This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Midea Group H Share Listing: AH Discount Views
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
- In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.
2. Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- Midea is the world’s largest home appliance company in sales volume and revenue in 2023. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
- The PHIP update shows that the business is in good health, with accelerating growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.
3. Midea: Thoughts on HK Listing and Valuation
- Chinese appliance maker Midea’s application to list its shares on the HKEx has been approved and the company plans to list up to 10% of its shares to raise $4bn.
- Midea Group Co Ltd A (000333 CH) has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and M&A’s that have helped significantly grow its business.
- Our analysis on previous secondary listings of Chinese-listed companies on HKEx shows that the HK listings were priced at a significant discount to their A-Shares.
4. Key Things to Watch in Ecopro HN’s Big Rights Offering
- Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
- The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
- The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.
5. Hamamatsu Photonics Placement – Peculiar Timing
- Toyota Motor (7203 JP) aims to raise around US$190m via selling over a 4% stake in Hamamatsu Photonics Kk (6965 JP).
- This is another cross-shareholding unwind and hence, won’t be a huge surprise. Although given the recent share price weakness, the timing appears peculiar.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
6. Bajaj Housing Finance IPO – Will Trade at a Premium
- Bajaj Housing Finance (BHF IN) is looking to raise around US$800m in its India IPO.
- BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
- In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.
7. Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop
- Premier Energies Limited (0377949D IN) raised around US$337m after pricing the deal at the top end of the range at INR450 / share.
- It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.
8. CICT Placement – Accretive Acquisition, Should Be Favored by Existing Unitholders
- Capitaland Integrated Commercial Trust (CICT SP) is looking to raise around S$350m (US$267m) in its primary placement. Included in the issuance is a preferential offering to raise an additional S$757m.
- The proceeds will be geared towards acquiring a 50% interest in the ION Orchard mall from its Sponsor.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
9. Midea Group: Initial Thoughts on the Hong Kong IPO Listing
- Midea Group Co Ltd A (000333 CH) is getting ready for a Hong Kong IPO listing, trying to raise at least US$3 billion.
- Midea Group is trading a relatively attractive valuations. It is trading at P/E of 11.8x, EV/EBITDA of 8.1x, and P/B of 2.5x based on 2024 consensus earnings estimates.
- In the past five days, Midea’s price is down 2.3%. Some investors have been selling shares in Midea due to concerns about higher discount price offered at HK IPO listing.
10. The Born Korea IPO Preview
- The Born Korea is getting ready to complete its IPO in Korea in November. The total IPO offering is expected to range from 69 billion won to 84 billion won.
- Based on the bankers’ valuation, the expected market cap of the company ranges from 357 billion won to 419 billion won.
- The Born Korea was founded by Baek Jong-Won, the most famous celebrity chef in Korea.
