In this briefing:
- IPO Trading Strategy: A Deep-Dive on Early Trade of Chinese Companies Listing in the US
- Natural Foods IPO Trading Update – Not Expensive but Needs to Show a Clear Turnaround
- Mobvista IPO Trading Update – Not a Buyer at Anywhere Close to These Level
- Sonic Healthcare Placement – Accretive Acquisition, Placement Discount Should Help
- Tencent Music IPO – Firework – Trading Strategies
1. IPO Trading Strategy: A Deep-Dive on Early Trade of Chinese Companies Listing in the US
Ahead of Tencent Music (TME US)‘s IPO today , we have done a deep-dive analysis on the past 28 major Chinese IPOs that have listed in the US. We note the following points
A higher pop associated with a lower free float?
If it starts weak , we wouldn’t assume disaster – historically shares have broken above IPO price at some point during day one trade
Day one moves by pricing range – pops across the board
GER pricing view for Tencent music
Companies assessed in this report: X Financial (XYF US) , Qudian Inc (QD US) , Pinduoduo (PDD US) , Qutoutiao Inc (QTT US) , HUYA Inc (HUYA US) , Pintec Technology Holdings L (PT US) , 111 Inc (YI US) , Uxin Ltd (UXIN US) , BEST Inc (BSTI US) , Sunlands Online Education Gr (STG US) , Cango Inc (CANG US) , Huami Corp (HMI US) , Sea Ltd (SE US) , Aurora Mobile Ltd (JG US) , Viomi Technology Co Ltd (VIOT US) , Weidai Ltd (WEI US) , Jianpu Technology (JT US) , Greentree Hospitality (GHG US) , iQIYI Inc (IQ US), Sogou Inc (SOGO US) , Onesmart Education (ONE US) , CNFinance Holdings Ltd (1640496D US) , TuanChe Ltd (TC US) , NIO Inc (NIO US) , CooTek Cayman Inc (CTK US) , Niu Technologies (NIU US) , Mogu (MOGU US) , and Bilibili Inc (BILI US)
More details below
2. Natural Foods IPO Trading Update – Not Expensive but Needs to Show a Clear Turnaround
Natural Food International H (1837 HK)‘s IPO was priced at the low-end at HKD1.62/share. The retail tranche was 1.4x covered and the institutional tranche was said to be moderately over-subscribed. I have covered most aspects of the deal in my earlier insight,
In this insight, I’ll provide an update on the deal dynamics, valuations and provide a table with the implied valuations at different share price levels.
3. Mobvista IPO Trading Update – Not a Buyer at Anywhere Close to These Level
Mobvista (1860 HK)‘s IPO was priced just above the low-end at HKD4/share, the retail tranche was 1.8x covered while the institutional tranche was moderately oversubscribed. I have covered most aspects of the deal in my earlier insights:
- Mobvista Pre-IPO – Impairments Would Have Wiped off past Profit, Related Parties Still Owed Money, and
- Mobvista IPO – One Client Rescued 1H18, the Slowdown Has Been on Since 2H17. P/ E Doesn’t Matter
In this insight, I’ll provide an update on the deal dynamics, valuations and provide a table with the implied valuations at different share price levels.
4. Sonic Healthcare Placement – Accretive Acquisition, Placement Discount Should Help
Sonic Healthcare (SHL AU) plans to raise US$434m (A$600m) via an institutional placement to part fund its US$540m acquisition of Aurora Diagnostic.
As per the company, the acquisition is likely to be earnings accretive and will increase the revenue contribution of US operations to around 26%. While the deal appears attractive, SHL hasn’t provided many details about the past financial performance for Aurora. Some of the earlier filings by Aurora seem to indicate that revenue has been growing much faster than EBITDA.
5. Tencent Music IPO – Firework – Trading Strategies
Tencent Music Entertainment (TME US)‘s IPO was priced at the low-end US$13/share. The shares will begin trading tonight. As per earlier media reports, books were well covered.
I have covered most aspects of the deal in my previous series of insight, links to which are below. In this insight, I’ll re-look at what peers have been doing since book building began and how its main listed peer Spotify Technology Sa (SPOT US) has been performing. I’ll also provide a sensitivity table of the implied valuations at different price points and my thoughts on the price range for near-term trading.
My previous insights on TME’s IPO:
- The company’s performance: Tencent Music Pre-IPO Review – The Final Countdown – Growth Doesn’t Seem to Be Slowing Down,
- The working of the apps: Tencent Music Pre-IPO – This Is How We Do It – A Quick Look at How the Apps Work,
- Industry dynamic: Tencent Music Pre-IPO – Industry – Don’t Cry – In 2010 a Little Red Dot Almost Overtook the Dragon, and
- Peer analysis: Tencent Music Pre-IPO – Quick Peer Analysis – If I Was You, I’d Wanna Be Me Too – Bigger and Faster,
- Valuations overview: Tencent Music Pre-IPO – Valuations Estimates – Leaving on a Jet Plane – $30bn Was Quite Stretched.
- First take on the IPO pricing: Tencent Music Pre-IPO Updates – Welcome to the Jungle – Rumoured Asking Valuations More Reasonable
- IPO valuation update: Tencent Music IPO – Don’t Stop Me Now – 9M18 Updates, Outlook and Price Limits
- Some more information on Ultimate Music acquisition: Tencent Music IPO – A Little Less Conversation – A Little More Information on Ultimate Music
