In today’s briefing:
- Trial Holdings IPO: Trading Debut
- Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside
- Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong
- Reddit IPO – Quick Thoughts on Valuation
- Carote Ltd Pre-IPO Tearsheet
- Jeil Machine & Solution IPO Valuation Analysis
- MIXUE Pre-IPO – Initial Thoughts on Valuation
- Aeromexico – Another Record Year in Prospect in 2024
Trial Holdings IPO: Trading Debut
- Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
- We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
- The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.
Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
- The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
- If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.
Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside
- Tencent (700 HK) reported 4Q results today. Both revenues and OP increased 7.1% and 42.0% YoY, however, both revenue and OP fell below consensus estimates.
- The company also announced an increase to 2023 dividends and more than doublethe size of the company’s share buyback in 2024 compared to 2023.
- We expect Internet VAS to grow at single-digits in 2024, however, high-margin new products to help boost margins in 2024.
Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong
- Akeso Biopharma Inc (9926 HK) is looking to raise US$155m from its primary placement.
- Proceeds from the deal would be geared towards R&D expenditure for its preclinical programs, expediting clinical trials, and towards commercializing its existing approved products.
- Accounting for 3% of shares outstanding, and representing 5.7 days of its three month ADV, the deal would be a relatively small one for the firm to digest.
Reddit IPO – Quick Thoughts on Valuation
- Reddit (RDDT US) is looking to raise up to US$750m in its US IPO.
- Reddit is an online social media platform where users are able to join communities, engage in conversations, research, exchange goods and services as well as create new communities.
- In our previous note, we talked about the company’s historical performance. In this note, we share our quick thoughts on valuation.
Carote Ltd Pre-IPO Tearsheet
- Carote Ltd (CARO HK) is looking to raise around US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are BNP Paribas, and CMB International.
- Carote is a distributor of kitchenware products. Expanding its lineup of products, the firm aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
- Initially engaged to provide original equipment manufacturing (OEM) overseas, the firm has since ventured into the online retail sector, introducing kitchenware products under its own brand name “CAROTE”.
Jeil Machine & Solution IPO Valuation Analysis
- Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 35% higher than the high end of the IPO price range.
- We estimate the Jeil M&S to generate sales of 279 billion won (up 94.9% YoY) and operating profit of 18.1 billion won (up 928% YoY).
- Jeil M&S’s main products include mixing equipment for the rechargeable battery sector. Its major customers include Samsung SDI, LG Energy Solution, and Northvolt.
MIXUE Pre-IPO – Initial Thoughts on Valuation
- Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
- 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.
- In our earlier notes, we have looked at the past performance and undertaken a peer comparison. In this note, we provide our initial thoughts on valuation.
Aeromexico – Another Record Year in Prospect in 2024
- Aeromexico reported record profitability in 2023 and we expect another record in 2024.
- Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
- The US DOT’s tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.
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