ECM Weekly (27 October 2018) - Wanka, CanSino, PEXA, Bitmain, Celltrion, Coronado

Markets have been volatile this week but it is not stopping Hong Kong IPOs from pushing through with their end of year listing spree. We are hearing that Babytree Inc (BABYTRE HK), Tongcheng-Elong Holdings Ltd (1629482D CH), Wanka Online (WANKA HK), and Mobvista (MBV HK) are seeking approval this week. Refer to the table below for research done on these names.

That said, Australia witnessed another IPO casualty as Property Exchange Australia Ltd (PEXA AU) pulled its IPO. The delay is hardly the fault of market turmoil. Rather, the company is the cause of its own downfall by pitching an ostensibly expensive valuation even at blue sky assumptions as mentioned by Sumeet Singh in his note, Property Exchange Australia IPO - Even Blue Skies Aren't Blue Enough. In Hong Kong, STX Entertainment (1613966D HK) and Osim International (OSIM SP) have aborted their plans to IPO and allowed their application for IPO to lapse. Back in the US, 360 Finance filed for a US$200m IPO while we are hearing that Tencent-backed Futu Securities is looking to file for IPO soon.

We also saw the debut of Coronado Global Resources Inc (CRN AU) which has been a disaster despite its high FY19E dividend yield of 12% at its IPO price. This was after there had been reports that institutional bookbuild was already covered before launch based on indicative demand and retail orders. The deal eventually got downsized and priced at the low end implying poor sentiment.

We also had three placements this week and Celltrion Inc (068270 KS)'s deal stands out with Temasek selling down another chunk of their stake in the company. We were not too positive on the deal because this is the second selldown of the year and came just about 49 days after the lock-up expired from its March placement and would naturally put an overhang on the share price. The placement quickly crashed below its deal price on the second day of trading despite being a small deal relative to its three-month ADV.