ECM Weekly (3rd October 2021) - MicroPort Medbot, MicroTech Med, Airdoc, Abbisko, FWD, PHC Hldgs

Events next week:

Hong Kong’s ECM has been fairly quiet this week other than DRC Bank and Transcenta’s poor debut and Abbisko launching its bookbuild, which was quickly covered. The lack of activity in HK should extend into next week since China is celebrating The Golden Week holiday from 1st to 7th October.

• Abbisko (和誉) IPO: Fairly Valued for the Early Stage of Clinical Trials
• Abbisko (和誉) Pre-IPO: Thoughts on Valuation
• Dongguan Rural Commercial Bank IPO Trading -Needs to Correct at Least 50% to Trade Inline with Peers
• Transcenta (创胜) IPO Trading: Share Concentration

This is probably just a short respite before the Q4 IPO ramp as the pipeline in Hong Kong continues to build up. MicroTech Medical was approved by HKEX, joining the fray of a few other approved IPOs such as Airdoc, MicroPort Medbot, etc, that should launch soon.

• MicroPort MedBot Pre-IPO - RoboDoc - PHIP Updates and a Look at Its Largest Competitor
• MicroTech (微泰医疗) Pre-IPO: A Story of Domestic Product Replacing International Competitors
• Beijing Airdoc (北京鹰瞳科技) Pre-IPO - Updates on 1Q21 Results and Competition

Also, for new upcoming IPOs in the pipeline, Shenzhen-listed LB Group filed its draft prospectus with HKEX for up to US$1bn listing. The company is looking to enter the new energy vehicle battery industry. There are also a handful of smaller filings which readers can find below.

In the U.S, TDCX (TDCX US) opened 16% higher than its IPO price on its trading debut but closed just about 5.9% above. We didn't think valuation was justifiable considering that growth has been slowing down and margins were under pressure coupled with the founder cashing out about US$300m before the IPO.

• TDCX Inc. IPO Trading - Won't Be Buyers

The other large Asia linked US ADR that will come to market soon is FWD Group Holdings (FWD US) which filed last week. We cover the positives and negatives in our two notes this week.

• FWD Pre-IPO - The Positives - Growing Fast
• FWD Pre-IPO - The Negatives - Strategy Remains Unclear

In India, Aditya Birla Sun Life AMC (570499Z IN) conducted its IPO bookbuild. Valuation at a slight discount to its peers, but there is no strong reason to buy since the company is likely to continue to lose market share going forward.

• Aditya Birla Sun Life AMC IPO - At a Slight Discount but There’s No Compelling Reason to Buy

The pipeline of IPOs in India has also continued to build up. Notably, Oravel Stays, which is more commonly known as Oyo, filed its draft prospectus to raise US$1bn. There are also other smaller filings such as Global Health, which runs the “Medanta” chain of hospitals, Sahajanand Medical Technologies, India's largest cardiac stent maker, Waaree Energies, a solar panel maker, and etc.

In Japan, PHC Holdings (6523 JP) cut its deal size down to US$700m from US$1.8bn but we still think that the company should not be worth significantly more than what it paid for to assemble the different businesses considering that PHC as a whole seemed to be a disparate amalgamation of healthcare focused firms.

• PHC Holdings IPO - Should Have Cut the Price, Not Just the Size

Placements continued its momentum in Japan with a handful of large placements. Earlier in the week, Appier Group Inc (4180 JP) shareholders sold about US$155m worth of shares just as IPO lock-up expired. Then there was Hulic Co Ltd (3003 JP) and SUMCO Corp (3436 JP)'s US$1.1bn and US$1.17bn follow-on offerings, respectively. Both of which are not expected to be accretive in the near-term despite the significant dilution.

• Sumco Placement - Unexpected Large Deal with No Near-Term Accretion
• Hulic Placement - Accretion Will Take Time, Needs to Be Priced at Wide Discount
• Appier Placement - Selldown by Various Investors

Last, but not least, Tearsheets for newly filed IPOs this week:

• Shukun Technology Pre-IPO Tearsheet
• GFT International Pre-IPO Tearsheet (Refiled)
• Puranik Builders Pre-IPO Tearsheet (Refiled)