Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/china-mobile" target="_blank" data-smartkarma-citation="entities:35371:1" rel="noopener">China Mobile (600941 CH)</a> A-Share IPO at RMB 57.58/share starts trading tomorrow on 5 January. I thought this premium disappointing, and the dividend overly attractive.</li>
<li>At 800x over-subscribed, with substantial clawback, IPO allocations to mainland investors were limited. Cash should be back in investors' hands and the yield is very attractive on A-shares and H-shares.</li>
<li>Today, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> announced it would start executing on its buyback mandate (10% of H-shares out (2.047bn shares). This is potentially enormous. And absolutely praise-worthy.</li>
</ul>


The China Mobile (600941 CH) A-Share IPO at RMB 57.58/share starts trading tomorrow on 5 January. I thought this premium disappointing, and the dividend overly attractive.
At 800x over-subscribed, with substantial clawback, IPO allocations to mainland investors were limited. Cash should be back in investors' hands and the yield is very attractive on A-shares and H-shares.
Today, China Mobile (941 HK) announced it would start executing on its buyback mandate (10% of H-shares out (2.047bn shares). This is potentially enormous. And absolutely praise-worthy.


China Mobile (941 HK) - Massive Buyback Announced on Eve of A-Share IPO

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> has priced its A-share IPO at RMB 57.58/share which is slightly disappointing in terms of premium to the H-share. </li>
<li>Subscriptions start on 22 December, and the IPO should launch a week later, for the largest mainland offering this year and possibly the largest in a decade.</li>
<li>Given the more explicit SHAREHOLDER RETURN PLAN framework published in May this year with the A-Share Circular, expect more management clarity on dividend payout.</li>
</ul>



China Mobile (941 HK) has priced its A-share IPO at RMB 57.58/share which is slightly disappointing in terms of premium to the H-share. 
Subscriptions start on 22 December, and the IPO should launch a week later, for the largest mainland offering this year and possibly the largest in a decade.
Given the more explicit SHAREHOLDER RETURN PLAN framework published in May this year with the A-Share Circular, expect more management clarity on dividend payout.


China Mobile Prices RMB A-Share IPO - Disappointing IPO Price So A-Share Could Yield ~CGBs+230

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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 Bottom-Up

<div><div id="ember4189"><div>
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<a href="https://www.smartkarma.com/entities/pt-dayamitra-telekomunikasi" target="_blank" data-smartkarma-citation="entities:34741:1" rel="noopener">Mitratel (1319Z IJ)</a> is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>.</div>
<div></div>
<div>Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. </div>
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</div></div></div><div>
<p>In <a href="https://www.smartkarma.com/insights/mitratel-dayamitra-telekomunikasi-ipo-initiation-control-tower" target="_blank" data-smartkarma-citation="insights:59620" rel="noopener">Mitratel (Dayamitra Telekomunikasi) IPO Initiation: Control Tower</a>, we noted that in comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract. The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. We concluded that Mitratel's fundamentals tick all the right boxes. </p>
<div class="content-highlight"><p>Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO.</p></div>
</div>



Mitratel (1319Z IJ) is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of Telekomunikasi Indonesia (TLKM IJ).

Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. 


In Mitratel (Dayamitra Telekomunikasi) IPO Initiation: Control Tower, we noted that in comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract. The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. We concluded that Mitratel's fundamentals tick all the right boxes. 
Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO.


Mitratel (Dayamitra Telekomunikasi) IPO: Valuation Insights

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/pt-dayamitra-telekomunikasi" target="_blank" data-smartkarma-citation="entities:34741:1" rel="noopener">Mitratel (1319Z IJ)</a> is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>.</p><p>Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. </p><p>Indonesia's tower industry is fast consolidating into an oligopoly with three large tower companies which are Mitratel, <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a> (Protelindo) and <a href="https://www.smartkarma.com/entities/tower-bersama-infrastructure" target="_blank" data-smartkarma-citation="entities:3537:1" rel="noopener">Tower Bersama Infrastructure (TBIG IJ)</a>. In comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract.</p><div class="content-highlight"><p>The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. Overall, Mitratel's fundamentals tick all the right boxes, in our view. </p></div>

Mitratel (1319Z IJ) is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of Telekomunikasi Indonesia (TLKM IJ).Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. Indonesia's tower industry is fast consolidating into an oligopoly with three large tower companies which are Mitratel, Sarana Menara Nusantara (TOWR IJ) (Protelindo) and Tower Bersama Infrastructure (TBIG IJ). In comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract.The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. Overall, Mitratel's fundamentals tick all the right boxes, in our view. 

Mitratel (Dayamitra Telekomunikasi) IPO Initiation: Control Tower

<p><a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0806/2021080600069.pdf" target="_blank" rel="noopener">priced</a> its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in <a href="https://www.smartkarma.com/insights/china-mobile-941-hk-it-could-have-been-done-better-but-it-ain-t-bad-for-hs" target="_blank" data-smartkarma-citation="insights:52018" rel="noopener">China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs</a> and <a href="https://www.smartkarma.com/insights/china-telecom-728-hk-ups-div-payout-policy-there-s-a-plan-here-expect-china-mobile-to-follow" target="_blank" data-smartkarma-citation="insights:53355" rel="noopener">China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow</a>.</p><p>It was also an 87% premium to the current H-share price. </p><p>As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a <em>higher payout ratio</em> NOW and <em>even higher payout ratio</em> LATER. </p><p>Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But...</p><p>.... There is more below the fold.</p>

China Telecom Corp Ltd (H) (728 HK) has priced its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs and China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow.It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But....... There is more below the fold.

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

China

China Tower Corporation Limited is a state-owned telecommunication company that provides telecommunication tower infrastructure services, including construction, maintenance, and operation of base station ancillary facilities. The company also offers distributed antenna systems, smart tower services, and energy solutions like power backup and battery exchange. It was founded in July 2014 and is headquartered in Beijing, China.

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China Tower (788 HK)

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China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

China Telecom has priced its A-share IPO at an 87% premium to the H. To get to the same 2021e DivYield, China Mobile will have to be 20+ higher,...

Travis Lundy