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. Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering

SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what.
In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.

2. Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out

Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.

3. Heiwado (8276 JP) – Banks and Insurers Unwinding Cross-Holdings In Offering

Heiwado Co Ltd (8276 JP) today announced a Secondary Offering sell-down by cross-holders, combined with a buyback post-offering to mitigate some of the effects of overhang.
Banks and insurers are selling, and that will leave the stock with a lot of cross-holders left, but investors should look at the model given he zeitgeist.
Companies with lots of cross-holders have to be “fair” to them. Those without copious cash have to spread it around so this transaction model looks likely to be continued.

4. Initial Thoughts on the Webtoon Entertainment IPO

Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024.
The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO.
The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).

5. Azure Minerals Block – Removal of Overhang but Still a Risky Bet

Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up.
The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

6. Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion

Union Bank Of India (UNBK IN) is looking to raise up to US$370m (INR30bn) via its QIP.
The company last undertook a QIP in Aug 2023, which we covered in Union Bank of India QIP – Well-Flagged Deal, Recent Momentum Has Been Strong.
This deal too is a very well flagged one, with the firm having earlier reported that it would look to do a QIP to boost its free float and capital.

7. Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses

Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
We have looked at the past performance in our previous notes. In this note, we talk about the updates from its recent filings.

8. Orica Placement – Keeping the Acquisition Momentum Going

Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco.
The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

9. ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Trial Holdings (5882 JP) was back in the market, a year after ditching its previous attempt, while Juniper Hotels is trying to ride the India wave.
For placements, more signs of REIT coming back to life, this time in Japan. A relatively large deal in Toei Animation (4816 JP) as well was launched.

10. Amman Mineral International Lockup Expiry – Large Lockup Expiry, Sitting on Sizeable Profits

Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Feb 18

Weekly Top Ten Equity Capital Markets – Feb 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. Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come

In December 2021, when companies were required to file statements with the TSE as to plans to meet continuing listing requirements, Toei Animation (4816 JP) had a Plan.
That plan? Get from a then-current 15.5% Tradable Shares level to 25.0% by 31 March 2025. That was “OK” though later, the TSE asked companies to speed it up.
Today, shareholders Sony and Bandai Namco announced an equity offering to sell down up to 4.48mm shares in a domestic+overseas offering. It’s big, heavy, and there is more to come.

2. Toei Animation Placement – Looks Ripe for a Correction

Bandai Namco (7832 JP) and Sony Pictures are looking to raise up to US$525m via selling around 10.66% of Toei Animation (4816 JP) (TA).
The purpose of the placement is to unwind some of the cross-shareholding, as well as help TA to maintain its listing in the Standard Segment.
In this note, we will talk about the placement and run the deal through our ECM framework.

3. Toei Animation (4816 JP): A US$550 Million Secondary Offering

Toei Animation (4816 JP) has announced a secondary offering of up to 4.5 million shares (including overallotment). Bandai Namco Holdings (7832 JP) and Sony Corp (6758 JP) are the sellers.
The offering will allow Toei Animation to maintain its listing in the TSE Standard Market and enable Bandai Namco and Sony to reduce and liquidate cross-shareholdings.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 27 February and 4 March (likely 27 February).

4. Initial Thoughts on Hyundai Motor India IPO

Hyundai Motor India has been taking initial steps for an IPO. We believe this IPO could be completed sometime in 4Q 2024.
Hyundai Motor India Limited (HMIL) IPO offering size is estimated to be at least US$3 billion, which would be one of the largest in India and the world this year.
If HMIL is valued at US$25 billion and HMC sells a 15% stake, its remaining 85% stake would be worth US$21 billion, representing 55% of HMC’s market cap.

5. APR IPO Book-Building Results Analysis

APR reported a very strong IPO book-building results. APR IPO price has been determined at 250,000 won, which is 25% higher than the high end of the IPO price range.
A total of 1,969 institutional investors participated in this IPO book-building. The demand ratio was 663 to 1. APR IPO will start trading on 26 February.
Our base case valuation of APR is target price of 370,809 won per share which represents a 48% upside from the IPO price of 250,000 won.

6. KB Financial Placement – Momentum Has Been Strong and the Last Clean-Up Sale Has Done Well

The Carlyle Group / (CG US) via Kingsman Investment, is looking to raise US$244m from selling its entire stake in KB Financial (105560 KS).
Carlyle has been invested in the firm since mid-2020, where it then expressed that it would hold on to its stake for at least three and a half years.
The deal would be a small one to digest at just 3.8 days of KB Financial’s three month ADV, representing 1.2% of its current mcap.

