In this briefing:
- Tenaga Nasional Placement – Past Deals Have Done Ok but This One Might Not Be as Lucky
- Shenwan Hongyuan IPO Preview: Struggling to Stand Out
- Guotai Junan Placement: A Reasonable Price for Reasonable Performance
- Guotai Junan Securities Placement Quick Take – Might Be Too Big to Sail
- Studio City – Thoughts on Lock-Up Expiry
1. Tenaga Nasional Placement – Past Deals Have Done Ok but This One Might Not Be as Lucky
Khazanah plans to raise around US$260m via selling 85m share in Tenaga Nasional (TNB MK). We have covered three such placements since 2015 and most have ended up doing ok, if not well.
- US$440m in 2015: Tenaga Nasional (TNB MK) – Take the deal, strong earnings growth likely to continue
- US$290m in 2016: Tenaga Nasional Placement – Strong Track Record and a Potential Dividend Increase
- US$115m in 2017: Tenaga Nasional Placement – A Small Deal Size Relative to Previous Sell Down
Out of the three previous placement, Khazanah was the seller for the first two (2015 and 2016). Hence, this deal is unlikely to be a huge surprise. However, the stocks recent performance hasn’t been great and the replacement of the CEO seems to have raised more questions than it answers.
2. Shenwan Hongyuan IPO Preview: Struggling to Stand Out
Shenwan Hongyuan Hk (218 HK) is a Chinese securities firm which is backed by Chinese state-owned investment firm, Central Huijin, a 57% shareholder. It listed on the Shenzhen Stock Exchange in January 2015 and seeking to raise $1.5 billion through a Hong Kong listing. Shenwan Hongyuan will start book-building on Thursday according to press reports.
Securities firms had a tough 2H18 due to unfavourable stock market conditions and rising competition in China and Hong Kong. In 2019, the share prices of securities firms have markedly risen YTD due to the strong index performance and rising trading volumes. Overall, Shenwan Hongyuan fundamentals are reflective of a mid-tier firm struggling to stand out.
3. Guotai Junan Placement: A Reasonable Price for Reasonable Performance
Guotai Junan Securities (H) (2611 HK), a Chinese securities firm, has launched a primary placement to raise HK$2.7 billion ($345 million) at a placing price of HK$16.34. The placing price is a 7% discount to the last close price of HK$17.64.
In 2019, the share prices of Chinese securities firms have markedly risen YTD due to the strong index performance and rising trading volumes. We believe Guotai Junan’s fundamentals are reasonable due to its mid-tier revenue growth and top-quartile margins. Overall, we would participate in the placing.
4. Guotai Junan Securities Placement Quick Take – Might Be Too Big to Sail
Guotai Junan Securities (H) (2611 HK) plans to raise around US$350m via placing new H-Shares. We had earlier covered the IPO, you can find our coverage below:
- Guotai Junan Securities IPO: Second, if Not the Largest, China Security Broker, A-H Premium Examined
- Guotai Junan IPO: A Big Player but Relatively Less Liquid, How A-H Premium Plays
This is a large deal to digest and the shares seem to be trading at a relatively tighter A-H spread versus peers.
5. Studio City – Thoughts on Lock-Up Expiry
Studio City, a spin-off by MLCO US, was listed on October 18th, 2018 and its lock-up will expire next week on April 16th. The company raised USD 359 million in its IPO with the majority of the shares taken up by its shareholders.
In this insight, we will review the company’s operation, shares subject to lock-up expiry and its valuation vs peers.
Our previous insights on Studio City
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