In this briefing:
- ECM Weekly (9 February 2019) – Pinduoduo, Homeplus, PNB Metlife, Cal-Comp Tech
- The Downward Revision in FY03/19 Guidance Places Panasonic in Our Worst-Case Scenario
- Murata Up 12.8% Following 3QFY03/19 Earnings Release
- Yahoo Japan 3Q Update: Consumer Business Drives Mid-Term Growth; Plans to Diversify in the Long Run
- Samsung Electronics Share Class: Long 1P / Short Common on BlackRock Showing
1. ECM Weekly (9 February 2019) – Pinduoduo, Homeplus, PNB Metlife, Cal-Comp Tech
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.
There are no new IPO filings in Hong Kong but there is news on the timeline of a few upcoming IPOs.
In Korea, Homeplus will be starting its investor education next Monday to raise about US$1.5bn. Brief details of the deal are already available. The company will be selling 345m primary shares at an indicative range of KRW4,530 – 5,000 per share. We heard that the roadshow kick off on 28th February and will likely list on 29th March.
In India, PNB is targeting to list PNB MetLife between April to September. The estimated IPO size was about US$150 – 300m and its draft prospectus was filed last year.
In the Philippines, Cal-Comp Tech (Philippines) (CCTP PH) is targeting to launch its US$123m IPO towards the end of the third quarter this year based on media reports. We have previously covered the IPO in Cal-Comp Tech (Philippines) Pre-IPO Review – Muted Growth in Core Products.
As for placements, Pinduoduo (PDD US) chose to launch its follow-on offering in the midst of Chinese New Year, raising about US$1bn in fresh capital along with sell-down from existing investors. The placement was priced at US$25 per share, a 17.5% discount from its pre-announcement price of US$30.33 on 5th February and a 5.7% discount to its 7th February close price. Settlement date is on 12th February, greenshoe expires on 10th March and lock-up expires 9th May according to Bloomberg.
Accuracy Rate:
Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements
(Performance measurement criteria is explained at the end of the note)
No new IPO filings
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
- PineBridge-backed Uniparts gets SEBI nod to float IPO
- Cal-Comp Philippines eyes IPO by third quarter
- JERA new president says IPO is an option
- Singapore’s Zalora explores listing to fuel expansion
- S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
- Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year
Smartkarma Community’s this week Analysis on Upcoming IPO
- Koolearn: Losses in Full View
- Koolearn: Marketing Expenses Have Taken Operating Profits Down the Drain
List of pre-IPO Coverage on Smartkarma
2. The Downward Revision in FY03/19 Guidance Places Panasonic in Our Worst-Case Scenario
- Panasonic Corp (6752 JP)’s 3Q earnings were quite weak, failing to meet both consensus and our estimates. Panasonic reported revenue of JPY2,074.8bn and OP of JPY97.5bn resulting in an OPM of 4.7% compared to 5.8% in the third quarter of last year
- The majority of revenue growth came from the Automotive & Industrial Solution (A&IS) segment which saw the strongest growth in revenue at nearly 8% YoY followed by the Eco Solutions Segment. Despite the steady growth in the A&IS revenue, the segment continued to display a decline in profits by almost 13% YoY.
- A downward revision in targets was made following the weak earnings this quarter. Nine-months cumulative figures weren’t particularly attractive in the OP front as well (Revenue up 3% YoY and OP down -8% YoY as of 3QFY03/19). Panasonic is nearing our modest case scenario, although its downward revised earnings target places it in our worst-case scenario, where we expect Panasonic to be exposed to a high degree of risk, increasing its lookout for other customers. Panasonic has only tied up with Toyota Motor (7203 JP) thus far and may have to diversify its customer base further to bring earnings to a sustainable level.
- After the earnings release and news about Chinese competitor, CATL (A) (300750 CH), collaborating with Honda Motor (7267 JP) ( Honda Chooses CATL as Battery Partner for Their EVs; Panasonic Has Lost the Chance), Tesla Motors (TSLA US) announced that it was acquiring battery company Maxwell Technologies for production of its EV batteries. Panasonic fell almost -5% on Monday’s open.
3. Murata Up 12.8% Following 3QFY03/19 Earnings Release
- Murata reported 3.4% YoY revenue growth to JPY427.6bn and 89.9% YoY OP growth to JPY85.6bn in its third quarter earnings.
- Despite the strong third quarter performance, we, along with consensus, expect the company to underperform its revenue guidance. This is mainly due to the slowdown in the smartphone market, which is expected to persist in the current quarter as well.
- Based on our estimates, Murata is currently trading at a FY1 PE multiple of 17.5x, lower than its historical median of 20.5x.
4. Yahoo Japan 3Q Update: Consumer Business Drives Mid-Term Growth; Plans to Diversify in the Long Run
Yahoo Japan (4689 JP) reported 3Q FY03/19 financial results last Monday (04th February). Revenue and OP were on par with consensus. YJ revised the lower range of its FY03/19E OP guidance upwards by JPY7bn to JPY140bn mainly due to lower than expected growth related expenses (expenses for new challenges as per the management). Meanwhile, the upper limit of the FY03/19E OP guidance of JPY143bn remains unchanged. The revised OP guidance for FY03/19E is JPY140-143bn.
FY03/17* | FY03/18* | FY03/19E | FY03/20E | FY03/21E | |
Revenue (JPY bn) | 865 | 909 | 956 | 1,022 | 1,095 |
YoY Growth % | – | 5.1% | 5.2% | 6.9% | 7.2% |
OP (JPY bn) | 179 | 186 | 153 | 158 | 168 |
OP Margin % | 20.7% | 20.4% | 16.0% | 15.5% | 15.4% |
| |||||
Media Business | |||||
Revenue (JPY bn) | 282 | 288 | 303 | 305 | 307 |
OP Margin % | 57.5% | 58.7% | 48.0% | 50.0% | 52.0% |
| |||||
Consumer Business | |||||
Revenue (JPY bn) | 512 | 597 | 652 | 717 | 789 |
OP Margin % | 12.7% | 12.6% | 9.5% | 10.0% | 10.0% |
5. Samsung Electronics Share Class: Long 1P / Short Common on BlackRock Showing
- It was reported yesterday that BlackRock upped its stake in SamE by 0.04% to 5.03%. BlackRock announcement will increase expectation on higher dividend. Sentiment wise this news will likely push 1P over Common in the short-term.
- SamE shares are now enjoying a 21% YTD return. But Common/1P price ratio got reversed in favor of Common since around Jan 21. This must have been partly because of lower dividend concerns for this year. Local street expected a 25% payout on ₩30tril earnings. This’d put C/1P div yield difference at about 0.6%p. This is well below last year’s average.
- With BlackRock showing, somewhere around ₩1,450~1,500 per share seems to be a realistic expectation. At this much DPS on ₩30tril earnings, C/1P div yield difference would be right near last year’s yearend level. We are entering the March shareholder meeting phase. Usually, this’d not be a good time to go after 1P. But in this special situation, I’d go long 1P and go short Common for a short-term mean reversion.
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