7. ECM Weekly (12th Feb 2024) – Nissan/Renault, Metcash, Digital Core, SBFC, Thai Credit, Park Hotel

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Thai Credit Bank finally ended Thailand’s long dry spell, although it wasn’t a happy ending.
For placements, REITs appear to be coming back to life with rates now having peaked.

8. Industrial & Infrastructure Investment Corp Placement – Back to the Markets for the 12th Time

By Caixin Global, Caixin Global

Industrial & Infrastructure Fund Investment (3249 JP) is looking to raise around US$341m in its primary follow-on offering to acquire 28 properties and an equity interest in a silent partnership.
The deal is a somewhat large one to digest, at 83 days of three month ADV and 16.2% dilution.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

9. CICC-Backed Chinese Chip Design Firm Fined Over Fraudulent IPO Application

A semiconductor company sponsored by China International Capital Corp. Ltd. (CICC), one of the country’s top investment banks, has been fined over IPO application fraud, the China Securities Regulatory Commission (CSRC) said in a statement Friday.
S2C Ltd., which specializes in electronic design automation, has been fined 4 million yuan ($563,095) for fraudulent activities in its attempt to list on Shanghai’s tech-heavy STAR Market.
The move marks the CSRC’s latest effort to enforce strict information disclosure requirements and tough penalties for market violations under its registration-based IPO mechanism.

10. Bharti Hexacom Pre-IPO – The Negatives – No Clear Rationale for Listing

Bharti Hexacom is looking to raise up to US$1bn in its upcoming India IPO.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
In this note, we talk about the not-so-positive aspects of the deal.

Feb 11

Weekly Top Ten Equity Capital Markets – Feb 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. Metcash Placement – Not One, but Three Synergistic Acquisitions at a Go

Metcash Ltd (MTS AU) is looking to raise up to A$300m (US$195m) in its primary placement. The proceeds will be used to partially fund the acquisition of three businesses.
The deal would be a large one to digest at 22.5 days of three month ADV and 8.4% dilution.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

2. Thai Credit Bank IPO Trading – Half the Deal Already Spoken For, the Other Half Should Be Liquid

Thai Credit Bank PCL (3674238Z TB) raised around US$281m in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
We had looked at the firm’s past performance and shared our thoughts on TCB’s valuation in earlier notes. In this note, we will look at the trading dynamics.

3. Apeejay Surrendra Park Hotels IPO – Has Bounced Back Strongly, at a Decent Discount

Apeejay Surrendra Park Hotel (PARK IN) (ASPH) plans to raise up to US$111m via selling a mix of primary and secondary shares in its India IPO.
ASPH ranks as the eighth largest in India in terms of chain affiliated hotel rooms inventory as of Sep 2023, as per Horwath HTL Report.
In this note, we talk about the past performance and our thoughts on valuations.

4. Digital Core REIT Placement – Taking a Turn for the Better After All the Negative News

By Daniel Hellberg, Tracking Traffic

Digital Core REIT (DCREIT SP) is looking to raise at least US$100m in its primary placement. The proceeds will be used to fund potential acquisitions and debt repayment.
The deal will be a large one to digest at 72.7 days of three month ADV and 12.8% dilution.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

5. CaiNiao’s FYQ3: Solid Revenue Growth & EBITA Margin Improvement Distinguish It From Express Peers

CaiNiao’s revenue growth remained strong, up +24% Y/Y in December quarter
EBITA turned positive from loss in prior year period, but margin < FYQ2
Overall, an impressive set of results that distinguishes CaiNiao from express peers

6. Kayou Pre-IPO Tearsheet

Kayou (000KAYOU CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC, Morgan Stanley and JP Morgan.
Kayou is a Chinese pan-entertainment product retailer of toys, with trading cards in particular as its core product.
As of 9M23 (30th Sep 23), it had an IP matrix of 44 IPs through licensing from IP partners and the development of proprietary IPs.

7. Bharti Hexacom Pre-IPO Tearsheet

Bharti Hexacom (6597372Z IN) is looking to raise up to US$1bn in its upcoming India IPO. The bookrunners are SBI Capital, Axis Capital, BOB Capital, ICICI Securities and IIFL Securities.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
It offers its services under the brand ‘Airtel’. BH relies on a robust network infrastructure with a mix of owned and leased assets.

