In today’s briefing:
- WuXi XDC IPO: Valuation Insights
- Sichuan Baicha Baidao Pre-IPO – The Negatives – Growth Is Unsustainable
- Jyoti CNC IPO- Forensic Analysis
- Pre-IPO Pu’er Lancang Ancient Tea (PHIP Updates) – Lack of Product Standardization Is the Pain Point
WuXi XDC IPO: Valuation Insights
- WuXi XDC Cayman (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), has launched an HKEx IPO to raise up to US$470 million.
- We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
- Blue-Chip cornerstones will purchase US$300 million of the offer. Our base-case DCF valuation is HK$22.84 per share, 12.8% above the midpoint of the IPO price range.
Sichuan Baicha Baidao Pre-IPO – The Negatives – Growth Is Unsustainable
- Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO.
- SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.6%.
- In this note, we talk about the not so positive aspects of the deal.
Jyoti CNC IPO- Forensic Analysis
- Jyoti CNC Automation (0907734D IN) plans to come up with ~INR 10 bn IPO
- JCAL is an established player in manufacturing of metal cutting CNC machines, mostly in 5-Axis category. It has 8% market share in India and is 12th largest global player.
- Even though JCAL has bright order book visibility, it remains unprofitable, largely because of concerns with subsidiaries.
Pre-IPO Pu’er Lancang Ancient Tea (PHIP Updates) – Lack of Product Standardization Is the Pain Point
- Traditional tea companies are rarely seen in China’s secondary market. The most significant issue in the domestic tea industry is product standardization, leading to obvious bottlenecks in future revenue/profit scale.
- Despite increasing investment in sales/marketing, financial results of Lancang haven’t shown much improvement. Sales of 1966 products would continue to be under pressure due to weak demand during economic downturn.
- Lancang’s financial performance is unsatisfactory, with declining revenue growth and profit margin. We are not optimistic about the Company’s prospects. Valuation should be lower than Nayuki Holdings (2150 HK).
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