Dansuk’s valuation would range from 462 billion won to 522 billion won. 

6. Flair Writing Industries IPO- Forensic Analysis

By Nitin Mangal, India Independent Insight

  • Flair Writing Industries (1656496D IN) ‘s INR 5.9 bn upcoming IPO consists of fresh issue worth INR 2.9 bn and OFS worth INR 3 bn (at the upper end).
  • The company is the largest pen manufacturer in India and one of the top three players in the Indian Writing Instruments Industry.
  • While the company has shown a handsome growth since the pandemic, some operating metrics pertaining to employees don’t seem to add up.

7. WuXi XDC (2268.HK) – How Long Will the Rally Last?

By Xinyao (Criss) Wang

  • WuXi XDC’s shares surged since IPO. Obviously, ADC industry is in a “honeymoon period”. The market is optimistic about ADC due to high certainty and growth visibility in short term.
  • Pharmaceutical companies believe this platform would produce blockbuster products continuously. However, if there’s any “persuasive event” to change optimistic expectations on ADC, it’s time for investors to reconsider WuXi XDC.
  • “Positive sentiment + non-falsifiable short-term logic” would indeed push WuXi XDC’s shares to a new high. As long as sales of major ADCs are in line with expectations, party continues.

8. Tata Technologies IPO- Forensic Analysis

By Nitin Mangal, India Independent Insight

  • Tata Technologies (TATATECH IN) awaited IPO is set to launch for subscription this week.
  • The company is one of the largest ER&D player that is based in India with revenues crossing INR 44 bn in F23. 
  • Balance sheet remains strong and cash rich. There are however, doubts on revenue recognition policy, forex risk and reliance on Tata Group.

9. Zensho Holdings (7550) – ¥50bn Offering Is Not Meant For You

By Travis Lundy, Quiddity Advisors

  • Zensho Holdings (7550 JP) has had a great couple of years in share price movement. And this year is seeing earnings explode to new highs. M&A and FX.
  • Now they want to build a “war chest” equivalent to 4% of market cap to go do more M&A. 
  • This seems opportunistic. And the shareholder register is extraordinarily lopsided. There is really only one buyer for this deal.

10. Zeekr Pre-IPO – Peer Comparison – Catching up with Little Spending

By Sumeet Singh, Aequitas Research

  • ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • We have looked at the company’s past performance in our earlier notes . In this note, we will undertake a peer comparison.

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Nov 19
0

Weekly Top Ten Equity Capital Markets – Nov 19, 2023

By | Equity Capital Markets

1. Asahi Group Placement – Relatively Small One when Compared to Previous Large JP Secondary Selldowns

By Clarence Chu, Aequitas Research

  • A group of shareholders are looking to raise US$1.3bn (JPY197.8bn) by selling their respective stakes in Asahi Group Holdings (2502 JP) via an extended secondary follow-on.
  • The deal would represent 23 days of Asahi’s three month ADV. Its latest extended large primary deal has done very well.
  • While the deal isn’t particularly well flagged, it is an extended one allowing the market to price in the impact of the share sale. 

2. Zeekr Pre-IPO – The Positives – Has Been Growing Very Fast While Meeting Its Targets

By Sumeet Singh, Aequitas Research

  • Zeekr, a premium EV brand by Geely Auto (175 HK) , aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • In this note, we talk about the positive aspects of the deal.

3. Zeekr Pre-IPO – The Negatives – Remains Highly Dependent on Geely

By Sumeet Singh, Aequitas Research

  • ZEEKR, a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • In this note, we talk about the not-so-positive aspects of the deal.

4. Ajinomoto Placement – Share Buyback Should Aid Group Selling

By Clarence Chu, Aequitas Research

  • A group of shareholders are looking to raise US$444m by trimming their respective stakes in Ajinomoto Co (2802 JP) via an extended secondary follow-on.
  • While the selldown doesn’t seem particularly well flagged, it won’t be a very large one to digest at just eight days of three month ADV. 
  • In a bid to cushion the selldown, Ajinomoto plans to buyback its stock to the tune of 10m shares, which would amount to 80% of the base shares on offer. 

5. WuXi XDC Cayman IPO Trading – Strong Subscription Rates Heading into Listing

By Clarence Chu, Aequitas Research

  • WuXi XDC Cayman (1877628D HK) raised US$470m in its Hong Kong IPO.
  • WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

6. Steadfast Group Placement – While Accretion Here Is Limited, Past Deals Have Done Well

By Clarence Chu, Aequitas Research

  • Steadfast (SDF AU) is looking to raise around A$280m (US$180m) to fund the acquisition of Sure Insurance, and provide headroom for potentially additional acquisitions over the year.
  • SDF has undertaken a number of capital raises in the past to similarly fund its active acquisition strategy. Overall, the firm’s past deal record has been strong.
  • In this note, we will talk about the acquisition and run the deal through our ECM framework.

7. Wuxi XDC: Thoughts on First Day Trading

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

  • Wuxi XDC priced its IPO at HK$20.60 per share (upper-end of range), and raised HK$3.5bn (US$417m) at a market capitalisation of HK$24.3bn and post-money EV of HK$20.4bn.
  • Both HK offering and the international offering of the company were significantly oversubscribed by 49.96x and 19.6x respectively.
  • Our DCF value per share is still at a significant premium to the final IPO price, and we expect Wuxi XDC’s IPO to have a strong debut.