8. Agilus Diagnostics Limited Pre-IPO – Still Recovering from COVID

Agilus Diagnostics Limited (SRLL IN) is looking to raise around US$200m in its upcoming India IPO.
Agilus Diagnostics Limited (Agilus) is a diagnostic testing service provider.
In this note, we look at the company’s past performance.

9. Samhyun IPO Valuation Analysis

Our base case valuation of Samhyun is target price of 28,106 won, which is 25% higher than the mid-point of the IPO price range (22,500 won).
Given the moderate upside, we have a Positive view of Samhyun IPO. Our base case valuation is based on P/E of 34.6x net profit of 8.6 billion won in 2023.
Samhyun developed one of the world’s first CVVD (Continuously Variable Valve Duration) technology for automobile engines, which improves fuel efficiency by controlling the engine’s valve opening time.

10. Pre-IPO Xiaocaiyuan International Holding – A “Dark Horse” In Mass Chinese Cuisine Market

Based on effective strategic positioning, Xiaocaiyuan is able to seize the market’s demand for cost-effective catering during consumption downgrade and the trend of increasing restaurant chain rate in China.
The key for Xiaocaiyuan to generate increasing profits at low spending-per-consumer is due to its strong supply chain, which will be favored by capital especially when Xiaocaiyuan enters community catering.
Xiaocaiyuan International Holding (XCY HK) is better than peers. However, due to poor sentiment in HKEX, it’s not sure if Xiaocaiyuan’s valuation/share price performance could outperform peers as well.

Feb 04

Weekly Top Ten Equity Capital Markets – Feb 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. Amer Sports IPO Trading – Downsized and Cornered, Close to Optimistic Fair Value

Amer Sports (AS US) raised around US$1.3bn in its US IPO, after pricing its IPO below its initial range, as per media reports.
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.
We have looked at the company’s performance and valuation in our past note. In this note, we talk about the trading dynamics.

2. Mixue Pre-IPO: Reliable Price Advantage – An On-The-Ground Viewpoint

By Ming Lu, Aequitas Research

We believe Mixue’s low prices are fit for the current weak economy.
Any “freshly made” price lower than Mixue’s will compete with bottled drinks.
We also believe low rental is the key for Mixue’s low prices.

3. Brainbees Solutions (FirstCry) IPO: The Bear Case

FirstCry (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, has filed for a US$700 million IPO.
In Brainbees Solutions (FirstCry) 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 worrying trend of India’s KPIs, margin pressures, cash burn, and deteriorating balance sheet strength.

4. Ola Electric Pre-IPO – The Negatives – Still a Long Road Ahead with Ample Competition

Ola Electric is looking to raise about US$1bn 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 this note, we talk about the not-so-positive aspects of the deal.

5. Metals Acquisition Ltd Secondary Listing – Too Much to Pay for a Single Asset

Metals Acquisition (MTAL US) is looking to raise up to A$300m (US$197m) through its ASX secondary listing.
The proceeds will be used to repay Glencore’s deferred consideration facility for the MTAL’s acquisition of its CSA copper mine, amongst other uses.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

6. Ola Electric Pre-IPO – The Positives – India’s Answer to Tesla?

Ola Electric is looking to raise about US$1bn 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 this note, we talk about the positive aspects of the deal.

7. Samhyun IPO Preview

Samhyun is getting ready to complete its IPO on the KOSDAQ exchange in March. The IPO total offering amount is 40 billion won to 50 billion won.
The company generated sales of 99.8 billion won (up 45.5% YoY) and operating profit of 9.8 billion won (up 250% YoY) in 2023.
Samhyun developed one of the world’s first CVVD (Continuously Variable Valve Duration) technology for automobile engines, which improves fuel efficiency by controlling the engine’s valve opening time.

8. Xiaocaiyuan International Holding Pre-IPO Tearsheet

Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by Huatai and UBS.
Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants.
According to the firm, a Xiaocaiyuan restaurant offers approximately 45 to 50 menu items in each season, including cold dishes, stews and braised dishes, amongst others.

