1. Large GS Yuasa (6674) Placement – 20% Dilution, Needs Lots of Love
- Today after the close, noted Japanese battery maker Gs Yuasa Corp (6674 JP) announced a public equity offering accompanied by a 3rd party placement to Honda Motor (7267 JP).
- Total $300mm+ raise is nearly 20.0mm shares against ~80mm shares out now. That’s 20% EPS dilution at a still-decent discount to book value.
- This creates a weird situation of a low ROE stock becoming lower ROE, at a lower PBR, with “more growth ahead” in a hyper-competitive space.
2. Tata Technologies IPO: Valuation Insights
- Tata Technologies (TATATECH IN), the largest India-based ER&D service provider, seeks to raise gross proceeds up to US$366 million in a pure secondary offering.
- We previously discussed the IPO in Tata Technologies IPO: The Investment Case, Tata Technologies IPO: The Bull Case and Tata Technologies IPO: The Bear Case.
- Our valuation analysis suggests that the IPO price range of Rs475-500 per share is attractive. Therefore, we would participate in the IPO.
3. Zeekr Pre-IPO – Thoughts on Valuation
- ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
- Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
- We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we will talk about valuations.
4. GS Yuasa Placement – Well Flagged but Relatively Large Deal, Liquidity Might Be an Issue
- Gs Yuasa Corp (6674 JP) (GSY) is looking to raise around US$240m via a public offering, along with placing shares via third-party allotment with Honda Motor (7267 JP) .
- The company formed a JV with Honda Motors earlier this year and will use the bulk of the proceeds for investments in the JV.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
5. DS Dansuk IPO Preview
- DS Dansuk is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is from 79,000 won to 89,000 won.
- The book building for the institutional investors will be from 5-11 December. The IPO offering amount is from 96.4 billion won to 108.6 billion won.
- According to the bankers’ valuation, DS Dansuk’s valuation would range from 462 billion won to 522 billion won.
6. Flair Writing Industries IPO- Forensic Analysis
- Flair Writing Industries (1656496D IN) ‘s INR 5.9 bn upcoming IPO consists of fresh issue worth INR 2.9 bn and OFS worth INR 3 bn (at the upper end).
- The company is the largest pen manufacturer in India and one of the top three players in the Indian Writing Instruments Industry.
- While the company has shown a handsome growth since the pandemic, some operating metrics pertaining to employees don’t seem to add up.
7. WuXi XDC (2268.HK) – How Long Will the Rally Last?
- WuXi XDC’s shares surged since IPO. Obviously, ADC industry is in a “honeymoon period”. The market is optimistic about ADC due to high certainty and growth visibility in short term.
- Pharmaceutical companies believe this platform would produce blockbuster products continuously. However, if there’s any “persuasive event” to change optimistic expectations on ADC, it’s time for investors to reconsider WuXi XDC.
- “Positive sentiment + non-falsifiable short-term logic” would indeed push WuXi XDC’s shares to a new high. As long as sales of major ADCs are in line with expectations, party continues.
8. Tata Technologies IPO- Forensic Analysis
- Tata Technologies (TATATECH IN) awaited IPO is set to launch for subscription this week.
- The company is one of the largest ER&D player that is based in India with revenues crossing INR 44 bn in F23.
- Balance sheet remains strong and cash rich. There are however, doubts on revenue recognition policy, forex risk and reliance on Tata Group.
9. Zensho Holdings (7550) – ¥50bn Offering Is Not Meant For You
- Zensho Holdings (7550 JP) has had a great couple of years in share price movement. And this year is seeing earnings explode to new highs. M&A and FX.
- Now they want to build a “war chest” equivalent to 4% of market cap to go do more M&A.
- This seems opportunistic. And the shareholder register is extraordinarily lopsided. There is really only one buyer for this deal.
10. Zeekr Pre-IPO – Peer Comparison – Catching up with Little Spending
- ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
- Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
- We have looked at the company’s past performance in our earlier notes . In this note, we will undertake a peer comparison.
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