In today’s briefing:
- Leapmotor IPO – Peers Recent Down Move Won’t Help
- Leapmotor IPO: Valuation Insights
- Leapmotor IPO: Stuck in the Middle
- Fengxiang’s Judicial Auction Set for 10 October, Potential MGO
- Effective Share-Buyback Require Proven Track Record and Communication to Gain Investor Understanding
- EbixCash Pre-IPO – The Positives – The Few that There Are: Diversified Offering, Fast Revenue Growth
Leapmotor IPO – Peers Recent Down Move Won’t Help
- Leapmotor (LM) aims to raise around US$1.0bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
- As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
- In this note, we will run the deal through our ECM framework and talk about valuations.
Leapmotor IPO: Valuation Insights
- Leapmotor (2007699D HK) has launched its HKEx listing at HK$48.00-62.00 per share to raise up to US$1.0 billion. Books are open from 20 to 23 September.
- We previously discussed the IPO in Leapmotor IPO: The Bull Case, Leapmotor IPO: The Bear Case, Leapmotor IPO: Look Before You Leap, Leapmotor IPO: Valuation First-Look.
- Leapmotor, at best, should trade in line with median peer multiples. Leapmotor is fairly valued at the low end of the IPO price range. We pass on the IPO.
Leapmotor IPO: Stuck in the Middle
- Leapmotor (2007699D HK) is a leading smart EV company in China that designs and builds EVs. The company develops key hardware, software and all electronic components of the vehicles internally.
- The company has filed for an IPO on the HKEx and plans to raise about US$1bn through the IPO.
- In this insight, we analyse the company’s financials to understand the key reason behind the absence of gross profit margins compared to other players in the market.
Fengxiang’s Judicial Auction Set for 10 October, Potential MGO
- On 16 September, the administrator published the details for the auction of Shandong Fengxiang Co Ltd-H (9977 HK) controlling shareholder’s 70.92% stake in Alibaba Judicial Auction.
- If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.
- The base bid implies an MGO price of HK$1.563 per H Share, a 103.0% premium to the last close. The auction will be held from 10 October to 11 October.
Effective Share-Buyback Require Proven Track Record and Communication to Gain Investor Understanding
- In my previous analysis, I found that firms with high frequency of share repurchase cancellations increased their market capitalization during the relevant period (12/2021-1/2022).
- Even though the short-term share price performances of companies that announced share repurchases were mixed, the share prices of companies with track record of several share repurchases have risen.
- It takes certain amount of time for investors to understand the track record and the capital allocation policy is consistent with the goal of increasing corporate value over the-long run.
EbixCash Pre-IPO – The Positives – The Few that There Are: Diversified Offering, Fast Revenue Growth
- EbixCash (EC) is looking to raise around US$800m in its upcoming India IPO. The deal will be run by Motilal, Equirus, ISec, SBI Caps and Yes Securities.
- EC is a provider of digital products and services in the B2C, B2B and financial technology arena. Its has four primary business segments: Payment solutions, travel, financial technologies and BPO.
- In this note, we talk about the positive aspects of the deal.
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