9. ECM Weekly (4th Feb 2024) – Ola Electric, Mixue, Citicore, Amer, Thai Credit, Indus Tower, MTAL

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Amer Sports (AS US) was priced below its range, while Thai Credit Bank PCL, managed to get enough support to pull thru.
Given the earnings season, there weren’t many placement apart from Indus Towers (INDUSTOW IN) and Metals Acquisition (MTAL US)‘s CDR offering.

10. Shouhui Tech Pre-IPO Tearsheet

Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC, and Huatai International.
Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
According to F&S, Shouhui was the third largest online insurance intermediary in China in terms of GWPs of long-term life and health insurance in 2022, with a 7.1% market share.

Jan 28

Weekly Top Ten Equity Capital Markets – Jan 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. Renesas (6723 JP) ANOTHER Clean-Up Block Trade as Hitachi/NEC Exit

Last November saw the clean-up trade of INCJ getting out of Renesas Electronics (6723 JP). That was 180+mm shares, well over-subscribed.
Today we have news Hitachi and NEC are getting out of their stakes. That’s 123mm shares in an Accelerated Block Offering of about US$2bn. I expect it will go well.
Recent gains in semiconductor stocks globally make this larger discount attractive. I expect a little heaviness but not much. There are index repercussions for international indices.

2. Renesas Electronics Placement – Another US$2bn Deal, Momentum and Index Weights Should Help

Hitachi Ltd (6501 JP) and NEC Corp (6701 JP) aim to raise around US$2.1bn via a sell-down of their stake in Renesas Electronics (6723 JP).
The stock has seen a number of deals over the past few years with the most recent one being a cleanup in Nov 2023, which did well.
In this note, we will talk about the placement and run the deal through our ECM framework.

3. Amer Sports (AS US) IPO: Valuation Insights

Amer Sports (AS US) is a global iconic sports and outdoor brand group. Amer has launched an NYSE IPO to raise US$1.6-1.8 billion at a US$16.00 to US$18.00 price range.
We previously discussed the IPO in Amer Sports IPO: The Bull Case, Amer Sports IPO: The Bear Case and Amer Sports IPO: Valuation First-Look.
We revise our forecasts to reflect the FY23 preliminary estimates and long-term growth targets. Our valuation analysis suggests that Amer is fairly valued at the IPO price range.

4. Amer Sports IPO Valuation Analysis

Amer Sports announced it plans to raise up to $1.8 billion at $16 to $18 per share, targeting a valuation of up to $8.7 billion.
We estimate the company to generate revenue of $5.6 billion (up 23.5% YoY) and operating profit of $285.7 million (down 13.7% YoY) in 2024.
We would pass on this IPO due to lack of valuation merits, highly leveraged balance sheet, and inconsistent profit margins, despite its solid sales growth in the past several years.

5. Brainbees Solutions (FirstCry) Pre-IPO – The Positives – Carving Its Niche

FirstCry is looking to raise up to US$700m in its upcoming 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 this note, we talk about the positive aspects of the deal.

6. Amer Sports IPO – Deal Updates and Thoughts on Valuation

Amer Sports (AS US) now aims to raise up to US$1.8bn in its US IPO. Proceeds from the listing will be used to pay down debt to the Anta-led consortium.
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.
We have looked at the company’s performance in our past note. In this note, we talk about valuations.

7. Frasers Centrepoint Trust Placement – Relative Large Dilution for Smallish Accretion

Frasers Centrepoint Trust (FCT SP) aims to raise around US$152m in order to partly fund its purchase of an additional stake in NEX mall.
The company had purchased its initial stake in the property nearly a year ago.
In this note, we comment on the deal dynamics and run the deal through our ECM framework.

8. Thai Credit Bank IPO – Sentiment Isn’t the Best, but Valuations Aren’t Demanding

Thai Credit Bank PCL (3674238Z TB) is looking to raise up to US$281m in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
In this note, we will look at the updates since, undertake a quick peer comparison, and share our thoughts on valuation.

9. Brainbees Solutions (FirstCry) Pre-IPO – The Negatives – Not All of It Fits Together

FirstCry is looking to raise up to US$700m in its upcoming 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 this note, we talk about the not-so-positive aspects of the deal.

10. Pre-IPO Shouhui Tech – The Business Outlook and Stock Price Performance Are Not Optimistic

The essence of Shouhui’s business model is to “sell insurance” rather than provide services with technological attributes. So, Shouhui has relatively single business composition and lacks diversified sources of revenue.
The trend of “disintermediation” is becoming increasingly evident, which may lead to customers deciding to purchase insurance directly from insurance companies not from Shouhui, resulting declining demand for Shouhui’s services/products.
The business nature of insurance is incompatible with the Internet’s pursuit of rapid expansion. Cooling “Internet +insurance” investment in recent years proves the decline of market’s enthusiasm for this business.

