HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<ul>
<li>AUX mainly relies on low-price strategy to compete in the industry and has maintained robust growth in revenue/net profit.However, there's already a significant gap in scale compared with leading peers</li>
<li>Due to higher growth, AUX’s valuation could be higher than that of Midea and Gree. However, due to risks such as high debt and weak R&amp;D, valuation premium is limited.</li>
<li>A high valuation (e.g. P/E &gt;15x) can be justified only if the transition to a technology-driven value model can be completed before the cash flow of low-price model dries up.</li>
</ul>


AUX mainly relies on low-price strategy to compete in the industry and has maintained robust growth in revenue/net profit.However, there's already a significant gap in scale compared with leading peers
Due to higher growth, AUX’s valuation could be higher than that of Midea and Gree. However, due to risks such as high debt and weak R&amp;D, valuation premium is limited.
A high valuation (e.g. P/E &gt;15x) can be justified only if the transition to a technology-driven value model can be completed before the cash flow of low-price model dries up.


Pre-IPO Aux Electric Co (PHIP Updates) - Concerns About Business Model and Valuation Outlook

APAC IPOs & Placements, Aequitas Research

Nicholas Tan

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a>  raised around US$532m in its Hong Kong IPO.</li>
<li>It is one of the global top five air conditioner providers. </li>
<li>We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.</li>
</ul>



Aux Electric (2580 HK)  raised around US$532m in its Hong Kong IPO.
It is one of the global top five air conditioner providers. 
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.


Aux Electric IPO Trading: Decent Insti Demand; Is Cheap

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a> has announced terms for its HKEx IPO and plans to issue 207m shares at HK$16.00-17.42 per share and will raise around US$460m.</li>
<li>The company’s low-price strategy has helped expand its top line and market share in a short span of time; however, margins lag behind large air conditioner peers.</li>
<li>We think AUX should be compared against Hisense due to their higher dependence on ODM sales and believe AUX’s IPO is valued attractively compared to Hisense.</li>
</ul>



Aux Electric (2580 HK) has announced terms for its HKEx IPO and plans to issue 207m shares at HK$16.00-17.42 per share and will raise around US$460m.
The company’s low-price strategy has helped expand its top line and market share in a short span of time; however, margins lag behind large air conditioner peers.
We think AUX should be compared against Hisense due to their higher dependence on ODM sales and believe AUX’s IPO is valued attractively compared to Hisense.


AUX Electric IPO: Forecasts and Valuation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a>  is looking to raise up to US$460m in its upcoming Hong Kong IPO.</li>
<li>It is one of the global top five air conditioner providers, with capabilities covering the design, R&amp;D, production, sales and related services of household and central air conditioners.</li>
<li>In this note, we examine the IPO dynamics, and look at the firm’s valuation.</li>
</ul>



Aux Electric (2580 HK)  is looking to raise up to US$460m in its upcoming Hong Kong IPO.
It is one of the global top five air conditioner providers, with capabilities covering the design, R&amp;D, production, sales and related services of household and central air conditioners.
In this note, we examine the IPO dynamics, and look at the firm’s valuation.


Aux Electric IPO: Smallest Player but Superior Growth and Margins

<ul>
<li>AUX Electric is one of the top 5 air conditioner providers globally whose low-price strategy has helped expand its top line and market share in a short span of time.</li>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a> has filed for an IPO on HKEx and plans to raise proceeds of around US$460m through the issuance of 207m shares.</li>
<li>AUX’s low-price strategy and higher share of ODM brands have led to margins that are lower than domestic AC peers <a href="https://www.smartkarma.com/entities/gree-electric-appliances-inc-of-zhuhai" target="_blank" data-smartkarma-citation="entities:7622:1" rel="noopener">Gree Electric Appliances (000651 CH)</a> and <a href="https://www.smartkarma.com/entities/midea-group-co-ltd" target="_blank" data-smartkarma-citation="entities:43993:1" rel="noopener">Midea Group (300 HK)</a> .</li>
</ul>


AUX Electric is one of the top 5 air conditioner providers globally whose low-price strategy has helped expand its top line and market share in a short span of time.

Aux Electric (2580 HK) has filed for an IPO on HKEx and plans to raise proceeds of around US$460m through the issuance of 207m shares.
AUX’s low-price strategy and higher share of ODM brands have led to margins that are lower than domestic AC peers Gree Electric Appliances (000651 CH) and Midea Group (300 HK) .


AUX Electric IPO: Low-Price AC Strategy Drives Top Line Growth; Limited Upside to Margins

Hong Kong

Aux Electric Co., Ltd. designs, develops, manufactures, and sells air conditioners. The Company produces household air conditioners, central air conditioners, and provides related services. Aux Electric markets its products across worldwide.

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Aux Electric (2580 HK)

Pre-IPO Aux Electric Co (PHIP Updates) - Concerns About Business Model and Valuation Outlook

AUX's IPO debut revealed market concerns about its fundamentals, such as above 80% asset liability ratio, weak R&D capabilities/shortcomings in...

Xinyao (Criss) Wang

Aux Electric IPO Trading: Decent Insti Demand; Is Cheap

Aux Electric raised around US$532m in its Hong Kong IPO. In this note, we will talk about the demand and trading dynamics.

Nicholas Tan

AUX Electric IPO: Forecasts and Valuation

AUX Electric has announced terms for its HKEx IPO and plans to issue 207m shares at HK$16.00-17.42 per share and will raise around US$460m. In this...

Shifara Samsudeen, FCMA, CGMA

Aux Electric IPO: Smallest Player but Superior Growth and Margins

Aux Electric is looking to raise up to US$460m in its upcoming Hong Kong IPO. In this note, we examine the IPO dynamics, and look at the firm’s...

Nicholas Tan

AUX Electric IPO: Low-Price AC Strategy Drives Top Line Growth; Limited Upside to Margins

AUX Electric, a global AC provider has filed for an IPO on HKEx to raise $460m. AUX's low-price strategy has helped drive top line growth however...

Shifara Samsudeen, FCMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Pre-IPO Aux Electric Co (PHIP Updates) - Concerns About Business Model and Valuation Outlook

AUX's IPO debut revealed market concerns about its fundamentals, such as above 80% asset liability ratio, weak R&D capabilities/shortcomings in...

Xinyao (Criss) Wang

Aux Electric IPO Trading: Decent Insti Demand; Is Cheap

Aux Electric raised around US$532m in its Hong Kong IPO. In this note, we will talk about the demand and trading dynamics.

Nicholas Tan

AUX Electric IPO: Forecasts and Valuation

AUX Electric has announced terms for its HKEx IPO and plans to issue 207m shares at HK$16.00-17.42 per share and will raise around US$460m. In this...

Shifara Samsudeen, FCMA, CGMA

Aux Electric IPO: Smallest Player but Superior Growth and Margins

Aux Electric is looking to raise up to US$460m in its upcoming Hong Kong IPO. In this note, we examine the IPO dynamics, and look at the firm’s...

Nicholas Tan

AUX Electric IPO: Low-Price AC Strategy Drives Top Line Growth; Limited Upside to Margins

​AUX Electric, a global AC provider has filed for an IPO on HKEx to raise $460m. AUX's low-price strategy has helped drive top line growth however...

Shifara Samsudeen, FCMA, CGMA

AUX Electric, a global AC provider has filed for an IPO on HKEx to raise $460m. AUX's low-price strategy has helped drive top line growth however...