IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In <a href="https://www.smartkarma.com/insights/amer-sports-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:124040" rel="noopener">Amer Sports IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.</li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In Amer Sports IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In 2019, a consortium of <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, FountainVest, Anamered Investments and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> acquired Amer at an EV of €5.5 billion.  </li>
<li>The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. </li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.  
The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. 


External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Topsports International Holdings / Equity Bottom-Up

<ul><li>3Q24 retail sales growth was at low-teens, in line with expectations but the underlying fundamentals are good.</li><li>We still think the outlook for Topsports is solid, despite industry headwinds.</li><li>Maintain BUY and TP of HK$9.23, based on 18x FY2/25E P/E (unchanged).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

3Q24 retail sales growth was at low-teens, in line with expectations but the underlying fundamentals are good.We still think the outlook for Topsports is solid, despite industry headwinds.Maintain BUY and TP of HK$9.23, based on 18x FY2/25E P/E (unchanged).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Topsports (6110 HK) – Turnaround Continues After a Resilient 3Q24

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/enm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16267:1" rel="noopener">ENM Holdings (128 HK)</a>'s scheme document is out, with the vote scheduled for 26 September. The IFA considers Chime Corporation’s HK$0.58 per share offer fair and reasonable.</li>
<li>The spread of 7.4% reflects vote risk – cash required for the proposal is lower than the net cash, and the offer price is below the IFA’s SoTP valuation (HK$0.658). </li>
<li>Shareholder approval of the scheme is aided by no shareholder holding a blocking stake, a low AGM minority participation rate and no visible retail opposition to the offer. </li>
</ul>



ENM Holdings (128 HK)'s scheme document is out, with the vote scheduled for 26 September. The IFA considers Chime Corporation’s HK$0.58 per share offer fair and reasonable.
The spread of 7.4% reflects vote risk – cash required for the proposal is lower than the net cash, and the offer price is below the IFA’s SoTP valuation (HK$0.658). 
Shareholder approval of the scheme is aided by no shareholder holding a blocking stake, a low AGM minority participation rate and no visible retail opposition to the offer. 


ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

Thematic (Sector/Industry)

<ul><li>On one hand, retail sales growth in 5-1 Golden Week was a beat (after a soft Feb-Mar and an inline Apr).</li><li>On the other hand, retail discounts surprisingly widened due to increased competition from the de-stocking by brands like Adidas and Li Ning.</li><li>While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes on the end demand and intensity of competition. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

On one hand, retail sales growth in 5-1 Golden Week was a beat (after a soft Feb-Mar and an inline Apr).On the other hand, retail discounts surprisingly widened due to increased competition from the de-stocking by brands like Adidas and Li Ning.While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes on the end demand and intensity of competition. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Sportswear Sector – 5-1 sales beat but competition intensified

Hong Kong

Pou Sheng International (Holdings) Limited retails and wholesales sportswear, including sports footwear, apparel and accessories.

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Pou Sheng International (3813 HK)

Amer Sports IPO: The Bear Case

The bear case rests on ball and racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership,...

Arun George

Amer Sports IPO: The Bull Case

The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor...

Arun George

Topsports (6110 HK) – Turnaround Continues After a Resilient 3Q24

Sales growth acceleration should be from the new products and better marketing while margin improvement should be from self-initiated efficiency...

CMB International

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

The spread of 7.4% reflects vote risk. Shareholder approval is aided by no shareholder holding a blocking stake, a low AGM minority participation...

Arun George

China Sportswear Sector – 5-1 sales beat but competition intensified

While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes...

CMB International

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