In today’s briefing:
- JFE Holdings Placement – Well Flagged, but Would Probably Need a Wider Correction
- Orora Limited Placement – Large Deal to Digest, Although Seems Well Flagged and Accretive
- ARM Holdings IPO: Unattractive Price Range
- ARM Holdings Pre-IPO – Thoughts on Valuations
- VNG IPO: The Bull Case
- Changes to a Points Based System for IPO Subscriptions in Korea
- Shinsung ST IPO Preview
- Shinsung ST IPO Valuation Analysis
- ARM Holdings IPO – Thoughts on Valuation – Still Very Demanding
JFE Holdings Placement – Well Flagged, but Would Probably Need a Wider Correction
- JFE Holdings (5411 JP) is looking to raise around US$870m to fund its capacity expansion plans. Together with the offering, it will undertake a US$610m CB issuance.
- The deal appears to be well flagged with the firm disclosing its JV and other related CapEx plans in its earlier earnings announcement.
- Overall, the new shares would result in a 8.2% dilution and represent 12 days of three month ADV.
Orora Limited Placement – Large Deal to Digest, Although Seems Well Flagged and Accretive
- Orora Ltd (ORA AU) is looking to raise A$1,345m (~US$870m) via a primary placement and an entitlement offer to partially fund its acquisition of Saverglass.
- While the exact size/target of an acquisition wasn’t explicitly mentioned earlier, the firm had discussed its potential use of M&A to grow its North American/Europe regions.
- Including the entitlement offer, the deal would represent 212 days of three month ADV and add 58.9% to the firm’s total shares outstanding.
ARM Holdings IPO: Unattractive Price Range
- ARM Holdings (1822695D US) has launched a roadshow for its IPO. Softbank Group (9984 JP) offers 95.5 million ADSs (over-allotment option of 7.0 million ADS) at US$47.00-51.00 per ADS.
- We previously discussed the IPO in ARM Holdings IPO: The Bull Case, ARM Holdings IPO: The Bear Case and ARM Holdings IPO: Valuation Insights.
- The IPO price range values ARM at a premium to peers’ multiples. DCF sensitivity analysis suggests a need for ambitious forecasts to justify the price range.
ARM Holdings Pre-IPO – Thoughts on Valuations
- Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings‘ US IPO.
- ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
- In our earlier note, we looked at Arm’s past performance and undertook a peer comparison. In this note, we talk about valuations.
VNG IPO: The Bull Case
- VNG (VinaGame) (VNG US) is Vietnam’s leading, homegrown digital ecosystem. VNG has filed for a Nasdaq listing to raise US$300 million.
- VNG is the number one mobile games publisher in Vietnam. VNG’s Zalo, Zing MP3 and Bao Moi applications are Vietnam’s leading messaging, music streaming and online news applications.
- The bull case rests on the core games business’ improving KPIs, return to growth, good revenue visibility, and reducing dependence on critical partners combined with VNG’s improving margin.
Changes to a Points Based System for IPO Subscriptions in Korea
- In order to reduce fake subscriptions for IPOs in Korea, the financial regulators have changed the IPO subscription system to extend the number of subscription days from two to five.
- Plus, points based system is implemented so that investors will be given higher points for subscribing on the first day as opposed to the fifth day.
- Doosan Robotics will be a key company to look out for in terms of how this book building changes could impact its IPO as most upcoming IPOs are small caps.
Shinsung ST IPO Preview
- The IPO price range of Shinsung ST is from 22,000 won to 25,000 won and the expected IPO offering amount is from 44 billion won to 50 billion won.
- Shinsung ST produces busbars that connect currents of electric components in secondary battery batteries for EVs and ESSs, and module cases that protect battery cells from external shocks.
- The total order backlog of the company’s products reached 1.5 trillion won at the end of 2022. Order backlog ratio is 14x, which is very high.
Shinsung ST IPO Valuation Analysis
- Our base case valuation is implied price per share of 51,050 won, which is 104% higher than the high end of the IPO price range of 25,000 won.
- We estimate Shinsung ST to generate sales of 133.9 billion won (up 25.7% YoY) and operating profit of 15.4 billion won (up 94.6% YoY) in 2023.
- Our valuation sensitivity analysis suggests an IPO price range of 41,351 won to 61,771 won per share.
ARM Holdings IPO – Thoughts on Valuation – Still Very Demanding
- Softbank Group (9984 JP) aims to raisebetween US$4.5-4.9bn via selling some of its stake in ARM Holdings‘ US IPO.
- ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
- In our previous notes, we looked at the company’s past performance. In this note, we talk about valuation.
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