In today’s briefing:
- Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
- Belle Fashion IPO: The Investment Case
- Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model
- Cloudchain Pre-IPO – The Positives – Turned Profitable Recently
Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
- Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
- KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
- There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.
Belle Fashion IPO: The Investment Case
- Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO.
- Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
- The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage.
Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model
- The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
- BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
- BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO.
Cloudchain Pre-IPO – The Positives – Turned Profitable Recently
- Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO.
- Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
- In this note, we will talk about the positive aspects of the deal.
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