In today’s briefing:
- WuXi XDC IPO: The Bear Case
- Honasa Consumer Ltd IPO- Forensic Analysis
- ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
- Past A/H Listings Performance – Have Been a Mixed Bag
WuXi XDC IPO: The Bear Case
- WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
- In WuXi XDC IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on margins on a downward trend, large customer concentration, high related party transactions and volatile FCF generation.
Honasa Consumer Ltd IPO- Forensic Analysis
- Honasa Consumer (1652951D IN) IPO is a book built issue worth INR 17 bn, comprising INR 3.65 bn worth fresh issue and INR 13.4 bn of OFS (41.2 mn shares).
- The company is renowned for its flagship brand, Mama Earth while it has acquired other brands recently such as B-Blunt, Dr. Sheth and has also ventured in the salon business.
- Our concerns remain on the A&P spends and related growth output, acquisition value and employee churning.
ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
- Ask Automotive (7175293Z IN) is looking to raise around US$145m in its upcoming India IPO.
- ASK Automotive (ASKA) is the largest manufacturer of brake-shoe and advanced braking (AB) systems for 2Ws in India, in terms of FY23 production volume for OEMs and the branded IAM.
- As per CRISIL, it had an approximate 50% market share in said market. The IPO is expected to consist of 100% secondary shares, with promoters trimming their stakes.
Past A/H Listings Performance – Have Been a Mixed Bag
- Two of the biggest deals in the Hong Kong pipeline are A/H listings for S.F. Holding (002352 CH) and Midea Group (000333 CH), both looking to raise around US$3bn.
- Prior to the deals going live, we had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
- Overall, most of the recent A/H listings haven’t done much in the near term.
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