ECM Weekly (12 Oct 2019) - ESR, PropertyGuru, Latitude Financial, FangDD, Q&K, Languang Justbon

It has been a strange week in the IPO space.

On one hand, Hong Kong IPO sentiment is looking up on the back of strong performance of Topsports International (6110 HK) and Budweiser Brewing Company APAC (1876 HK) from a week ago. Smaller listings like 360 Ludashi (3601 HK) and Xinyuan Property Management (1895 HK) were up by 218% and 41% on their first day respectively. Ludashi, specifically, opened up about 100% and continued to trade much higher.

Granted these are small-cap companies but their strong debut could translate into a rush for small Hong Kong IPOs (US$100m - 300m deal size) to complete their listing before the year end.

On the flip side, U.S. blacklisted Chinese AI tech firms which included Megvii Technology (1737211D HK) we thought would be one of the hotter IPOs going into Q4. Goldman was also said to be reviewing that role as bookrunner in the IPO which certainly doesn't bode well for the company. Also, FriendTimes Inc (6820 HK)'s weak debut (30% below IPO price) despite being priced at 6.5x FY2019E P/E doesn't bode well for upcoming game developers' IPOs such as XD Inc. (XD HK) and China Mobile Games Adr (CMGE US).

IPO pipeline is still looking busy.

• We are hearing that China Feihe (FEIHE HK) and Metro Pacific Hospital Holdings Inc (HOSP PM) are looking to pre-market next week.
• Youdao (DAO US) will likely look to launch its IPO.
• Lion Air is also seeking to IPO towards the end of this year.
• Onsite Rental is said to be seeking US$475m IPO in Q4 2019.

Australia ECM is also getting active with PropertyGuru (PGU AH) looking to IPO soon. Latitude Financial Services (1272471D AU) will start its bookbuild next week while Home Consortium will start trading. However, MPC Kinetic Holdings Ltd (MPK AU) had been an unfortunate casualty, pulling its IPO citing weak demand.

• Latitude Financial Group IPO - Steady but Slow - In the Grey Zone
• PropertyGuru IPO - Powered by Singapore, Recharged by Vietnam but Dragged Down by Others
• PropertyGuru IPO - SOTP Leaves One Well Short of the Low-End

Other IPOs to watch out for are REIT listings in Philippines. There was recently a proposal that will look to halve the minimum public shareholding to 33% from 67% which could pave the way for REIT listings. Companies such as Ayala Land Inc (ALI PM), Doubledragon Properties (DD PM), SM Land, Robinsons Land and Megaworld have planned REIT listings that could come to the market soon.