In today’s briefing:
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
- Ola Electric Mobility Pre-IPO Tearsheet
- Ola Electric IPO: The Bear Case
- Fast Retailing (9983) | Q1 Preview – Slight Miss
- Oriental Watch (398 HK): Ex-Dividend, Cash Levels To Mkt Cap at 60%, 6.8x PE, 14% Dividend Yield
- Aequitas HK IPOs + Placements Broker Performance 2023
- PDD (PDD US): Stopped Diversifying into ‘Local Life’ – A Rational Decision During Fast Growing
- MIXUE Group Pre-IPO Tearsheet
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
- At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
- We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
- The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.
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.
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.
Fast Retailing (9983) | Q1 Preview – Slight Miss
- We anticipate a sluggish beginning to the fiscal year with 1Q8/24 earnings reflecting slower growth in Japan, China, and Southeast Asia.
- Our forecast for 1Q24 operating profit stands at ¥130 billion, slightly below the consensus estimate of ¥138 billion. Assuming our estimates are accurate, we anticipate a slightly negative share-price reaction.
- Our bearish stance on the stock persists, driven by the fact that it trades at a premium to our DCF and at a premium compared to global peers
Oriental Watch (398 HK): Ex-Dividend, Cash Levels To Mkt Cap at 60%, 6.8x PE, 14% Dividend Yield
- Oriental Watch (398 HK) went ex-dividend on the 4th of January and has settled at an appetizing valuation of 6.8x PE with 60% of the market cap in cash.
- The market post-golden week and into the new year has been tepid.
- We expect the company to continue paying out 100% of its profits as dividends, based on which the dividend yield is close to 14% at the current share price.
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.
PDD (PDD US): Stopped Diversifying into ‘Local Life’ – A Rational Decision During Fast Growing
- PDD diversified into ‘local life’ businesses in December 2023, but stopped these businesses within two weeks.
- We believe PDD’s low price advantage does not work in Meituan-like ‘local life’ and the top performer Meituan is hard to fight.
- We believe the stock price has an upside of 88% for year end 2024.
MIXUE Group Pre-IPO Tearsheet
- MIXUE Group (1860056D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Bank of America, Goldman Sachs, and UBS.
- 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.
- The firm is the largest domestically freshly-made drinks company in terms of number of stores as of Sept 23, and number of cups sold during 9M23, according to CIC.
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