Daily Brief ECM: Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry and more

In today’s briefing:

Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry
HD Hyundai Marine Solution IPO – Peer Comparison – Not Particularly Exciting
Pre-IPO Beijing Biostar Pharmaceuticals- Core Product Has Obvious Defects; Outlook Is Not Optimistic

Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry

Kokusai Electric (6525 JP)’s 180-day IPO lock-up period for 71% of outstanding shares expires on 22 April. The shares exiting the lock-up period are worth US$4.8 billion.
The likely seller will be KKR & (KKR US) as it was the sole selling shareholder in the IPO. The shares are currently trading at 2.4x the IPO price.
Kokusai anticipates a return to growth and margin improvement in FY24. However, Kokusai trades at a material premium to peer multiples and is fully priced.

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In our previous note, we talked about the company’s historical performance. In this note, we talk about peer comparison.

Besides the core product Utidelone Injection, the rest pipelines are mostly related to the indications expansion/new formulations R&D for Utidelone Injection. Excessive dependence on single product is hard to improve.
We’re not optimistic about the future sales growth of Utidelone Injection due to fierce competition/inconvenient administration methods/expired patent protection. Biostar is facing survival risks if new financing cannot be obtained.
Biostar’s post-investment valuation is already RMB4.49 billion. Given the gloomy sentiment and the concerns about the pipeline/prospects, we think it could fall below this valuation level after IPO in HKEX.

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