Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul class="">
<li>We visited the stores of Nayuki and its competitors.</li>
<li>Nayuki has the No. 4 largest customer base among Chinese teahouses, but we believe Heytea is the only competitor to Nayuki.</li>
<li>Fruit tea is still popular, but customers are loyal to one or two brands.</li>
</ul>


We visited the stores of Nayuki and its competitors.
Nayuki has the No. 4 largest customer base among Chinese teahouses, but we believe Heytea is the only competitor to Nayuki.
Fruit tea is still popular, but customers are loyal to one or two brands.


Nayuki (奈雪の茶): Teahouse Competition on the Ground

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Thematic (Sector/Industry)

<p>Historically, tea dominated the Asian beverages market, but over the last few years we are seeing a renewed interest in coffee and coffee-based beverages among Asians. Meanwhile, the tea industry is focusing on new products/trends such as bubble tea and fruit-infused tea to counter the threat posed by coffee as well as to provide a growth driver to counteract stagnant demand.</p><p>The younger generation favors the bubble tea and fruit tea trends, meaning that teahouses have been a tremendous success over the last four to five years. However, we think bubble tea and fruit tea lack the ability to encourage consumers to make regular purchases, affecting the long-term foot traffic of teahouses. Meanwhile, tea is generally less profitable than coffee. On the other hand, the coffee trend is more long-lasting. It also has the potential to generate superior returns/profitability over the medium/long term.</p><p>Nevertheless, there are both good apples and bad apples in both camps (coffee and tea). In this insight, we take a look at a few coffee and tea chains in China, Japan, and South Korea, assessing the long-term investment and business cases for our top picks in those markets.</p><h2>What’s Original?</h2><p>In this original, we discuss the value chain, costs of production and global demand and supply conditions in the tea and coffee markets. Additionally, we look at the emerging trends and the unit cost dynamics within tea/coffee chains in Asia, focusing on the three biggest tea/coffee markets in the region (China, Japan and South Korea). Furthermore, we briefly talk about popular tea/coffee chains and highlight the long-term investment and business cases for our top picks in the above markets.</p>

Historically, tea dominated the Asian beverages market, but over the last few years we are seeing a renewed interest in coffee and coffee-based beverages among Asians. Meanwhile, the tea industry is focusing on new products/trends such as bubble tea and fruit-infused tea to counter the threat posed by coffee as well as to provide a growth driver to counteract stagnant demand.The younger generation favors the bubble tea and fruit tea trends, meaning that teahouses have been a tremendous success over the last four to five years. However, we think bubble tea and fruit tea lack the ability to encourage consumers to make regular purchases, affecting the long-term foot traffic of teahouses. Meanwhile, tea is generally less profitable than coffee. On the other hand, the coffee trend is more long-lasting. It also has the potential to generate superior returns/profitability over the medium/long term.Nevertheless, there are both good apples and bad apples in both camps (coffee and tea). In this insight, we take a look at a few coffee and tea chains in China, Japan, and South Korea, assessing the long-term investment and business cases for our top picks in those markets.What’s Original?In this original, we discuss the value chain, costs of production and global demand and supply conditions in the tea and coffee markets. Additionally, we look at the emerging trends and the unit cost dynamics within tea/coffee chains in Asia, focusing on the three biggest tea/coffee markets in the region (China, Japan and South Korea). Furthermore, we briefly talk about popular tea/coffee chains and highlight the long-term investment and business cases for our top picks in the above markets.

