In this briefing:
- 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
- Futu Holdings IPO Trading Update – Might Be Trading a Little Too High
- New Century Hotel (浙江開元酒店) Trading Update – Low Free Float, Poor Liquidity
- Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
1. 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.
2. 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
3. Futu Holdings IPO Trading Update – Might Be Trading a Little Too High
Futu Holdings Ltd (FHL US)‘s IPO was priced at the top-end at US$12/ADS raising a total of US$160m, including the US$70m raised from General Atlantic via a concurrent private placement.
In my earlier insights, I looked at the company’s background, past financial performance, scored the deal on our IPO framework and compared it to Tiger Brokers:
- Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry,
- Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation,
- Futu Holdings IPO – Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End, and
- Futu Holdings IPO Quick Note – Comparison with Tiger Brokers – Same Market, Different Economics
In this insight, I will re-visit some of the deal dynamics, comment on share price drivers and provide a table with implied valuations.
4. New Century Hotel (浙江開元酒店) Trading Update – Low Free Float, Poor Liquidity
Zhejiang New Century Hotel Management Group (1158 HK) (NCH) raised about US$136m at HK$16.50 per share, just slightly below the mid point of its IPO price range. We have previously covered the IPO in:
- New Century Hotel (浙江開元酒店) Pre-IPO – Improved Profitability Not Driven by Underlying Operations
- New Century Hotel (浙江開元酒店) IPO Review – Higher ADR and RevPAR than Peers but Margins Fall Short
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
5. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
The Homeplus REIT IPO is surely a key landmark deal in the 20 year history of the Korean REIT market. We have a positive view on the Homeplus REIT IPO and believe it has a good chance of generating 6-9% return per year (including dividends and capital appreciation) in the next three years. The Homeplus REIT is geared towards the investors who are happy with 6-9% annual returns with relatively low downside risk. For the investors that are seeking 10%+ annual returns, this deal is probably not suitable for them.
The following are the five major factors why we believe the Homeplus REIT market will be a success:
- Stable dividend yield of 6-7%.
- Opportunity to get included in a global REIT index (such as EPRA Developed Asia Index).
- Supermarkets related REITs are viewed safer than residential and commercial office building related REITs globally.
- Global investors have wanted to invest in a big, liquid, safe retail REIT with stable dividends in Korea for a long time. The Homeplus REIT possesses many of these characteristics.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
