ECM Weekly (15th August 2021) - SH HeartCare, Acotec, Hyundai Heavy Ind, RLC REIT, Coupang, Devyani

Events next week:

There are greenshoots in Hong Kong IPO market despite Li Auto HK’s poor debut and the delay of Cloud Village’s IPO owing to current market sentiment.

• Li Auto HK Listing - Needs to Be Done at Discount Given XPeng’s Poor Debut

• Li Auto HK Listing Quick Take - Rebounded Higher After Approval; Discount Still Needed

• Li Auto HK Trading - Done at a Good Discount, Setting It up for a Modest Debut

Shanghai HeartCare Medical and Acotec Scientific launched their respective US$145m and US$210 IPO bookbuilds. The former’s books were covered within its first day of bookbuilding and it is expected to price at the top end. Whereas, pricing for Acotec will be released on Tuesday. HeartCare and Acotec are expected to debut on 20th and 24th August.

• Shanghai HeartCare (上海心玮医疗) Pre-IPO: A Decent Story to Sell
• Shanghai HeartCare (心玮医疗) Pre-IPO: Thoughts on Valuation

• Heartcare (心玮医疗) IPO: Decent Upside Barring Negative Lawsuit Outcomes

• Acotec (先瑞达) Pre-IPO: Early mover advantage in peripheral DCB

• Acotec (先瑞达) Pre-IPO: Thoughts on Valuation

• Acotec (先瑞达) IPO: Risk-Reward Does Not Warrant Participation

In India, SEBI has eased IPO lockup rules for listings in India. The key change would reduce lockup periods by half. Specifically, promoters from three years to 18 months, lockup for stakes above 20% from a year to 6 months, and lockup for pre-IPO investors from a year to 6 months. This would probably improve the liquidity in the market, but near-term overhang on share price from pre-IPO and cornerstone investors would likewise be more significant.

Indian cement manufacturer Nuvoco Vistas closed its US$672m bookbuild on Wednesday. Overall books were 1.71x covered while the institutional tranche was 4.23x covered.

• Nuvoco Vistas IPO - Don’t See Any Strong Reason to Buy

Online auto portal CarTrade closed its bookbuild on Wednesday as well, where books were covered 20.29x.

• CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

• Cartrade Tech IPO - Too Expensive for Our Taste

We also looked at Aptus Housing Finance which was looking to raise US$375m from its IPO.

• Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book

Last but not least, Devyani will debut on Monday. We take a final look at deal dynamics and updated valuation of the company.

• Devyani IPO Trading - Strongest of the Lot

In Korea, Krafton’s IPO debut was disappointing, to say the least, closing 12.2% below IPO price by the end of the week.

• Krafton IPO - Adapting and Transforming Well

• Krafton IPO - Assumptions and Valuation

• Krafton IPO - Lock-Up (Or Lack Thereof on Most Shares) + Index Inclusion

• Krafton IPO Trading - Relatively Weaker Demand and Uncertainty Surrounding MSCI Inclusion

This week, South Korean shipbuilder Hyundai Heavy Industries began pre-marketing its US$942m IPO. which will end this coming Friday. Bookbuild is slated to open from 26th August to 3rd September.

• Hyundai Heavy IPO - Sharp 1H21 Recovery Accompanied with a Surge in Costs

In the Philippines, this week was all about REITs. Filinvest REIT earlier priced its IPO at the midpoint to raise US$228m. Shares debuted on Thursday and traded flat, closing 2.3% above deal price on Friday.

• Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind, and

• Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

• Filinvest REIT IPO Trading - Set for Another Tepid Debut

Following Filinvest REIT’s listing, Robinsons Land REIT and Megaworld REIT have begun pre-marketing their respective US$491m and US$540m IPOs. The former has ended its pre-marketing by the end of the week and is expected to open its books this coming week.

• RL Commercial REIT Pre-IPO - Motley Crew of Assets Has Weathered COVID Well

• MREIT Pre-IPO - Mediocre Performance, Convoluted Lease, Low Asset Yield

We also revisited Coupang and Cloopen’s IPO lock-up expiries. Of the two, Coupang looked more interesting. There were signs of clear intention by some Coupang shareholders to sell their shares and we think it is highly likely that some shares will hit the market soon.

• Coupang Lock-Up Expiry - Failed to Meet Multiple Lock-Up Exits; Now Hitting the US$7bn Expiry

• Cloopen (容联.云通讯) Lock-Up Expiry - Some Pre-IPO Investors Sitting on Losses

For placements, Keppel DC REIT raised US$151m to acquire a data centre in China and pay down debt. Books were about 3.7x covered with participation from long-only funds, HNWIs and hedge funds. Share price closed 0.7% above deal price on Friday.

• Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive