Equity Analyst, LightStream Research

Aqila Ali

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.

Equity Capital Markets

<ul class="">
<li>The news stated that <a href="https://www.smartkarma.com/entities/27399" target="_blank" data-smartkarma-citation="entities:27399:1">NIO Inc (NIO US)</a> made its debut into a sell-off, although it did manage to rise above its low-end offer price at the day’s close and the stock rose sharply on Thursday, closing up 76% and surpassing the upper limit of its offer price. The stock declined slightly to reach USD9.9 at Friday's close, up almost 65% since its opening on Wednesday. </li>
<li>Although Tesla, did quite well at its IPO, post IPO it was unable to meet expectations with regards to production and gradually began to lose investor confidence. The resurgence of these issues lately could be a possible reason for the polarised nature of market confidence in pure EV companies such as Nio, despite their long-term potential. </li>
<li>Another possible reason for Nio’s tumbling start could have been that the IPO occurred at a time when China-US trade tensions are mounting with tit-for-tat tariffs affecting the global stock markets. </li>
<li>However, the rebound in stock price place Nio at a market cap of just over USD10bn on Friday which may be justified by the long-term growth. However, we believe that it is quite early to give the start-up such a large market cap. The company looks a bit overvalued, especially if growth hits our moderate or low growth estimates.  </li>
<li>Other Chinese like <a href="https://www.smartkarma.com/entities/24409" target="_blank" data-smartkarma-citation="entities:24409:1">Xiaomi Corp (1810 HK)</a> , <a href="https://www.smartkarma.com/entities/27248" target="_blank" data-smartkarma-citation="entities:27248:1">Intron Technology Holdings L (1760 HK)</a> and <a href="https://www.smartkarma.com/entities/24404" target="_blank" data-smartkarma-citation="entities:24404:1">CATL (A) (300750 CH)</a>, which went public in the second half of this year had a good start but began to show weakness after a few weeks/months of trading. It could be possible that Nio follows the same trend and falls close to its low-end price. Thus, it makes more sense to take profit now. On the long side we would wait for a better time to buy the stock for its attractive long-term growth prospects -  either a  significant correction in price or a few quarters of demonstrated execution (at least).</li>
</ul>


The news stated that NIO Inc (NIO US) made its debut into a sell-off, although it did manage to rise above its low-end offer price at the day’s close and the stock rose sharply on Thursday, closing up 76% and surpassing the upper limit of its offer price. The stock declined slightly to reach USD9.9 at Friday's close, up almost 65% since its opening on Wednesday. 
Although Tesla, did quite well at its IPO, post IPO it was unable to meet expectations with regards to production and gradually began to lose investor confidence. The resurgence of these issues lately could be a possible reason for the polarised nature of market confidence in pure EV companies such as Nio, despite their long-term potential. 
Another possible reason for Nio’s tumbling start could have been that the IPO occurred at a time when China-US trade tensions are mounting with tit-for-tat tariffs affecting the global stock markets. 
However, the rebound in stock price place Nio at a market cap of just over USD10bn on Friday which may be justified by the long-term growth. However, we believe that it is quite early to give the start-up such a large market cap. The company looks a bit overvalued, especially if growth hits our moderate or low growth estimates.  
Other Chinese like Xiaomi Corp (1810 HK) , Intron Technology Holdings L (1760 HK) and CATL (A) (300750 CH), which went public in the second half of this year had a good start but began to show weakness after a few weeks/months of trading. It could be possible that Nio follows the same trend and falls close to its low-end price. Thus, it makes more sense to take profit now. On the long side we would wait for a better time to buy the stock for its attractive long-term growth prospects -  either a  significant correction in price or a few quarters of demonstrated execution (at least).


Nio’s Lacklustre Performance Didn’t Last for Long; A 65% Gain For Those Who Subscribed

Intron Technology / Equity Capital Markets

The Intron Technology Holdings IPO application commenced on the 29th of June 2018 and is expected to end by 12:00 noon tomorrow on the Stock Exchange of Hong Kong Limited ("SEHK"). Established in 2001, Intron is one of the fastest growing automotive electronic solution providers in China. The IPO price range is between HKD2.9 and HKD3.33 per share. The IPO deal size could be around HKD780m, assuming a price of HKD3.12 (the mid-point of the proposed Offer Price range), with no over-allotment option being exercised. BNP Paribas Securities (Asia) is the sole sponsor of this global offering.
This insight covers Intron technology’s background, its business model, the growth prospects and the risks it holds in the market. We have also looked into the financial performance and position of the company and its valuation based on the offer price range. Based on our analysis, we think the company could see significant upside over the medium term. Intron’s continuous improvement in automotive electronic solutions is likely to cement its position in the market. Growth in the Chinese automotive market and the government’s support towards electrification will be key to sustaining growth in the long-run. For now, we think the company is a steady one with product categories steady enough to fight competition in the market. The company, if successful in the growing automotive market, is likely to trade a FY1 PE of 18x and EV/EBITDA multiple of 14x.
<div class="content-caption">
Deal Specifics of Intron’s Global Offering
</div>
<table class="table table-striped">
<tbody>
<tr>
<td colspan="2">
Details:
</td>
</tr>
<tr>
<td>
Application Period
</td>
<td>
June 29th, 2018 - Noon, July 5th 2018
</td>
</tr>
<tr>
<td>
Price Determination Date
</td>
<td>
On or Before 5pm, July 5th 2018
</td>
</tr>
<tr>
<td>
Result Announcement Date
</td>
<td>
On or Before July 11th 2018
</td>
</tr>
<tr>
<td>
Dealings in Shares commence on
</td>
<td>
July 12th 2018
</td>
</tr>
<tr>
<td>
Expected IPO price per share:  
</td>
<td>
Between HKD2.9 and HKD3.33
</td>
</tr>
<tr>
<td>
Number of Shares for IPO:
</td>
<td>
250m shares
</td>
</tr>
<tr>
<td>
No. of International Placing Shares
</td>
<td>
 
