Brief IPOs & Placements: MabPharma (迈博医药) IPO: Assembled for a Trade? and more

In this briefing:

1. MabPharma (迈博医药) IPO: Assembled for a Trade?
2. New Century Hotel Mgmt IPO Preview: Two-Speed Businesses
3. A Trading Strategy for EcoproBM Post IPO
4. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations
5. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao

1. MabPharma (迈博医药) IPO: Assembled for a Trade?

MabPharma, backed by Chinese private equity investor CDH, is seeking to list in Hong Kong. In this insight, we will discuss the following topics:

• The company’s background
• Details of pipeline drug candidates, the potential market of these products and the competition
• Shareholders and investors
• Questions for management meetings
• Summary of our likes and concerns

We will leave the discussion of valuation for our next insight.

• CStone Pharma (基石药业) IPO: Strong Assembly and Backing (Part 1)

• Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor

• Hansoh Pharma (翰森制药) IPO: Takeaways from Recent 4+7 City Centralized Tender Results

• Hansoh Pharma (翰森制药) IPO: A Leading Generic Player with Regulatory Overhang (Part 1)
• WuXi Apptec (药明康德) IPO: This A+H Listing Will Be Different

• Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect
• Ascentage Pharma (亚盛医药) IPO: Too Early for an IPO
• Junshi Bioscience (君实医药) IPO: Thoughts on Valuation (Part 2)
• Junshi Bioscience (君实医药) IPO: Early in Application but Behind in Key Indications (Part 1)
• CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)

• AOBiome Therapeutics IPO: Hope for Natural Therapeutic Treatment
• Stealth Biotherapeutics IPO: Cure the Symptoms but Not the Cause (Part 1)
• Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2)
• Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
• MicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
• Hua Medicine (华领医药) IPO: Thoughts on Valuation
• Hua Medicine (华领医药) IPO: Reviving Roche’s Failed Attempt?
• BeiGene (百济神州) IPO: Dual-Listing with Upside Capped in the Near Term
• Ascletis Pharma (歌礼制药) IPO: Valuation Not Justified by Ganovo and Ravidasvir NPV (Part 3)
• Ascletis Pharma (歌礼制药) IPO: Three Valuation Risk Factors (Part 2)
• Ascletis Pharma (歌礼制药) IPO: Emerging Player in the Crowded HCV Drug Market
• China Isotope & Radiation IPO: Oligopoly, Visible Growth and High Barrier to Entry
• Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
• Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)

2. New Century Hotel Mgmt IPO Preview: Two-Speed Businesses

Zhejiang New Century Hotel Management Group (ZHEKAIH HK)  is a leading hotel group in China engaged in the operation and management of mid-scale and upscale hotel chains. New Century has started pre-marketing for a Hong Kong IPO to raise up to $200 million, according to press reports.

3. A Trading Strategy for EcoproBM Post IPO

• In this report, we provide a trading strategy for Ecopro BM Co Ltd (247540 KS) IPO, which is expected to start trading on March 5th. The IPO price has been determined at 48,000 won, which is 19% higher than the mid-point of the original IPO price range of 37,500 won to 42,900 won. The institutional investors’ demand for the Ecopro BM IPO was extremely strong at 988 to 1. 
• In our previous report Ecopro BM IPO: Valuation Analysis, we proposed the base case to high end of the company’s value to be between 56,000 won and 67,800 won. Given the enormous institutional demand for this IPO, it appears that our base case valuation (56,000 won), which is 17% higher than the IPO price, may be too conservative. 
• A more likely scenario now is that the stock reaches about 65,000 won to 70,000 won in the first few hours of trading on the first day, overshooting its intrinsic value and sells off a bit for a few days/weeks, enters a consolidation phase and then resumes its higher share price again. 

4. New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations

Zhejiang New Century Hotel Management Group (ZHEKAIH HK) (ZNCH) is looking to raise US$220m in its upcoming IPO. 

ZNCH is a hotel operator and manager with presence across China. The company grew its revenue by a modest 5% from 2015 to 2017 but made significant improvements in profitability. Gross profit, EBITDA and PATMI grew by 33%, 61%, and 132% CAGR over the same period.

However, the improved profitability has not been driven by underlying operations. The company seemed a tad too ambitious to be expanding via leasing hotel when it already has a large hotel management pipeline.

In this insight, we will look at the company’s financial and operational performance, the drivers of its strong margin expansion, and include some questions for management.

5. Ab InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao

Anheuser Busch Inbev Sa/Nv (ABI BB) is looking to list its Asian operations in order to lighten its debt burden. The listing will probably be in Hong Kong and the company could raise around US$5bn at a valuation of around US$70bn.

In my earlier insight, Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China, I looked at how the Asian operations of ABI have shaped up over the past few years.  

In this insight, I’ll do a quick comparison of the past financial performance of China Resources Beer Holdin (291 HK) and Tsingtao Brewery Co Ltd H (168 HK).