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

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Suchuang Gas Corp / Equity Capital Markets

<p>Suchuang Gas, a piped natural gas operator in Taicang, China, plans to raise up to US$75m via an IPO. We would avoid the deal, given:</p><ul><li>The company has only one exclusivity agreement, to provider piped natural gas in Taicang, vs. it larger peers who operate across multiple cities. This greatly increases local government risk to its business vs. its peers, while reducing its scope for long term growth.</li><li>Corporate governance remains questionable, as management had earlier paid out large dividends in 2013 and plans to use part of the proceeds to acquire some refueling stations from a related entity, the price of which hasn't been disclosed.</li><li>While at the lower end the stock is being offered at a 30% discount to its larger peers however, the market cap post listing will be &lt;1/10th of its larger peers, thus, the discount looks adequate in our view.</li><li>Chinese government remains intent on increasing the share of natural gas in its energy consumption, but the fall in oil prices have made domestic natural gas uncompetitive in several regions. While NDRC has been undertaking reforms to move to market based pricing, however, in the near term uncompetitive prices could impact volume offtake of commercial and industrial clients, who form the largest customers for Suchuang Gas.</li><li>The company achieves a borderline score on our framework. In addition, recent small/mid-cap IPOs in HK have not been doing well.</li></ul>

Suchuang Gas, a piped natural gas operator in Taicang, China, plans to raise up to US$75m via an IPO. We would avoid the deal, given:The company has only one exclusivity agreement, to provider piped natural gas in Taicang, vs. it larger peers who operate across multiple cities. This greatly increases local government risk to its business vs. its peers, while reducing its scope for long term growth.Corporate governance remains questionable, as management had earlier paid out large dividends in 2013 and plans to use part of the proceeds to acquire some refueling stations from a related entity, the price of which hasn't been disclosed.While at the lower end the stock is being offered at a 30% discount to its larger peers however, the market cap post listing will be &lt;1/10th of its larger peers, thus, the discount looks adequate in our view.Chinese government remains intent on increasing the share of natural gas in its energy consumption, but the fall in oil prices have made domestic natural gas uncompetitive in several regions. While NDRC has been undertaking reforms to move to market based pricing, however, in the near term uncompetitive prices could impact volume offtake of commercial and industrial clients, who form the largest customers for Suchuang Gas.The company achieves a borderline score on our framework. In addition, recent small/mid-cap IPOs in HK have not been doing well.

Suchuang Gas - Cheap price but dim prospects - Avoid