Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of ASX Stocks as of Feb 10th (reported today) which has an aggregated short interest worth USD15.6bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Newcrest Mining, Rio Tinto, Suncorp, Insurance Australia, Woodside Energy, Wesfarmer.</li>
</ul>


We analyzed the changes in short interest of ASX Stocks as of Feb 10th (reported today) which has an aggregated short interest worth USD15.6bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Newcrest Mining, Rio Tinto, Suncorp, Insurance Australia, Woodside Energy, Wesfarmer.


ASX Short Interest Weekly (Feb 10th): Newcrest, Rio Tinto, Suncorp, Insurance Australia,

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.

Event-Driven

<ul>
<li>The IE considers <a href="https://www.smartkarma.com/entities/perpetual-ltd" target="_blank" data-smartkarma-citation="entities:599:1" rel="noopener">Perpetual Ltd (PPT AU)</a>'s cash and scrip offer for <a href="https://www.smartkarma.com/entities/pendal-group-ltd" target="_blank" data-smartkarma-citation="entities:15795:1" rel="noopener">Pendal Group (PDL AU)</a> to be fair and reasonable as it is within its valuation range of A$4.87-5.71. </li>
<li>Perpetual shareholders are getting the short end of the stick. While possible, <a href="https://www.smartkarma.com/entities/regal-partners-limited" target="_blank" data-smartkarma-citation="entities:29119:1" rel="noopener">Regal Partners (RPL AU)</a>/BPEA EQT riding to the rescue of Perpetual shareholders is low. </li>
<li>Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.</li>
</ul>


The IE considers Perpetual Ltd (PPT AU)'s cash and scrip offer for Pendal Group (PDL AU) to be fair and reasonable as it is within its valuation range of A$4.87-5.71. 
Perpetual shareholders are getting the short end of the stick. While possible, Regal Partners (RPL AU)/BPEA EQT riding to the rescue of Perpetual shareholders is low. 
Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.


Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December

<ul>
<li>The ACCC’s Statement of Issues noted “<em>significant preliminary competition concerns</em>” in relation to Dye &amp; Durham/DND’s acquisition of <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration (LNK AU)</a>. The findings will be announced on 8 September.</li>
<li>There is no easy fix. We think that satisfying the ACCC requires a <a href="https://www.smartkarma.com/entities/pexa-group-ltd" target="_blank" data-smartkarma-citation="entities:34716:1" rel="noopener">PEXA Group (PXA AU)</a> stake disposal which could trigger a material adverse clause.</li>
<li>Link aims to proceed with the 13 July scheme meeting but this is a broken deal. While our SoTP suggests upside, there are no short-term positive catalysts.</li>
</ul>


The ACCC’s Statement of Issues noted “significant preliminary competition concerns” in relation to Dye &amp; Durham/DND’s acquisition of Link Administration (LNK AU). The findings will be announced on 8 September.
There is no easy fix. We think that satisfying the ACCC requires a PEXA Group (PXA AU) stake disposal which could trigger a material adverse clause.
Link aims to proceed with the 13 July scheme meeting but this is a broken deal. While our SoTP suggests upside, there are no short-term positive catalysts.


ACCC’s Concerns Likely to End in a Link-DND Deal Bust

<ul>
<li>DND’s 3QFY22 last night continued to suggest DND’s commitment to complete the <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a> acquisition.</li>
<li>DND management's messaging in the call downplayed the MAC risk of a contract renewal but shifted incrementally more bearish on the ACCC review, in our view.</li>
<li>The risk-reward calculus is now incrementally more positive. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 (-5% below the last close) limiting downside risk.</li>
</ul>


DND’s 3QFY22 last night continued to suggest DND’s commitment to complete the Link Administration Holdings (LNK AU) acquisition.
DND management's messaging in the call downplayed the MAC risk of a contract renewal but shifted incrementally more bearish on the ACCC review, in our view.
The risk-reward calculus is now incrementally more positive. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 (-5% below the last close) limiting downside risk.


Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call

<ul>
<li>
<a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a> claims to be not aware of any reason for today’s -15% share collapse. The market seems nervy that DND will exhibit buyer’s remorse. </li>
<li>The scheme consideration is now 2.6x DND’s market cap. The ACCC delayed review and the contract renewal MAC clause could be DND’s get-out-of-jail-free card for a lower price/walk-away. </li>
<li>Our “deal-break” SoTP valuation suggests a valuation of A$4.24 per share, which is broadly in line with the last close price. The next catalyst is DND’s results tomorrow.</li>
</ul>



Link Administration Holdings (LNK AU) claims to be not aware of any reason for today’s -15% share collapse. The market seems nervy that DND will exhibit buyer’s remorse. 
The scheme consideration is now 2.6x DND’s market cap. The ACCC delayed review and the contract renewal MAC clause could be DND’s get-out-of-jail-free card for a lower price/walk-away. 
Our “deal-break” SoTP valuation suggests a valuation of A$4.24 per share, which is broadly in line with the last close price. The next catalyst is DND’s results tomorrow.


Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In

Australia

Insignia Financial Ltd operates as a financial services company. The Company provides clients with a range of products and services including financial advisory, investment management, real estate, and trustee services. Insignia Financial serves customers worldwide.

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Insignia Financial (IFL AU)

ASX Short Interest Weekly (Feb 10th): Newcrest, Rio Tinto, Suncorp, Insurance Australia,

We analyzed ASX short interest report for the past week and highlight short interest changes in Newcrest Mining, Rio Tinto, Suncorp, Insurance...

Ke Yan, CFA, FRM

Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December

While possible, the probability of Regal/BPEA EQT derailing the deal continues to decline. At the last close prices, the gross spread to the offer...

Arun George

ACCC’s Concerns Likely to End in a Link-DND Deal Bust

The deal is all but bust due to the ACCC's concerns. Our SoTP is A$3.74 which is a 12% upside to the last close. However, we would stay away as...

Arun George

Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call

The risk-reward calculus gets a lift from the DND 3Q call. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 limiting...

Arun George

Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In

Shares collapsed today on concerns that the deal is on shaky grounds as DND may push for a lower price or walk away. Link is now trading at our...

Arun George

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