8. WuXi XDC IPO: Trading Debut

By Arun George, Global Equity Research Ltd

9. Ecopro Materials IPO Trading – One of the Weakest Subscription Rates of the Year

By Ethan Aw, Aequitas Research

  • EcoPro Materials (ECO123 KS) raised around US$320m, after downsizing the deal and pricing its IPO at the low end of the range at KRW36,200/share.
  • Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
  • In this note, we will talk about the demand for the deal and other trading dynamics.

10. ZEEKR IPO: The Bull Case

By Arun George, Global Equity Research Ltd

  • ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
  • ZEEKR has launched three models – the luxury shooting brake coupe ZEEKR 001, the luxury pure electric MPV – ZEEKR 009 and the new luxury versatile SUV – ZEEKR X.
  • The bull case rests on bestselling premium BEVs, rapid vehicle sales growth, rising gross margin, debt-free balance sheet and a favourable cash conversion cycle.

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Nov 12
0

Weekly Top Ten Equity Capital Markets – Nov 12, 2023

By | Equity Capital Markets

1. Renesas Electronics Placement – Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

By Ethan Aw, Aequitas Research

  • INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been paring down its stake. 
  • The deal is a slightly large one to digest at 12 days of three month ADV and around 6% of current mcap.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

2. WuXi XDC Cayman IPO – Decent Upside from IPO Range, Bulk of the Deal Taken up by Marquee Investors

By Clarence Chu, Aequitas Research

  • WuXi XDC Cayman (1877628D HK) is looking to raise US$470m in its Hong Kong IPO.
  • WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
  • In this note, we will look at the deal dynamics and share our final thoughts on valuation.

3. Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise

By Clarence Chu, Aequitas Research

  • Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan. 
  • In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg. 
  • The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.

4. WuXi XDC IPO: Valuation First-Look

By Arun George, Global Equity Research Ltd

5. WuXi XDC IPO: Valuation Insights

By Arun George, Global Equity Research Ltd

  • WuXi XDC Cayman (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), has launched an HKEx IPO to raise up to US$470 million.
  • We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
  • Blue-Chip cornerstones will purchase US$300 million of the offer. Our base-case DCF valuation is HK$22.84 per share, 12.8% above the midpoint of the IPO price range.

6. Bajaj Finance QIP – Very Well Flagged US$1bn Raising, past Deals Have Done Well

By Sumeet Singh, Aequitas Research

  • Bajaj Finance Ltd (BAF IN) , one of India’s largest NBFCs, aims to raise around US$1bn via a QIP.
  • Bajaj Finance is an NBFC offering auto, consumer and home loans, along with other products as well.
  • In this note, we run the deal through our ECM framework and talk about the deal dynamics.

7. Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban

By Douglas Kim

  • Ecopro Materials reported disappointing IPO book building results. IPO price has been finalized at 36,200 won, which is at the low end of the IPO price range.
  • The demand ratio was 17.2 to 1 which was low. Total IPO offering amount was 419 billion won. Ecopro Materials will start trading on 17 November. 
  • Our base case valuation of Ecopro Materials is target price of 37,436 won per share, which is 3.4% higher than the IPO price. We remain negative on this IPO.

8. WuXi XDC IPO Valuation Analysis: Premium Multiples Reflect 100%+ Top-Line Growth

By Andrei Zakharov

  • WuXi XDC set terms for an upcoming IPO: the fast-growing CRDMO offers 178.4M shares at the price range of HK$19.90-HK$20.60, implying a market cap of ~HK$23.9B (~$3B) at the midpoint. 
  • Cornerstone investors agreed to subscribe and buy ~116M shares, assuming the IPO price of HK$20.25 at the midpoint. WuXi XDC shares will begin trading on Friday, November 17. 
  • My PT of HK$25.57 implies a ~26% upside to the IPO price at the midpoint. WuXi XDC’s premium multiples reflect 100%+ top-line growth and the company’s leadership position. 

9. WuXi XDC Cayman IPO: Robust Top Line Growth but Margins Remain Under Pressure

By Shifara Samsudeen, ACMA, CGMA, LightStream Research

  • WuXi XDC Cayman (1877628D HK) is a leading contract research, development and manufacturing organisation (CRDMO) focused on the global antibody-drug conjugate (“ADC”) and broader bioconjugate market.
  • The company has announced the terms for its HKEx IPO and plans to raise proceeds of around US$470m through the IPO.
  • Wuxi XDC’s revenues have seen robust growth during the last 3-years driven by growth in ADC market while margins have continued to decline.

10. Hybe Placement- Another Block Incoming

By Ethan Aw, Aequitas Research

  • HYBE (352820 KS)‘s second-largest shareholder, Netmarble, seeks to raise approximately US$408m through a secondary block deal, selling approximately 2.5m shares (6% of TSO). 
  • The deal is a slightly large one to digest at 10.9 days of three month ADV and 5.5% of current mcap.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

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