225m shares
</td>
</tr>
<tr>
<td>
No. of HK Offer Shares
</td>
<td>
 25m shares
</td>
</tr>
<tr>
<td>
Lead managers of the IPO: 
</td>
<td>
 
BNP Paribas Securities (Asia)
</td>
</tr>
<tr>
<td>
IPO base deal size: 
</td>
<td>
Approx.HKD780m (based on Median)
</td>
</tr>
<tr>
<td>
Major Shareholder  
</td>
<td>
 
Directors Luk Wing Ming and Chan Cheung Ngai-
</td>
</tr>
<tr>
<td>
Expected market cap after IPO:
</td>
<td>
Between HKD2,900mn - HKD3,330m
</td>
</tr>
<tr>
<td>
Use of Proceeds
</td>
<td>
* HKD211.5m (30%)- recruiting additional research and development professionals;
* HKD211.5m (30%)- investing in and acquiring testing and other equipment and technology software;
* HKD211.5m (30%) - finance acquisitions of research and development capabilities;
* the balance of HKD70.6m (10%) as additional working capital.
</td>
</tr>
</tbody>
</table>
<div class="content-remarks">
Source: Company Disclosures
</div>

The Intron Technology Holdings IPO application commenced on the 29th of June 2018 and is expected to end by 12:00 noon tomorrow on the Stock Exchange of Hong Kong Limited ("SEHK"). Established in 2001, Intron is one of the fastest growing automotive electronic solution providers in China. The IPO price range is between HKD2.9 and HKD3.33 per share. The IPO deal size could be around HKD780m, assuming a price of HKD3.12 (the mid-point of the proposed Offer Price range), with no over-allotment option being exercised. BNP Paribas Securities (Asia) is the sole sponsor of this global offering.
This insight covers Intron technology’s background, its business model, the growth prospects and the risks it holds in the market. We have also looked into the financial performance and position of the company and its valuation based on the offer price range. Based on our analysis, we think the company could see significant upside over the medium term. Intron’s continuous improvement in automotive electronic solutions is likely to cement its position in the market. Growth in the Chinese automotive market and the government’s support towards electrification will be key to sustaining growth in the long-run. For now, we think the company is a steady one with product categories steady enough to fight competition in the market. The company, if successful in the growing automotive market, is likely to trade a FY1 PE of 18x and EV/EBITDA multiple of 14x.

Deal Specifics of Intron’s Global Offering





Details:




Application Period


June 29th, 2018 - Noon, July 5th 2018




Price Determination Date


On or Before 5pm, July 5th 2018




Result Announcement Date


On or Before July 11th 2018




Dealings in Shares commence on


July 12th 2018




Expected IPO price per share:  


Between HKD2.9 and HKD3.33




Number of Shares for IPO:


250m shares




No. of International Placing Shares


 
225m shares




No. of HK Offer Shares


 25m shares




Lead managers of the IPO: 


 
BNP Paribas Securities (Asia)




IPO base deal size: 


Approx.HKD780m (based on Median)




Major Shareholder  


 
Directors Luk Wing Ming and Chan Cheung Ngai-




Expected market cap after IPO:


Between HKD2,900mn - HKD3,330m




Use of Proceeds


* HKD211.5m (30%)- recruiting additional research and development professionals;
* HKD211.5m (30%)- investing in and acquiring testing and other equipment and technology software;
* HKD211.5m (30%) - finance acquisitions of research and development capabilities;
* the balance of HKD70.6m (10%) as additional working capital.





Source: Company Disclosures


Intron Technology IPO: The Evolving Chinese Automotive Market Likely to Power The IPO

Hong Kong

Intron Technology Holdings Limited manufactures automobile parts. The Company produces oil pumps, motors, colling fan control systems, body control, and powertrain systems. Intron Technology Holdings markets its products in Hong Kong.

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Intron Technology (1760 HK)

Nio’s Lacklustre Performance Didn’t Last for Long; A 65% Gain For Those Who Subscribed

The news stated that NIO Inc (NIO US) made its debut into a sell-off, although it did manage to rise above its low-end offer price at the day’s...

Aqila Ali

Intron Technology IPO: The Evolving Chinese Automotive Market Likely to Power The IPO

The Intron Technology Holdings IPO application commenced on the 29th of June 2018 and is expected to end by 12:00 noon tomorrow on the Stock...

Aqila Ali

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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