Daily Brief ECM: Five-Star Business Pre-IPO - The Negatives - NPLs Low but Delayed Payments Aren't and more

In today’s briefing:

Five-Star Business Pre-IPO – The Negatives – NPLs Low but Delayed Payments Aren’t
Lionheart Studio IPO: Still Same Inflated Valuation
Kaynes Technology Pre-IPO – Can’t Put a Finger on the Business

Five-Star Business Pre-IPO – The Negatives – NPLs Low but Delayed Payments Aren’t

Five-Star Business Finance (0958461D IN) is looking to raise around US$300m in its upcoming India IPO. The deal will be run by ICICI Securities, Edelweiss, Kotak, and Nomura.
Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
In this note, we talk about the not so positive aspects of the deal.

Lionheart used the net profit from 3Q last year to 2Q this year. The Odin sales peaked in the third quarter of last year and are on a downward trend.
The indicative price band reaches a P/E multiple of 22~32x reasonably projected earnings of ₩140B. NCsoft’s 12M forward PER stands at 14-15x. Krafton is only 12x.
It is unclear whether the market will accept this price deception under current conditions. We should refrain from aggressively approaching it without a clear answer to the decline in sales.

Kaynes Technology India (7575164Z IN) is looking to raise about US$125m in its upcoming India IPO.
Kaynes Technology (KT) is an end-to-end and IoT solutions enabled integrated electronics manufacturing player, having capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services.
Profitability accelerated post COVID-19 with margins expanding slightly. However, revenue growth might have been driven by the pandemic and there hasn’t been much operating data for us to work with.

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