In today’s briefing:
- TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates
- Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish
- APA Group Placement – Well Flagged Deal, but Lacks in Accretion
- Shibaura Mechatronics (6590) Secondary Offering & Buyback
- ARM Holdings IPO Preview
- S.F. Holding H Share Listing: The Investment Case
- ARM Holdings Limited – The Negatives – Tepid Growth and China JV Issues
- Doosan Robotics IPO Preview
- JSW Infra Pre-IPO – The Positives – Grown Its Concessions and Long-Term Contracts Provide Visibility
- Pre-IPO Sunho Biologics (SHB HK) – High Valuations Can Be Hard to Come By
TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates
- TVS Supply Chain Solutions (TVSSCS IN) raised around US$108m in its India IPO, after downsizing from an earlier reported float of up to US$500m.
- TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand and trading dynamics.
Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish
- Baring aims to raise around US$900m by selling its remaining 26.6% stake in Coforge (COFORGE IN) .
- Baring has been paring down its stake since 2020 and hence, the selldown is somewhat well flagged.
- In this note, we run the deal through our ECM framework and talk about the deal dynamics.
APA Group Placement – Well Flagged Deal, but Lacks in Accretion
- APA Group (APA AU) is looking to raise A$675m (US$430m) in its primary follow-on to partially fund its acquisition of the Alinta Energy assets in the Pilbara region.
- The deal is a well flagged one with APA having been one of the last remaining bidders on the asset. Short interest has been on the rise as well.
- However, the deal doesn’t seem accretive at our end, and the results reported today seemed to have missed analyst expectations.
Shibaura Mechatronics (6590) Secondary Offering & Buyback
- Five plus years ago, Toshiba Corp (6502 JP) sold down a 26% stake in small cap Shibaura Mechatronics (6590 JP) to get to a consolidated 13%-ish stake.
- This was discussed in Toshiba Selldown of Shibaura Mechatronics (6590) back then. Yesterday, we got news Toshiba would sell out its remaining stake. And there’s a buyback. Maybe.
- The stock has reacted badly on Day 1, despite a lack of dilution. Shareholder structure matters.
ARM Holdings IPO Preview
- While Softbank is trying to complete the IPO of Arm in the next several weeks, many investors are likely to have concerns about valuations.
- Arm Holdings generated sales of US$2.7 billion (down 0.9% YoY) and net profit of US$524 million (down 22.5% YoY) in FY 2023.
- In order for the valuation of Arm to reach US$60 billion, this would imply a significant premium multiple to the comps.
S.F. Holding H Share Listing: The Investment Case
- S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, has filed for an H Share listing to raise US$2-3 billion, according to press reports.
- SF is the largest integrated logistics service player in China and Asia, and the fourth largest player globally, in terms of revenue in 2022, according to Frost & Sullivan.
- The key elements of the investment case rest on the primary business’ improving fundamentals, margin trajectory, cash generation, modest leverage and undemanding PEG multiples.
ARM Holdings Limited – The Negatives – Tepid Growth and China JV Issues
- 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 this note, we talk about the not-so-positive aspects of the deal.
Doosan Robotics IPO Preview
- Doosan Robotics is getting ready to complete its IPO in Korea in September. The expected IPO price range is 21,000 won to 26,000 won.
- The company estimates its sales to surge from 67 billion won in 2023 to 766.3 billion won in 2027, representing 83.9% CAGR from 2023 to 2027.
- One of the major reasons why local investors will have a positive view of Doosan Robotics is due to Samsung’s investment in Rainbow Robotics whose share price increased 232% YTD.
JSW Infra Pre-IPO – The Positives – Grown Its Concessions and Long-Term Contracts Provide Visibility
- JSW Infrastructure (5978490Z IN) is looking to raise around US$340m in its upcoming India IPO.
- JSW Infrastructure (JSWI) is the fastest growing port-related infrastructure company in terms of growth in installed cargo handling capacity and cargo volumes handled during FY20 to FY22, according to CRISIL.
- In this note, we will talk about the positive aspects of the deal.
Pre-IPO Sunho Biologics (SHB HK) – High Valuations Can Be Hard to Come By
- There is a certain connection between Sunho and Genscript. So, Sunho has a typical style of “CXO switching to biotech” – That is to do whatever is popular.
- For core products, IAP0971 and IAE0972 just completed phase I trials, still with high R&D failure risks. IAH0968 is difficult to become a blockbuster variety due to strong competing products.
- As investors’re already rational about investing in unprofitable Biotech. The companies without commercialized products and with uncertain outlook may not be favored by the market. Therefore, high valuation is unreasonable.
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