ECM Weekly (22 November 2020) - Evergrande Svcs, CR Mixc Svcs, Blue Moon, HBM, Yatsen

We are close to the home stretch for IPOs this year but there are still a handful of deals that are coming to market. In Hong Kong, we are hearing that Evergrande Services (EGS HK) and China Resources Mixc Lifestyle Services (CRML HK) will be opening their books on Monday and Tuesday, respectively. Blue Moon Group Holdings (BMG HK) will likely launch its bookbuild soon as well since it just won its approval to list last week whereas JD Health (JDH HK) should also hit the market soon since it has been doing its premarketing rounds this week.

• Evergrande Services (恒大物业) Pre-IPO - Bad Parenting
• CR Mixc Lifestyle Services (华润万象生活) Pre-IPO - SOE-Linked Parentage Didn’t Help
• CR Mixc Lifestyle Services (华润万象生活) Pre-IPO - A Balance of Residential and Commercial Properties
• Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag
• Blue Moon Group Pre-IPO - Valuation Updates
• JD Health (京东健康) Pre-IPO - Updates from PHIP - Fine-Tuning Forecasts

Other upcoming (relatively smaller deal size) IPOs which had gotten approvals this week are POP MART (POP HK), and Harbour Biomed (HMD HK) and they will be looking to premarket this coming week. Dalrymple Bay Infrastructure (DBI AT) in Australia also completed its bookbuild on the 19th of November. We have covered them in:

• Pop Mart Pre-IPO - The Positives - Expanding Portfolio+Wider Distribution= Explosive Earnings Growth, and
• Pop Mart Pre-IPO - The Negatives - Is It a Brand Owner or Just a Retailer?
• Pop Mart Pre-IPO - Peer Set and Valuation
• HBM (和珀医药) Pre-IPO: Innovative Heavy Chain Platform to Be Tested
• HBM (和珀医药) Pre-IPO: Thoughts on Valuation
• Dalrymple Bay Infrastructure - Highly Curious Timing

IPO debuts this week traded well, indicating that short-term momentum is still strong for now. Yatsen Holding (YSG US) traded the strongest amongst listings. It closed its first day trading (Thursday) with about 70+% gain and on Friday, posted another 8% gain. It is now 90% above IPO price. Valuation is very stretched at this point and it would probably be a wise move to take some profits off the table.

• Yatsen IPO - Pricey but It Comes with Strong Investor Backing
• Yatsen IPO Trading - A Little More Pricey Now

Hong Kong property management services listings rush were looking weak initially due to Jinke Smart Services (9666 HK)'s weak debut (broke deal price) but managed to turn for the better after Sunac Services (1516 HK) trade better on the first day (closing about 20% higher). Obviously this bodes well for CR Mixc and Evergrande Svcs but we think these listings have their own problems too which one needs to be cognizant about (Links above).

• Sunac Services (融创服务) IPO Trading - Subscription Rate Similar to Jinke Svcs
• Jinke Smart Services (金科智慧服务) IPO Trading - Demand and Valuation = Muted Near-Term Performance

Other than these, Gland Pharma (7172753Z IN) in India, traded well on debut too closing about 20% higher than IPO price on Friday but Antengene (6996 HK) in Hong Kong opened high but closed just 1% above.

• Antengene (德琪医药) IPO Trading: Ample Potential for the Management
• Gland Pharma IPO Trading - Squeezed Through, Now for the Real Test

Placement activity was not as busy as last week but there were two notable ADR/ADS placements by Pinduoduo (PDD US) and KE Holdings Inc (BEKE US). Both have traded well above their respective deal prices post-pricing but PDD's performance was the most outstanding as it has already returned 14% from deal price as of Friday's close. In India, Embassy Office Parks REIT (EOP IN) is looking to partially fund the acquisition of assets via an institutional placement.

• KE Holdings/​​​​​Beike Placement - Too Much, Too Soon. Front Running the Lock-Up Expiry
• Pinduoduo Placement - Should Do Well If, It Corrects Beforehand
• Embassy Office Parks REIT Placement - Early Look - Big Deal but Will Come with Ample Warning

Last, but not least, Hong Kong Exchange came up with plans to shorten the settlement period for IPO shares to as short as one day, hoping to bring HKEX in line with other major markets and stay competitive.