In today’s briefing:
- Aequitas HK IPOs Sponsor + GC Performance (2019-2022)
- Tencent/Netease: January Game Approval Shows Tencent Playing Catching Up
- IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable
- Fengxiang (9977 HK): Delisting Resolution Fails, MGO Closes 1 February
- Brilliance China: Special Dividend Amount Disappoints, but More Could Be on the Way
- IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play
Aequitas HK IPOs Sponsor + GC Performance (2019-2022)
- In this note, we will take a look at broker performance for HK IPOs from 2019-2022.
- The following dataset includes all HK IPOs above US$100m for the period of Calendar Years 2019-2022, which amounted to a total of 173 deals.
- The deals you see in this note are based on our historical IPO tracker. Feel free to drop us a message for additional information on any of these IPOs.
Tencent/Netease: January Game Approval Shows Tencent Playing Catching Up
- China just announced game approval for January batch. The number of games approved is slightly higher than the previous three months.
- Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
- Both Tencent and Netease received approval for one game each. Overall Tencent is still behind its peers since the approval resumed.
IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable
- IQiyi announced a follow-on equity offering of 76.5m ADS priced at $5.90 per ADS (at a 11% discount to previous close) and will raise approx. $442.3m through the issuance.
- Each ADS represents seven Class A ordinary shares and the new equity offering of 76.5m ADS will account for approx. 8.5% of iQiyi’s extended share capital post offering.
- Following the announcement, the company’s shares fell 16.4% and we think the upside is limited here.
Fengxiang (9977 HK): Delisting Resolution Fails, MGO Closes 1 February
- Shandong Fengxiang (9977 HK)‘s delisting resolution was overwhelmingly voted against by independent H Shareholders. The results were not helped by the poor turnout.
- PAG’s MGO at HK$1.5132 per H Share is not conditional on the approval of the delisting resolution. The MGO remains open with a final closing date of 1 February.
- PAG currently holds 85.44% of the outstanding shares. At the last close and for a 10 February payment, the gross and annualised spread is 1.6% and 28.9%, respectively.
Brilliance China: Special Dividend Amount Disappoints, but More Could Be on the Way
- HK$0.96 per share special dividend announced last Friday disappointed the market.
- The dividend implies only 20% of the cash on the balance sheet paid out in dividends
- We think there could be 1-2 more special dividends in 2023E given lack of obvious uses for the cash balance
IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play
- IQIYI Inc (IQ US) aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.
- The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January.
- The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn.
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