Tea/Coffee Chains: As Asians Acquire a Taste for Coffee, Novelty Seems Like the Way Forward for Tea

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

<div>
<p><a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (2150 HK)</a> is the second-largest premium teahouse chain in China accounting for 18.9% of China’s premium modern teahouse market as measured by total retail consumption value in 2020, according to CIC.</p>
<p>Nayuki will commence trading on Wednesday, 30 June. Nayuki priced its IPO at HK$19.80 and the shares <a href="https://inews.hket.com/article/2993858/%E3%80%90%E5%A5%88%E9%9B%AA%E7%9A%84%E8%8C%B6%E6%9A%97%E7%9B%A4%E3%80%91%E5%A5%88%E9%9B%AA%E7%9A%84%E8%8C%B62150%E5%A0%B4%E5%A4%96%E6%9A%97%E7%9B%A4%E5%8D%8711-%E3%80%80%E4%B8%80%E6%89%8B%E5%B8%B3%E9%9D%A2%E8%B3%BA1100%E5%85%83?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">stood 11% higher</a> at HK$22.00 in the grey market.</p>
</div><div>
<p>In <a href="https://www.smartkarma.com/insights/nayuki-holdings-ipo-initiation-a-new-leaf" target="_blank" data-smartkarma-citation="insights:48532" rel="noopener">Nayuki Holdings IPO Initiation: A New Leaf</a>, we noted that premium teahouses have rapidly gained popularity in China as they bring new tea-drinking experiences and benefit from the structural trend of consumer’s consumption upgrades driven by higher disposable income. We opined that Nayuki has the right ingredients to offer investors an attractive play on this market. In <a href="https://www.smartkarma.com/insights/nayuki-holdings-ipo-drinking-habits" target="_blank" data-smartkarma-citation="insights:52873" rel="noopener">Nayuki Holdings IPO: Drinking Habits</a>, we noted that recent results (disclosed in the PHIP) show that Nayuki is well-positioned as a post-COVID-19 recovery play.</p>
<p>In <a href="https://www.smartkarma.com/insights/nayuki-holdings-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:53291" rel="noopener">Nayuki Holdings IPO: Valuation Insights</a>, we noted that Nayuki is attractively valued to its peer group for its forecasted earnings growth i.e. on a PEG basis. We recommended participating at the low end of the IPO price range due to the decent upside compared to our base-case DCF valuation.</p>
</div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise and FX, our base-case DCF derived price target is HK$19.45 per share. Nevertheless, our DCF sensitivity and relative valuation analysis show that the grey market price is justifiable.  </p></div></div></div>


Nayuki Holdings (2150 HK) is the second-largest premium teahouse chain in China accounting for 18.9% of China’s premium modern teahouse market as measured by total retail consumption value in 2020, according to CIC.
Nayuki will commence trading on Wednesday, 30 June. Nayuki priced its IPO at HK$19.80 and the shares stood 11% higher at HK$22.00 in the grey market.

In Nayuki Holdings IPO Initiation: A New Leaf, we noted that premium teahouses have rapidly gained popularity in China as they bring new tea-drinking experiences and benefit from the structural trend of consumer’s consumption upgrades driven by higher disposable income. We opined that Nayuki has the right ingredients to offer investors an attractive play on this market. In Nayuki Holdings IPO: Drinking Habits, we noted that recent results (disclosed in the PHIP) show that Nayuki is well-positioned as a post-COVID-19 recovery play.
In Nayuki Holdings IPO: Valuation Insights, we noted that Nayuki is attractively valued to its peer group for its forecasted earnings growth i.e. on a PEG basis. We recommended participating at the low end of the IPO price range due to the decent upside compared to our base-case DCF valuation.
Updating for the final IPO net raise and FX, our base-case DCF derived price target is HK$19.45 per share. Nevertheless, our DCF sensitivity and relative valuation analysis show that the grey market price is justifiable.  