Jan 21

Weekly Top Ten Equity Capital Markets – Jan 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. Why Is APR IPO Getting Delayed?

APR announced it will delay its IPO. Now, APR’s book building has been postponed to 2 to 8 February. The IPO price range remains the same.
The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers’ valuation range (200,000 won).

2. Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year

Alchip Technologies (3661 TT) is looking to raise US$415m in its GDR offering. As per the firm, the proceeds from the GDR offering will be used to purchase raw materials.
Offering 3.7m GDRs, the deal wouldn’t be a very large one for the firm to digest at just 1.6 days of its three month ADV.
The deal is very well flagged one and momentum on the stock has been very strong.

3. Aequitas 2024 Asia IPO Pipeline – US ADRs

In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with US ADRs, after having looked at HK, India, Japan and Korea earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

4. MIXUE Group Pre-IPO – The Positives – Leading by a Mile

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the positive aspects of the deal.

5. Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

6. Amer Sports IPO: Valuation First-Look

Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise at least US$1 billion.
We previously discussed the IPO in Amer Sports IPO: The Bull Case and Amer Sports IPO: The Bear Case.
In this note, we present our forecasts and take the first look at Amer’s potential valuation range.

7. Amer Sports IPO Preview

The biggest risk for Amer Sports is its excessive leverage. It had net debt of $5.9 billion and equity of only $8.8 million at the end of 3Q 2023.
Many investors are likely to emphasize the negatives more (especially the excessive leverage and inconsistent operating margins), rather than the positives such as China representing increasing percentage of total sales.
Amer Sports is trying to raise nearly $1 billion in this IPO which could value the company at about $10 billion.

8. Aequitas 2024 Asia IPO Pipeline – Japan & Korea

In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with Japan & Korea, after having looked at Hong Kong and India earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

9. Amer Sports IPO: The Fundamentals, and How We See It?

By Osbert Tang, CFA

We consider the fundamentals of Amer Sports (AS US) attractive and are positive towards its business outlook. Profitability has surged with solid growth rates in revenue and margin.
Amer’s investment case lies in its multi-brand portfolio, niche, functional, and professional products, margin expansion/profitability improvement, and China growth prospects.
Since the proceeds will be used to repay shareholder loans, this will lower its interest burden and strengthen its financial position. Hence, the IPO should further boost its profitability.

10. MIXUE Group Pre-IPO – The Negatives – Declining GMV Share

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the not-so-positive aspects of the deal.

Jan 14

Weekly Top Ten Equity Capital Markets – Jan 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. Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

2. Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

3. Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

4. Aequitas 2024 Asia IPO Pipeline – Hong Kong

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, starting with Hong Kong.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

5. Aequitas 2023 IPOs and Placements Performance Review – IPOs Forming a Low Base, Placements Pick Up

2023 marked our eighth year covering Equity Capital Markets in Asia Pacific. In 2023, IPOs didn’t pick up much from the low base of 2022 while placements showed upward momentum.
We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115 placements.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

6. Aequitas Japan IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

7. Aequitas HK IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for HK IPOs and placements in 2023.
The following dataset includes all HK IPOs and placements above US$100m, which amounted to a total of 27 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

8. Ola Electric IPO: The Bear Case

Ola Electric (1700674D IN), the largest Indian electric two-wheel vehicles (E2W) player, is seeking US$660 million from a primary raise along with a secondary raise at a US$7-8 billion valuation.
In Ola Electric 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 high R&D capitalization, ongoing losses, high attrition, declining contract liabilities, cash burn and deteriorating balance sheet.

9. Ola Electric Mobility Pre-IPO Tearsheet

Ola Electric (1700674D IN) is looking to raise about US$1bn in its upcoming India IPO. The bookrunners are Kotak, Citigroup, BofA, Goldman Sachs, Axis, ICICI Sec, SBI Caps, BoB Caps.
Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
The firm manufactures EVs and certain core EV components like battery packs, motors and vehicle frames.

