In this briefing:
- Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
- Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
- Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
- Lyft IPO Preview: Maybe We’ll Just Walk?
- ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century
1. Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
Shenwan Hongyuan filed in November to list in Hong Kong. It is a leading brokerage house in China. With an A-share market capitalization of USD 18 billion, the company plans to issue up to 20% of its shares for an A+H listing. In this insight, we will discuss:
- Company’s history.
- Comparison with leading Chinese brokers.
- Our thoughts on valuation.
2. Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
Embassy Office Parks REIT (EOP IN) plans to raise around US$1bn in its India IPO. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of US$4.2bn.
In my previous insight, Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish I covered the company background and its projected growth. In this insight, I’ll compare it to its closest listed peer, Ascendas India Trust (AIT SP) and add in the performance of other yield driven listings in India.
3. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
- We evaluate the attractiveness of Sea Ltd’s (SE US) US$1 bn follow-on public offering announced last Fri.
- This offering is a typical opportunistic fundraising as its ADR price has recently surged.
- At assumed deal price of US$21, SE post deal would trade at 4.6x 2019E P/adjusted sales (excl. 1P e-commerce sales), vs. peers average of 5.2x.
- We would recommend investors to go for the deal if it is priced at US$20 or lower.
4. Lyft IPO Preview: Maybe We’ll Just Walk?
Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below
Intro to Lyft
Lyft – a comparison vs. peers
Strengths and Weaknesses
Financials
5. ECM Weekly (2 March 2019) – Futu, Tiger Brokers, China Risun, China Tobacco, Zhejiang New Century
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.
ECM activity seems to be picking up as we get more information on upcoming large IPOs in Hong Kong and the US.
Starting with Hong Kong, there are a handful of small ongoing IPOs such as Yincheng International Holdings (1902 HK), China Risun (1907 HK), and Zhejiang New Century Hotel Management Group (1158 HK). Yincheng, a small and highly levered property developer, will list next week on the 7th of March.
But, the upcoming IPOs are the ones that seem to be more exciting with the HKEX filing of ESR Cayman’s draft prospectus. The company is a logistics real estate developer backed by Warburg Pincus and was said to be seeking US$1.5bn in its IPO. There are also Global Switch and OneConnect which seemed to be one step closer to their IPO.
In the US, we are finally getting approvals after the government shutdown starting with the Tencent-backed Futu Holdings Ltd (FHL US) launching its IPO and it will be listing on the 8th of March.
Jumping on the broker IPO bandwagon, Jim Rogers-backed Up Fintech (TIGR US) has also filed with the SEC. Sumeet Singh had already compared the two companies in his note, Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics.
There are also news reports that Luckin Coffee, a Starbucks competitor in China, has already tapped three banks for its US IPO.
Accuracy Rate:
Our overall accuracy rate is 72.2% for IPOs and 63.7% for Placements
(Performance measurement criteria is explained at the end of the note)
New IPO filings
- ESR Cayman (Hong Kong, ~US$1.5bn)
- Jinshang Bank (Hong Kong, ~US$500m)
- China Everbright Water (Hong Kong, >US$100m, dual-listing)
- Up Fintech/Tiger Brokers (the US, >US$100m)
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.
News on Upcoming IPOs
- Global Switch Picks Banks for Over $1 Billion IPO
- Warburg Pincus-backed ESR files for Hong Kong IPO of up to $1.5 billion
- Ping An plans IPO of fintech unit in HK at $1.35b
- Starbucks’ China rival Luckin Coffee taps 3 banks for US IPO
Smartkarma Community’s this week Analysis on Upcoming IPO
- 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
- China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
- Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End
- China Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
- New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
- Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
- Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet
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