APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. 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%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Skymark Airlines / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/skymark-airlines-inc" target="_blank" data-smartkarma-citation="entities:20430:1" rel="noopener">Skymark Airlines (9204 JP)</a> raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th Jun 2023.</li>
<li>Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline  according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th Jun 2023.
Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline  according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
In this note, we will talk about the lock-up dynamics and updates since our last note.


Skymark Airlines Lockup Expiry - Still Doesn’t Seem Cheap with 50% of the Shares Being Unlocked

Founder of Antler Capital

Stanley Tsai, CFA

Equity Bottom-Up

BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> 
As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

<ul>
<li>JAL finishing FY24 strongly with another guidance upgrade – upgraded FY26 targets more logical in light of existing ANA targets</li>
<li>​Demand momentum particularly helpful as wages rise across Japan and ​cost control to remain impressive over FY25-FY26 as LCC growth set to dilute FSC inflation</li>
<li>​Detailed analysis of JAL’s widening margin gap to ANA suggests revenue solution required – momentum helpful and needs to be watched carefully</li>
</ul>


JAL finishing FY24 strongly with another guidance upgrade – upgraded FY26 targets more logical in light of existing ANA targets
​Demand momentum particularly helpful as wages rise across Japan and ​cost control to remain impressive over FY25-FY26 as LCC growth set to dilute FSC inflation
​Detailed analysis of JAL’s widening margin gap to ANA suggests revenue solution required – momentum helpful and needs to be watched carefully


Japan Airlines – Encouraging Lifting of Medium Term Expectations to Narrow Recovery Gap to ANA

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Amidst intense competition in online mall retailing, JAL and ANA both launched their own e-commerce malls last year to replace once popular catalogues.</li>
<li>Although a tough market to enter given the competition from the big 3 (Amazon, Rakuten and Yahoo), airlines have distinct advantages over other small malls.</li>
<li>In particular, they have data on millions of consumers and access to premium customers willing to spend ¥1 million on a case of wine.</li>
</ul>


Amidst intense competition in online mall retailing, JAL and ANA both launched their own e-commerce malls last year to replace once popular catalogues.
Although a tough market to enter given the competition from the big 3 (Amazon, Rakuten and Yahoo), airlines have distinct advantages over other small malls.
In particular, they have data on millions of consumers and access to premium customers willing to spend ¥1 million on a case of wine.


<ul>
<li>We refresh estimates for ANA and JAL, and highlight we think the strength of FY24 makes it difficult for ANA to avoid an earnings decline in FY25.</li>
<li>However, ANA's superior recovery to JAL poses bigger questions for JAL as it revisits its medium term plan on 21 March</li>
<li>Our deep dive on margin management at each carrier suggests a revenue problem rather than a cost problem at JAL; but without revenue improvements, it will have to cut costs</li>
</ul>


We refresh estimates for ANA and JAL, and highlight we think the strength of FY24 makes it difficult for ANA to avoid an earnings decline in FY25.
However, ANA's superior recovery to JAL poses bigger questions for JAL as it revisits its medium term plan on 21 March
Our deep dive on margin management at each carrier suggests a revenue problem rather than a cost problem at JAL; but without revenue improvements, it will have to cut costs


Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL

Japan

ANA Holdings Inc provides a variety of air transportation-related services. The Company offers scheduled & unscheduled air passenger services and air courier services. ANA sells aircraft parts and provides travel arrangement & reservation services as well.

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Ana Holdings (9202 JP)

Skymark Airlines Lockup Expiry - Still Doesn’t Seem Cheap with 50% of the Shares Being Unlocked

Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th...

Ethan Aw

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

Japan Airlines – Encouraging Lifting of Medium Term Expectations to Narrow Recovery Gap to ANA

Detailed analysis of JAL's medium term plan update, FY24-FY26 earnings prospects, and widening margin gap to principal competitor All Nippon Airways

Neil Glynn

JAL Mall: Gold from 30m Mileage Members

JAL and ANA enter online retail market with e-commerce malls, leveraging customer data and premium clientele to compete with big players like...

Michael Causton

Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL

A deep dive on ANA and JAL analysing the drivers of ANA's superior financial recover to JAL and the implications for JAL's medium term strategy...

Neil Glynn

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52-week Range

Market Cap (USDm)

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Dividend (Yield)

Skymark Airlines Lockup Expiry - Still Doesn’t Seem Cheap with 50% of the Shares Being Unlocked

Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th...

Ethan Aw

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

Japan Airlines – Encouraging Lifting of Medium Term Expectations to Narrow Recovery Gap to ANA

Detailed analysis of JAL's medium term plan update, FY24-FY26 earnings prospects, and widening margin gap to principal competitor All Nippon Airways

Neil Glynn

JAL Mall: Gold from 30m Mileage Members

​JAL and ANA enter online retail market with e-commerce malls, leveraging customer data and premium clientele to compete with big players like...

Michael Causton

Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL

A deep dive on ANA and JAL analysing the drivers of ANA's superior financial recover to JAL and the implications for JAL's medium term strategy...

Neil Glynn

JAL and ANA enter online retail market with e-commerce malls, leveraging customer data and premium clientele to compete with big players like...