In this briefing:
- Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth
- Up Fintech (Tiger Brokers) IPO Quick Take – It’s Not like Futu, Won’t Perform like It Either
- Short Haidilao (海底捞) Before Earning & Lock-Up Expiry
1. Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth
Dongzheng Automotive Finance (2718 HK) is looking to raise approximately US$300 – 500m in its upcoming IPO.
DAF is a fast growing auto finance company which acquires customers through a network of dealership around China. Its net interest income grew by 66% CAGR from FY2016 to FY2018 while net fees/comms income and profit grew by 39.6% and 61% CAGR over the same period.
However, most of its growth originated from ZhengTong dealers and joint promotion arrangement. Excluding loans from joint promotion arrangement, gross outstanding loan had only grown by 12% CAGR.
In this insight, we will look at the company’s business, analyze the competitive landscape, provide thoughts on valuation, and some questions for management.
2. Up Fintech (Tiger Brokers) IPO Quick Take – It’s Not like Futu, Won’t Perform like It Either
Up Fintech (TIGR US) plans to raise up to US$91m in its US listing. The company counts Xiaomi Corp (1810 HK) and Interactive Brokers Group, Inc (IBKR US) as its main investors.
In my earlier insights, I commented about Tiger’s reliance on IBKR and compared its operations with Futu Holdings Ltd (FHL US):
- Up Fintech (Tiger Brokers) Pre-IPO Quick Note – Much Too Reliant on IBKR
- Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
In this insight, I’ll run the deal through our framework and comment on valuations.
3. Short Haidilao (海底捞) Before Earning & Lock-Up Expiry
Haidilao International, the largest Chinese cuisine player by valuation, was listed on September 26th last year and lock-up expiry will be on March 26th. The stock has returned 24% since listing.
- As it heads into lock-up expiry, we will examine Haidilao’s shareholder structure and potential shares up for sale.
- Haidilao was included in the Hong Kong Connect Scheme on December 10th, 2018 and shares held by mainland investors have been consistently increasing.
- But we think Haidilao’s valuation has built in a perfect growth scenario.
- Risk of de-rating for Haidilao warrants a short position.
Our previous coverage on Meituan Dianping
- Haidilao IPO First Glance: Legendary Hot Pot Restaurant that Will Be Hot (Part 1)
- Haidilao (海底捞) IPO: Superior Metrics in a Scalable Segment (Part 2)
- Haidilao (海底捞) IPO: Near Term Rapid Growth but Deceleration Ahead (Part 3)
- Haidilao (海底捞) IPO: Appealing Valuation at the Low End for a Branded National Champion (Part 4)
- Haidilao (海底捞) Post-IPO Trading Update: Not Much Upside from High End, Lessons from Meituan
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