ECM Weekly (27th June 2021) - Didi, Xpeng, Zylox, Dingdong, EBeauty, Chaoju Eye Care, Keymed Bio

Hong Kong and China ADR ECM continue their momentum from last week. For quicker reference, here are the IPOs that will trade next week:

For ongoing/live IPOs, in the US, Didi launched its bookbuild, aiming to raise up to US$4bn. The IPO valuation range lies close to our earlier estimates.

• DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet.

• DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch

• DIDI (滴滴) Pre-IPO: Competitive in Car Hailing, Uncompetitive In “Others”, Generally Valuable

• DiDi Chuxing Pre-IPO - Peer Comparison

• DiDi Chuxing Pre-IPO - Valuation

• DiDi Chuxing Pre-IPO - Bull Case, Index Inclusion, Uber Exit

• DiDi Chuxing IPO - At Fair Value, with Partial Lock-Up and Index Inclusion Pulling It Either Way

Atour Lifestyle Holdings also launched its US$305m bookbuild. Notably, Hillhouse has indicated interest to take up to US$120m in the IPO, almost half of the deal size. The IPO will price on Wednesday.

• Atour Lifestyle Holdings Pre-IPO - Visible Growth, Resilient Operations

• Atour Lifestyle Holdings IPO - Reasonable Valuation for a Fast-Growing Brand

On-demand grocery/e-commerce delivery companies, Dingdong Maicai and MissFresh, launched their bookbuilds this week. Despite launching at the same time, the latter closed its bookbuild early, priced at the bottom-end, and traded on Friday, ahead of Dingdong. But, this wasn’t the case of overwhelming demand, hence, the accelerated timeline. Rather, it seemed like the company/bookrunners just wanted to get the IPO over with because it traded about -36% intraday and ended the day at -25%. In comparison, we liked Dingdong better and the company is looking to close its bookbuild on Monday. Shares will debut on Tuesday.

• Dingdong Maicai Pre-IPO - Increasing Market Share, Fast Growth but No Signs of Profit

• Missfresh Limited (每日优鲜) Pre-IPO - Worrying and Unsustainable Trend

• Dingdong Maicai Vs Miss Fresh Pre-IPO - One Clear Winner

• Dingdong (叮咚买菜): Fresh Food Competition in and Outside of Frontline Warehouse

• Dingdong Maicai Pre-IPO - Thoughts on Valuation

• Dingdong Maicai Pre-IPO - It’s Still like a VC Bet but Probably Worth It

• Missfresh Limited (每日优鲜) IPO - Stale Valuation

In Hong Kong, Xpeng launched its US$1.74bn bookbuild and will price on Wednesday. The deal comes after reports in March stating that US-listed Chinese EV makers are seeking HK dual listings so Nio and Li Auto could follow suit shortly after Xpeng.

• Xpeng Motors HK Listing - Will Probably Be Hot Given Strong Momentum but past Deal Didn’t Do Well

Nayuki Holdings raised about US$656m at the top-end of its IPO price range and its shares will debut on Wednesday. Even though valuation isn’t cheap, given that it's the first premium modern teahouse chain to be listed, it should still be able to hold its own on debut.

• Nayuki (奈雪) Pre-IPO - Fast-Growing, Cash Flow Positive Teahouse Chain

• Nayuki (奈雪) Pre-IPO - PHIP Updates - 4Q20 Results Shows Improvement

• Nayuki (奈雪) Pre-IPO - Industry Landscape and Peer Comparison

• Nayuki (奈雪) Pre-IPO - Forecast and Thoughts on Valuation

• Nayuki (奈雪) IPO - Not Cheap but Should Still Do Well

Keymed Biosciences launched its US$400m bookbuild this week. Pricing will come on Wednesday and shares are to debut on 8 July. We updated our coverage this week with updates from its bookbuild:

• Keymed (康诺亚生物) Pre-IPO: Differentiated products but far from commercialization

• Keymed (康诺亚生物) IPO: A Free Option for Overseas Potential

Zylox-Tonbridge, a neuro- and peripheral-vascular interventional device company, closed its US$330m bookbuild a day earlier due to strong demand. Twelve cornerstones, consisting of reputable investors such as Hillhouse, Fidelity, Boyu Capital and Lake Bleu Prime, took up US$145m of the deal. Shares will debut on 5 July.