10. Aequitas 2024 Asia IPO Pipeline – India

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, following up with India after having looked at Hong Kong earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

Jan 07

Weekly Top Ten Equity Capital Markets – Jan 7, 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. APR IPO Preview

APR is getting ready to complete an IPO in KOSPI in February 2024. The IPO price range is from 147,000 won to 200,000 won.
According to the bankers’ valuation, the company’s valuation is expected to range from 1.1 trillion won to 1.6 trillion won post IPO.
The company’s best selling product is its skin care beauty device product called Medicube Age-R.

2. Ola Electric IPO: The Bull Case

Ola Electric (1700674D IN), the largest Indian electric two-wheel vehicles (E2W) player, is seeking US$660 million from a primary raise along with a secondary raise at a US$7-8 billion valuation.
Ola is the best-selling E2W brand in India in terms of monthly E2W registrations on the VAHAN Portal of the Ministry of Road Transport and Highways.
The bull case rests on rising market share in a growing market, a rapid growth phase, increasing gross margin and a favourable cash conversion cycle.

3. Hyundai Hyms IPO Preview

Hyundai Hyms is getting ready to complete its IPO in KOSDAQ in January. The total IPO offering amount is 43.5 billion to 54.9 billion won.
The company is offering 8.7 million shares in this IPO, of which 40% are old shares and 60% are new shares.
Hyundai Hyms specializes in shipbuilding equipment. Hyundai Hyms’s main business includes shipbuilding equipment and related services.

4. APR IPO Valuation Analysis

Our base case valuation of APR is implied price of 370,809 won per share, representing an 85% upside from the high end of the bankers’ valuation range.
We estimate APR to generate sales of 683.9 billion won (up 25.7% YoY) and operating profit of 114.6 billion won (up 39.5% YoY) in 2024.
APR is one of the best IPOs in the Korean cosmetics sector in the past several years.

5. Hyundai Hyms IPO Valuation Analysis

Our base case valuation of Hyundai Hyms is implied target price of 8,025 won per share, which is 27% higher than the high end of the IPO price range.
We believe Hyundai Hyms’ valuation premium to the comps is appropriate due to much stronger operating profit growth and its strong relationships with HD Hyundai Heavy Industries.
Hyundai Hyms’s main business includes shipbuilding equipment and related services. The company manufactures a wide variety of items necessary for ship construction, such as ship unit blocks and piping manufacturing.

6. Pre-IPO QuantumPharm – Good Stories May Not Be Backed up by Performance

The essential difference between QuantumPharm and InSilico in terms of business models is that InSilico is an end-to-end generative AI-driven biotech but QuantumPharm is more of a platform-based service provider.
It’s difficult for QuantumPharm to achieve significant increase in revenue scale in short time,because the service fee amount is usually not large, and it takes time to accumulate order volume.
If there is no substantial performance contribution, these good stories would not bring about a sustained leap in valuation. QuantumPharm’s valuation in last funding round before IPO is too expensive.

7. MIXUE Group IPO: The Investment Case

Mixue Group (MIX HK), a world-leading freshly made drinks company, filed for an HKEx IPO to raise US$0.5-1.0 billion.
Mixue is China’s largest and the world’s second-largest freshly made drinks company, in terms of both the number of stores and cups sold in 9M23, according to CIC.
The investment case rests on a strong brand, leading market share, high revenue growth, robust cost control, stable profitability and cash generation.

8. Weekly Deals Digest (07 Jan) – Ola Electric, Mixue, Aoki Super, Hollysys, Weiqiao Textile, Vinda

By Daniel Hellberg, Tracking Traffic

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
Event-Driven developments – Aoki Super (9977 JP), Hollysys Automation Technologies (HOLI US), Weiqiao Textile Co (2698 HK), Vinda International (3331 HK).

9. J&T Global Express FY23 Earnings Preview | Revenue Growth & Margin | China, SE Asia, ‘Other’

In this insight we preview J&T’s maiden earnings report as a listed company
We focus on revenue growth & margin trends in the China & SE Asia businesses
We fear slowing organic growth & margin deterioration could spook investors

10. Cloudbreak Pharma (拨康视云) Pre-IPO: Old Drug, New Formulation

By Ke Yan, CFA, FRM, Aequitas Research

Cloudbreak Pharma, a China-based clinical-stage biotechnology company, plans to raise up to US$200m via a Hong Kong listing.
In this note, we examine the company’s core products, namely CBT-001 and CBT-009, for pterygium and juvenile myopia respectively.
We are seeing a lack of convincing sustainable innovation from the company. Pre-IPO investors and management are mediocre.

