In this briefing:
- ECM Weekly (26 January 2019) – Maoyan, CStone Pharma, Polycab India, Hujiang Edu
- Delhi International Airport: INR90 Billion Investment Planned
- Snippets #18: Naughty CEOs, Southern Crusades
- Rides War Has Shifted To Share of Wallet
- China Kepei Edu (科培教育) Post-IPO – Tepid Demand Means Little Support if IPO Price Breaks
1. ECM Weekly (26 January 2019) – Maoyan, CStone Pharma, Polycab India, Hujiang Edu
Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.
Starting with placements this week, we had a relatively small Recruit Holdings (6098 JP) block sold by Toppan Printing (7911 JP). The stock traded below its deal price of JPY2,762 for the most part of the first-day post-placement. It bounced back on Friday to close just 0.6% above its deal price. We were bullish about the placement because it was a tiny deal relative to its three-month ADV.
There was also a small Ihh Healthcare (IHH MK) secondary block on Thursday after markets have closed. The deal was about US$80m and got priced at MYR5.56, the bottom-end of the price range.
For deals that have launched, there are Maoyan Entertainment (EPLUS HK) and Chalet Hotels. Maoyan will be pricing on the 28th of January while Chalet Hotels will open its book on the 29th of January and swiftly close on the 31st.
In terms of upcoming IPOs, we are hearing that CStone Pharma (CSTONE HK) is looking to pre-market in Hong Kong next week while Hansoh Pharmaceutical (HANSOH HK) will be looking to launch its US$1bn IPO in next month. Ke Yan, CFA, FRM has written early thoughts on the IPOs in:
- CStone Pharma (基石药业) IPO: Strong Assembly and Backing (Part 1)
- Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
- Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results
Earlier this week, we also heard that Dexin China, a property developer mostly based on Zhejiang Province, was seeking listing approval to list in Hong Kong whereas Global Switch, a UK-based data center operator, will meet banks next week in London to choose arrangers for a Hong Kong IPO of about US$1bn in 2019.
Other than that, another pharma company, Jubilant Pharma, is looking to list on the US market after getting tepid interests from investors for an SGX listing. It was initially looking to raise about US$500m. Fang Holdings Limited (SFUN US), a Chinese real estate internet portal, has also submitted a confidential filing to the SEC for a proposed spin-off of its research unit, China Index Holdings.
Accuracy Rate:
Our overall accuracy rate is 71.9% for IPOs and 63.8% for Placements
(Performance measurement criteria is explained at the end of the note)
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No new IPO filings
Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.
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News on Upcoming IPOs
- Asia’s thirst for beer adds fizz to mega-brewer’s plans for IPO
- Chinese cryptocurrency exchanges seek reverse mergers in Hong Kong
- Market, bankers pin hope on Chalet Hotels for breaking lull in IPO launches
- Hong Kong exchange head clarifies listing rules as IPO hopes dim for cryptocurrency giant Bitmain
Smartkarma Community’s this week Analysis on Upcoming IPO
- CStone Pharma (基石药业) IPO: Strong Assembly and Backing (Part 1)
- Maoyan Entertainment IPO Valuation: Press the Skip Button
- Hujiang Education (沪江教育) Pre-IPO – Spending More than It Earns
- Polycab India Limited Pre-IPO – Market Leader with Steady Growth but with a Few Unanswered Question
- Maoyan Entertainment (猫眼娱乐) IPO: Turning Profitable, Thoughts on Valuation
- Ecopro BM IPO Preview: The World’s #2 Player in the NCA High Nickel-Based Cathode Materials
List of pre-IPO Coverage on Smartkarma
2. Delhi International Airport: INR90 Billion Investment Planned
Delhi International Airport Limited (0180331D IN) has announced that it will be investing INR90 bn in the busiest aerodrome in India over the next three and a half years. This investment is aimed at boosting the passenger handling capacity up to 100 million passengers per year and is expected to be funded using bank loans and new debt instruments. The investment will affect the bond spreads for the company. Nevertheless, a change in regulations means that new baggage charges can be levied on every flight, putting the company in a better position to generate more cash in the future. We maintain our NEUTRAL recommendation.
3. Snippets #18: Naughty CEOs, Southern Crusades
In this review, we highlight five new unrelated developments that might impact the Thai stock market if you happen to hold the affected stocks.
- Skeletons in the closet. CIMB’s Thai CEO went on voluntary leave to clear his name regarding a legacy case back in his KTB days, while one of Thailand’s highest profile tycoon Dr. Prasert has been implicated in a stock manipulation case of Bangkok Airways from way back in 2015.
- Religious wars? As the southern insurgency spreads to economically vibrant province of Songkhla, insurgents attack a Buddhist temple and kill two monks, possibly in an effort to turn the crisis into a religious war. Doesn’t sound great for overall stability.
- A rare bump in the Baht. Despite QE unwinding, the Baht has risen almost 3% against the greenback. Bad news for exporters (eg. TUF, DELTA) good news for serial acquirers (think Thai Beverage, Banpu).
- Government-inspired deals. Is the government driving M&A in Thailand these days? They certainly had a hand in the TMB-Thanachart deal and now are rumored to be buying Thaicom, the country’s only satellite operator.
- Air quality takes a dive thanks to diesel and aggressive skytrain construction programs. Stores selling face mask and companies that substitute ethanol to diesel are set to benefit, while BTS might hit headwinds as government forces them to slow down construction.
4. Rides War Has Shifted To Share of Wallet
Grab is not just challenging the usual passengers-ride and taxi market; it has upped its game by selling monthly subscription plans, which can build recurring users. It is also looking to take bigger slices of business trips, traditionally the more lucrative pie for local taxi companies and niche car rental companies.
This report explains why Grab has gone into this promotional strategy, and is divided into five parts:
1. Monthly Subscription Plans
2. Better Allocation of Resources
3. The Juicy Corporate Pie
4. Fare comparison between Grab, Go-Jek, CD
5. Conclusions
5. China Kepei Edu (科培教育) Post-IPO – Tepid Demand Means Little Support if IPO Price Breaks
Kepei Education (1890 HK) has raised US$112m at HK$2.48 per share, just slightly above the mid-end of the IPO price range. We have previously covered the insight in:
- China Kepei Edu (科培教育) Pre-IPO Review – A Well Run Private Higher Education Company
- China Kepei Edu (科培教育) IPO – Regulation Poses Significant Near-Term Risks
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
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