• Zylox-Tonbridge (归创通桥) Pre-IPO: Competition is the key concern

• Zylox-Tonbridge (归创通桥) IPO: Clear Upside Thanks to Comprehensive Coverage

Ophthalmic medical services group, Chaoju Eye Care, began its US$233m bookbuild as well, where pricing is expected to come on Tuesday, with shares debuting on 7 July.

• Chaoju Eye Care (朝聚眼科) Pre-IPO: Growth prospect far from being impressive

• Chaoju Eye Care (朝聚眼科) Pre-IPO: How does it fare against industry leader

• Chaoju Eye Care (朝聚眼科) IPO: Beware of Value Trap

US and London-listed bio pharma company, Hutchmed (China), raised US$537m at a 0.27% discount to US close on Tuesday. Shares will debut on Wednesday.

• Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

• HCM Secondary Listing: Not a Good Performer

Property management companies, Yuexiu Services and SCE Commercial Management, launched and swiftly closed their bookbuilds this week. Both companies priced at the bottom end of their respective price range. The former traded flat in the grey market and will debut on Monday, while the latter will trade on Friday.

• Yuexiu Services (越秀服务) IPO - Interesting but Not Outstanding

• SCE Commercial Management (中骏商管服务) IPO - Still Reliant on China SCE, Exposed to Lower Tier Cities

For upcoming/pre-marketing IPOs, in Hong Kong, Shanghai Bio-Heart, a medical devices provider, began pre-marketing its US$300m IPO last week. We updated our coverage this week with a note on valuation:

• Shanghai Bio-heart (上海百心安) Pre-IPO: Needs a long runway

• Shanghai Bio-Heart (上海百心安) Pre-IPO: Thoughts on Valuation

Other companies currently in the midst of pre-marketing include Medlive Technology, Brii Biosciences, Edding Group, Acotec Scientific Holdings, Transcenta Holding, BetterLife, UNQ, Kangqiao Service Group and South China Vocational Education Group. We have covered Medlive Technology, Brii Biosciences and Edding Group, earlier and they are looking to raise US$500m, US$400m and US$300m, respectively.

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

• Brii Biosciences (腾盛博药) Pre-IPO: A Hopeful Tackle on HBV

• Edding Group (亿腾医药) Pre-IPO: Distributor Turning Pharmaceutical

• Edding Group (亿腾医药) Pre-IPO: Notes from Latest Financials and Its Related Party

We also initiated on eBeauty Holdings, e-commerce enablement service provider, where it is currently in the midst of pre-marketing its US$600m IPO.

• EBeauty Holdings (悠可集团) Pre-IPO - Largest E-Commerce Enablement but Competition Is Intensifying

Notable new filings this week include Shanghai-listed, China Tourism Group Duty Free Corporation Limited, where they are aiming to raise between US$7-10bn. They own over 200 duty free shops in China. Other filings include AI-empowered business solutions provider, Qingdao Ainnovation Technology Group, where they are looking to raise more than US$100m in its Hong Kong float. A list of healthcare and biotech firms that filed this week have also been included in our list below.

For halted/deferred IPOs, Soulgate, which operates the Soul app, an algorithmic-driven online social playground, halted its IPO citing other capital and financing options as the reason. The company said its bookbuild was hot. A day after, Hello Inc, a local services platform, reportedly halted its planned US$1bn IPO as well.

In Malaysia, glove maker Harp Holdings deferred its US$500m listing as interests and valuations initially boosted by the pandemic fell short of expectations. Other Malaysian glove makers have also seen their shares tanking this year due to falling valuations. This came after Top Glove delayed its US$1bn Hong Kong due to a US import ban, just two weeks ago.

Credits to Clarence Chu for helping with the note.