Dec 31

Weekly Top Ten Equity Capital Markets – Dec 31, 2023

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

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1. Pre-IPO Concord Healthcare Group (PHIP Updates) – Some Points Worth the Attention

Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.
We’ve doubts about Concord’s endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors.
Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.

Dec 24

Weekly Top Ten Equity Capital Markets – Dec 24, 2023

1. 2024 IPOs Pipeline Worldwide (Top 100 Companies)

This is our 5th annual edition of the IPOs Pipeline Worldwide (Top 100 Companies) report.
After weak global IPO markets in 2022 and 2023, the near term trend for global IPOs continues to remain lackluster.
For those investors that closely monitor the global IPO opportunities, this is a good reference insight to check out the largest potential IPOs that could get completed next year.

2. REPT BATTERO Energy IPO Trading – Needs to Correct by 20-30%, at Least

REPT BATTERO Energy (REPT) raised around US$270m in its Hong Kong IPO.
REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

3. Midea (000333 CH): Positive Read-Through From Gree’s Profit Alert

By Steve Zhou, CFA

Gree Electric Appliances (000651 CH) announced a profit alert for FY22 yesterday. Net profit is expected to increase 10.2% – 19.6% yoy for the whole year.
The resilient result of Gree should alleviate concerns of the market that Midea is too correlated with China’s new home sales.
The stock is trading at 10x 2024E earnings compared to an average of 13x over the last 10 years, with earnings likely growing at a high-single-digit pace.

4. Muthoot Microfin IPO – RHP Updates, Quick Peer Comparison and Thoughts on Valuation

Muthoot Microfin (1363943D IN) is looking to raise up to US$116m in its Indian IPO, after downsizing from an earlier reported float of US$163m.
Muthoot Microfin (MMF) is a microfinance institution providing micro-loans to women customers with a focus on the rural regions of India.
In our previous note, we looked at the company’s performance. In this note, we talk about the company’s RHP updates and share our quick thoughts on peer comp and valuation.

5. Embassy Office Parks REIT Block – Likely Well Flagged and Overhang Will Be Removed

Blackstone (BX US) is looking to raise around US$834m through a secondary block deal. This will be a clean-up as Blackstone fully exits from Embassy Office Parks REIT (EMBASSY IN).
The deal is a large one to digest, at approximately 397.2 days of three month ADV and 20.7% of current mcap.
In this note, we will talk about the selldown and run the deal through our ECM framework.

6. India Shelter Finance IPO Trading – Subscription Pulled by Strong Insti Demand

India Shelter Finance (0570670D IN) raised around US$144m from its India IPO.
India Shelter Finance (ISF) is a retail-focused HFC targeting the self-employed customer with a focus on first time home loan takers in the low and middle income group.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

7. UBTech Robotics IPO – Quick Thoughts on Valuation – Too Hefty a Premium for Slowing Growth

By Nitin Mangal, India Independent Insight

UBTech Robotics (9880 HK) is looking to raise about US$168m in its upcoming HK IPO, after downsizing from an earlier reported float of up to US$700m.
UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
In our previous note, we looked at the company’s performance and its PHIP updates. In this note, we share our quick thoughts on valuation.

8. Credo Brands Marketing IPO- Forensic Analysis

Credo Brands (Mufti) (CREDO IN) IPO opens as a full OFS worth INR 5.5 bn.
The company operates ‘Mufti’ which is one of the renowned brands in Indian Men Casual Fashion category.
CMBL faces several questions including employee pay vs KMP, accounting for unsold inventory, delay in important payments, conflict of interest with BoD/SMPs etc.

9. Octillion Energy Holdings Pre-IPO Tearsheet

Octillion Energy Holdings (OE HK) is looking to raise US$400m in its upcoming Hong Kong IPO.
Octillion Energy Holdings (OE) primarily designs, manufactures and markets tailor-made battery systems for electric vehicles (EVs), and to a lesser extent, electric storage systems (ESS) and battery management systems (BMS).
As per F&S, OE had a 9.6% market share and was ranked the third largest EV battery system provider for passenger battery EVs (BEVs) in China by FY22 shipment units.

10. ECM Weekly (24th Dec 2023) – Embassy REIT, Muthoot Microfin, India Shelter, Inox, UBTech