ECM Weekly (11th July 2021) - Zomato, Bukalapak, Kakao Bank, Krafton, Didi, Kanzhun, Full Truck

China ADRs were rattled this week. It began with announcements of a cyber security review into newly-listed DiDi Chuxing, Kanzhun and Full Truck Alliance by the Cyberspace Administration of China (CAC).

Since then, China has pledged greater scrutiny of data for listed companies and is considering regulations that will hinder Chinese firms from listing overseas. In our notes this week, we discuss the news in greater detail and what it means for future listings:

• China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message

• China ADRs - Now the Message Is Loud and Getting Clearer

China ADR ECM pipeline will be subject to greater uncertainty and deal flow should come to a halt for the foreseeable future. Expectedly, LinkDoc, which closed its books early for its US$211m bookbuild, has since shelved its IPO and China e-Commerce platform, Meicai, has also postponed its US IPO plan.

Prior to the news, we initiated on Alibaba and 58.com-backed Daojia Limited, one of the largest one-stop home services platforms in China.

• Daojia Pre-IPO - Can’t Pinpoint the True Growth

For live IPOs, attention finally shifted away from Hong Kong to other APAC countries. In India, food delivery platform, Zomato, secured SEBI approval for its listing and launched its upsized bookbuild to raise US$1.26bn (up from US$1.1bn). The firm is backed by Alipay, Temasek, Uber and Sequoia. Demand for the deal has been considerably high thus far, with anchor books set to open on Tuesday. Shares will debut on 27 July.

• Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps,

• Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and

• Zomato Pre-IPO - Peer Comparison - Listed and Domestic

• Zomato IPO - Strong 4Q21, Has a Very Long Runway

In Hong Kong, the focus next week will be on biotech/healthcare names. Medlive Technology and Kindstar Globalgene Technology both closed their bookbuilds earlier than stipulated, citing strong investor demand. Both deals were priced at the top end. Medlive will debut on Thursday, and Kindstar, on Friday. We covered both deals earlier:

• Medlive (医脉通) Pre-IPO: Internet Hospital a Different Ball Game

• Medlive (医脉通) IPO: Candidate for Multi-Bagger

• Kindstar (康圣环球) Pre-IPO: Issues with Scalability

• Kindstar Globalgene (康圣环球) pre-IPO: Is it worth the premium?

• Kindstar Globalgene (康圣环球) Pre-IPO: Financial and Valuation Update

• Kindstar Globalgene (康圣环球) IPO: Fairly Valued for a Questionable Moat

Brii Biosciences closed its books a day earlier as well, raising US$320m. The deal boasts an impressive lineup of 11 cornerstones that includes Oppenheimer, UBS, Boyu, Yunfeng, Sequoia etc., combining to take up half the total deal size.

• Brii Biosciences (腾盛博药) Pre-IPO: A hopeful tackle on HBV

• Brii Biosciences (腾盛博药) Pre-IPO: Thoughts on Valuation

• Brii Biosciences (腾盛博药) IPO: Not a Demanding Valuation for Its Differentiation

For our ongoing coverage, we followed up with peer comparison and preliminary valuation on fresh food and FMCG retailer, WM Tech, and its US$1bn deal.

• WM Tech Pre-IPO - Digitalization Efforts Coming Through but Not Well Substantiated

• WM Tech Pre-IPO: Wumart as Main Brand, Marginalized on the Ground

• WM Tech Pre-IPO - Peer Comparison and Pre-IPO Valuation - Some Signs of Advantage

Tencent-backed games developer Krafton Inc. is also set to launch its US$3.8bn bookbuild this coming Wednesday. The company is known for developing the global hit, PlayerUnknown's Battlegrounds (PUBG), an online multiplayer battle royale game. Books are expected to close on 27 July and to trade on 10 August.

• Krafton IPO - Adapting and Transforming Well

Despite the general market weakness mid week, Hong Kong debuts have mostly done well except for Xpeng which closed 5.8% below deal price largely due to its ADR trading lower. On the other hand, Chaoju Eye Care and Keymed closed 40.4% and 30.2% above their respective IPO price by Friday’s close.

• Xpeng Motors HK Trading - More Hot with Instis that Retail

• Chaoju Eye Care (朝聚眼科) IPO Trading: Fairly Valued for Its Operation

• Keymed (康诺亚生物) IPO Trading: CDE Consultation Paper Marginally Positive for Pipeline

For placements and potential ones this week, we think that there is a good chance that RLX Technology Inc (RLX US)'s pre-IPO investors could come to market to sell considering the impact from regulation.

• RLX Lock-Up Expiry- Stung by Regulation, What Early Investors Do Will Be Telling, >US$1bn Comes Free

Jinxin Fertility Investment Group sold part of its stake in Jinxin Fertility Group to raise US$99m. Deal was priced at a 6.6% to undisturbed price and has traded downwards, closing 9.15% below deal price on Friday.

• Jinxin Fertility (锦欣生殖) Placement - A Familiar Name by Now and Don’t Expect Extravagant Returns