In this briefing:
- IPO Radar: AutoCorp, Honda’s Avatar in Thailand
- Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
- Weimob IPO Valuation: Optically Cheap
- Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation
- Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor
1. IPO Radar: AutoCorp, Honda’s Avatar in Thailand
In August 2017, Honda stole the top spot in Thai passenger cars from Toyota and held it for a few months. They are still formidable players, and ACG (AutoCorp) which runs Honda dealerships and service centers across Thailand, is expected to IPO some time in 2019. Here’s our quick look at the company.
- We value this IPO at Bt2/sh using DCF, since there’s really no good comparables. The company is expected to enjoy slower revenue growth and higher margins going forward as car sales slow down nationally and maintenance becomes a bigger chunk of the revenues.
- They only operate in four provinces and run 8 showrooms with over 6,000 sqm of display space. The service centers account for almost 17,200 sqm. The big chunk comes from lower margin car sales. Along with accessories, these account for 84% of revenues.
- The IPO is firmly underwritten by Singapore’s Phillips Securities and is good for more than a quarter of shares outstanding (26%). The founding Rangkanuwat family control all remaining shares and have committed to 6 month lock-up period.
2. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
Chengdu Expressway Company Limited (1785 HK) is looking to raise US$112m in its upcoming IPO.
The expressways that CEC operate are integral in Chengdu’s transport network. The expressways have been upgraded and expanded consistently over the past three years which has led to an increase in traffic and toll revenue. However, in terms of valuation, CEC will likely trade at a valuation closer to small expressway peers which implies a 10% downside.
In this insight, we will look at the company’s financial and operational performance, toll payment model, and compare its valuation to Hong Kong-listed expressway peers. We will also run the deal through our IPO framework.
3. Weimob IPO Valuation: Optically Cheap
Weimob.com (1260480D CH) is a combination of a SaaS software and an adtech (targeted marketing) business which has started book building to raise gross proceeds of $108-135 million. According to press reports, Weimob is being viewed favourably by investors as it is being offered at a “cheap” valuation of 18-23x 2019 P/E.
However, the valuation of 18-23x 2019 P/E is optically cheap. Our analysis suggests that including capitalised R&D, Weimob is being offered at a material premium to a peer group of major Chinese internet companies. Notably, our forecasts do not adjust for the capitalised contract acquisition costs which would further increase Weimob’s P/E multiple. Consequently, we believe that the proposed IPO price range is unattractive and would sit out this IPO.
4. Weimob IPO Quick Take – Less SaaS, More Ads -> Lower Valuation
Weimob.com (1260480D CH), a Tencent Holdings (700 HK) and GIC investee company, plans to raise up to US$135m in its Hong Kong IPO.
I’ve covered most aspects of the deal in my earlier insight, Weimob Pre-IPO – Can Be Steamrolled by Tencent, Anytime, where I spoke about the over-reliance on Tencent, high attrition rates and acquisition costs for SMBs, and the increasing contribution of its ads business.
In this insight, I’ll provide an update from the latest filings, comment on valuations and run the deal through our IPO framework.
5. Viva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor
Viva Biotechnology, a China-based drug discovery company, is seeking to raise USD 200m to list on the Hong Kong Stock Exchange. In this insight, we cover the following topics:
- Services provided by Viva.
- Revenue model of the company.
- The CRO market.
- The company’s history and shareholders.
- Our initial thoughts on valuation.
Our previous coverage on CRO Listings
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