Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of IPO & Placements for Aequitas Research. At Aequitas we cover all IPOs and placements across Asia-Pac with a deal size of at least US$100m. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%. 
Prior to Aequitas. I was heading Content Strategy for Smartkarma, along with covering IPOs & Placement. In an earlier life I have covered ASEAN property and the banking space in India.

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

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Equity Capital Markets

GF Securities (H) / Equity Capital Markets

<p>GF Securities (GFS) plans to raise USD2.9-3.6bn through its listing in Hong Kong. Valuations seem reasonable to us and hence, we would take the deal:</p><ul><li>On post money p/b basis, shares are&nbsp;being offered at&nbsp;1.3-1.6x p/b vs H-shares of other brokers which are trading at an average of 2.1x (range of 1.8x for Galaxy to 2.2x for Citic). On a p/e basis at 12.5-15.1x the discount looks reasonable vs. other brokers who are at an average of 17.8x&nbsp;(range from 20x for Citic to 12x for Galaxy).&nbsp;</li><li>The company's H-shares are being offered at a 43-53% discount to its A-shares.&nbsp;Citic H-shares are trading at 32% discount to its A-shares, while Haitong is trading at 39% discount to its A-shares.</li><li>The company's performance has been good over the past few years with revenue having grown at a CAGR of 39.3%, while&nbsp;PATMI has grown much faster at 51.4%</li><li>The company is one of the leading securities firm with a market share of 4-5% across categories and has a large backlog of IPO's (although quite a few of these are likely to be SME's). It also has one of the largest asset management businesses.</li><li>Over 50% of the deal has been taken up by cornerstone investors</li></ul><p>Negatives:</p><ul><li>The shares don't offer any unique exposure to the sector, as its larger peers are already listed in Hong Kong</li><li>The firm derives a large proportion of its income from trading, which remains susceptible to market performance</li><li>Brokerage rates have been under pressure and the potential opening of the securities industries could lead to even more pressure on rates.&nbsp;</li></ul>

GF Securities (GFS) plans to raise USD2.9-3.6bn through its listing in Hong Kong. Valuations seem reasonable to us and hence, we would take the deal:On post money p/b basis, shares are&nbsp;being offered at&nbsp;1.3-1.6x p/b vs H-shares of other brokers which are trading at an average of 2.1x (range of 1.8x for Galaxy to 2.2x for Citic). On a p/e basis at 12.5-15.1x the discount looks reasonable vs. other brokers who are at an average of 17.8x&nbsp;(range from 20x for Citic to 12x for Galaxy).&nbsp;The company's H-shares are being offered at a 43-53% discount to its A-shares.&nbsp;Citic H-shares are trading at 32% discount to its A-shares, while Haitong is trading at 39% discount to its A-shares.The company's performance has been good over the past few years with revenue having grown at a CAGR of 39.3%, while&nbsp;PATMI has grown much faster at 51.4%The company is one of the leading securities firm with a market share of 4-5% across categories and has a large backlog of IPO's (although quite a few of these are likely to be SME's). It also has one of the largest asset management businesses.Over 50% of the deal has been taken up by cornerstone investorsNegatives:The shares don't offer any unique exposure to the sector, as its larger peers are already listed in Hong KongThe firm derives a large proportion of its income from trading, which remains susceptible to market performanceBrokerage rates have been under pressure and the potential opening of the securities industries could lead to even more pressure on rates.&nbsp;

GF Securities - Discount to peers and A-shares appears attractive