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 Capital Markets

Hangzhou SF Intra-city Industrial / Equity Capital Markets

Hangzhou SF Intra-city Industrial (9699 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hangzhou-sf-intra-city-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:34916:1" rel="noopener">SF Intra-City (9699 HK)</a> is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-delivering-losses" target="_blank" data-smartkarma-citation="insights:61272" rel="noopener">SF Intra-City Industrial IPO: Delivering Losses</a>, we noted that SF Intra-city’s fundamentals are less than inspiring. </li>
<li>While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   </li>
</ul>



SF Intra-City (9699 HK) is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. 
In SF Intra-City Industrial IPO: Delivering Losses, we noted that SF Intra-city’s fundamentals are less than inspiring. 
While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   


SF Intra-City Industrial IPO: Valuation Insights

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Delta Electronics (Thailand) / Index Rebalance

<ul>
<li>SET conducted a market consultation in September/October and amended the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">SET50 INDEX</a> index methodology earlier this month. These changes could see an extra 'targeted' deletion from the index.</li>
<li>The review period ends today and we see two high probability inclusions which means there will be at least two deletions. One of the deletions is a high probability name.</li>
<li>The changes should be announced mid-December and will be implemented at the close of trading on 30 December.</li>
</ul>


SET conducted a market consultation in September/October and amended the SET50 INDEX index methodology earlier this month. These changes could see an extra 'targeted' deletion from the index.
The review period ends today and we see two high probability inclusions which means there will be at least two deletions. One of the deletions is a high probability name.
The changes should be announced mid-December and will be implemented at the close of trading on 30 December.


SET50 Index Rebalance Preview: Revised Methodology & Potential Changes

<div>
<p><a href="https://www.smartkarma.com/entities/ane-logistics" target="_blank" data-smartkarma-citation="entities:34119:1" rel="noopener">ANE Logistics (1292621D CH)</a> operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch. ANE’s shareholders include Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.</p>
<p>At the proposed IPO price range of HK$13.88-16.88 per share, ANE will have a market cap of HK$16,137-19,625 million ($2.1-2.5 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,124.1 million ($144 million), materially below the rumoured target of $500 million.</p>
<p>A single cornerstone investor, Harvest Prosperity SP, will purchase $12.5 million worth of the offer shares (7.88% of the offer shares at the mid-point of the IPO price range). </p>
</div><div><p>In <a href="https://www.smartkarma.com/insights/ane-logistics-ipo-initiation-home-delivery" target="_blank" data-smartkarma-citation="insights:57807" rel="noopener">ANE Logistics IPO Initiation: Home Delivery</a>, we stated that ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. We concluded that ANE’s fundamentals are solid. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ane-ipo-the-freight-debate" target="_blank" data-smartkarma-citation="insights:57957" rel="noopener">ANE IPO: The Freight Debate</a>, we stated that the PHIP continues to support our view that the ANE IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. Our valuation analysis, suggests that the IPO price range is attractive particularly at the low-end.</p></div></div></div>


ANE Logistics (1292621D CH) operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch. ANE’s shareholders include Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.
At the proposed IPO price range of HK$13.88-16.88 per share, ANE will have a market cap of HK$16,137-19,625 million ($2.1-2.5 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,124.1 million ($144 million), materially below the rumoured target of $500 million.
A single cornerstone investor, Harvest Prosperity SP, will purchase $12.5 million worth of the offer shares (7.88% of the offer shares at the mid-point of the IPO price range). 
In ANE Logistics IPO Initiation: Home Delivery, we stated that ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. We concluded that ANE’s fundamentals are solid. In ANE IPO: The Freight Debate, we stated that the PHIP continues to support our view that the ANE IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. Our valuation analysis, suggests that the IPO price range is attractive particularly at the low-end.

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

<p><strong>We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.</strong></p><div>• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.</div><div></div><div>• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.</div><div></div><div>• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.</div><div></div><div><strong>We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.</strong></div>

We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.

KEX: Expect Earnings to Grow Strongly in 2H21

<p>In this weeks recap, we look at:</p><ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul><p>There are no major index events in the coming week - there were enough in the last week!</p><p>There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>. </p>

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

Thailand

Kex Express is a nationwide parcel delivery company in Thailand, providing integrated logistics solutions for C2C, B2C, and B2B segments, including domestic and international parcel delivery. They also offer ocean freight, cross-border land transportation, and customs clearance services. The company is headquartered in Bangkok, Thailand, and was founded in 2006.

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Kex Express (KEX TB)

SF Intra-City Industrial IPO: Valuation Insights

While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of...

Arun George

SET50 Index Rebalance Preview: Revised Methodology & Potential Changes

TIDLOR and BANPU are high probability inclusions to the SET50 in Dec while STA is a high probability deletion. DELTA and BJC could be deletes on...

Brian Freitas

ANE IPO: Valuation Insights

At the proposed IPO price range of HK$13.88-16.88 per share, the net proceeds are $144 m. Our valuation analysis, suggests that the IPO price range...

Arun George

KEX: Expect Earnings to Grow Strongly in 2H21

We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters. We maintain KEX with a BUY rating...

Pi Securities PCL, Thailand

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

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