APAC IPOs & Placements

Zhen Zhou, Toh

<div>
<p><a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (NYK HK)</a> raised US$656m at HK$19.80 per share, the top-end of its IPO price range.</p>
</div>
<div>
<p>Nayuki is the operator of Nayuki teahouses, a premium modern teahouse chain in China. The company had a network of 491 Nayuki teahouses across 61 cities in China as of December 2020. As per CIC, Nayuki is the most extensive premium modern teahouse network in China in terms of the number of cities covered.</p>
<p>In this note, we will discuss deal dynamics and update valuation.</p>
</div>
<div>
<p>We had previously covered the IPO in:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-fast-growing-cash-flow-positive-teahouse-chain" target="_blank" data-smartkarma-citation="insights:49798" rel="noopener">Nayuki (奈雪) Pre-IPO - Fast-Growing, Cash Flow Positive Teahouse Chain</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-phip-updates-4q20-results-shows-improvement" target="_blank" data-smartkarma-citation="insights:52793" rel="noopener">Nayuki (奈雪) Pre-IPO - PHIP Updates - 4Q20 Results Shows Improvement</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-industry-landscape-and-peer-comparison" target="_blank" data-smartkarma-citation="insights:52797" rel="noopener">Nayuki (奈雪) Pre-IPO - Industry Landscape and Peer Comparison</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/nayuki-pre-ipo-forecast-and-thoughts-on-valuation" target="_blank" data-smartkarma-citation="insights:52992" rel="noopener">Nayuki (奈雪) Pre-IPO - Forecast and Thoughts on Valuation</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/nayuki-ipo-not-cheap-but-should-still-do-well" target="_blank" data-smartkarma-citation="insights:53247" rel="noopener">Nayuki (奈雪) IPO - Not Cheap but Should Still Do Well</a> </li>
</ul>
</div>


Nayuki Holdings (NYK HK) raised US$656m at HK$19.80 per share, the top-end of its IPO price range.


Nayuki is the operator of Nayuki teahouses, a premium modern teahouse chain in China. The company had a network of 491 Nayuki teahouses across 61 cities in China as of December 2020. As per CIC, Nayuki is the most extensive premium modern teahouse network in China in terms of the number of cities covered.
In this note, we will discuss deal dynamics and update valuation.


We had previously covered the IPO in:




Nayuki (奈雪) Pre-IPO - Fast-Growing, Cash Flow Positive Teahouse Chain 

Nayuki (奈雪) Pre-IPO - PHIP Updates - 4Q20 Results Shows Improvement 

Nayuki (奈雪) Pre-IPO - Industry Landscape and Peer Comparison 

Nayuki (奈雪) Pre-IPO - Forecast and Thoughts on Valuation 

Nayuki (奈雪) IPO - Not Cheap but Should Still Do Well 



Nayuki (奈雪) IPO Trading - Good Demand

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (2150 HK)</a> is expected to price its IPO at the top of the announced price range of HK$17.20-19.80 per share. The offer price will be announced on 29<sup>th</sup> June 2021, and shares will commence trading on the Hong Kong stock exchange on the following day.</li>
<li>The IPO has gained the backing of five cornerstone investors, including UBS Asset Management (US$50.0m), GF Fund Management (US$30.0m), and China Southern Asset Management (US$20.0m), to subscribe to 65.0m (US$155m) shares.</li>
<li>Moreover, the bubble tea chain has attracted a lot of retail investors, as the retail offer was oversubscribed around 187.0x according to The Standard.</li>
<li>We would avoid this IPO on fundamentals. However, most of the recent big ticket IPOs with similar demand from institutional and retail investors performed reasonably well at market debuts.</li>
<li>For that reason, we said in our previous insight that there could be a trading angle to this IPO. Having analysed past IPO performance, we are revising our views, as we think that Nayuki’s IPO is priced rather high, leaving little room for a solid first day performance.</li>
</ul>



Nayuki Holdings (2150 HK) is expected to price its IPO at the top of the announced price range of HK$17.20-19.80 per share. The offer price will be announced on 29th June 2021, and shares will commence trading on the Hong Kong stock exchange on the following day.
The IPO has gained the backing of five cornerstone investors, including UBS Asset Management (US$50.0m), GF Fund Management (US$30.0m), and China Southern Asset Management (US$20.0m), to subscribe to 65.0m (US$155m) shares.
Moreover, the bubble tea chain has attracted a lot of retail investors, as the retail offer was oversubscribed around 187.0x according to The Standard.
We would avoid this IPO on fundamentals. However, most of the recent big ticket IPOs with similar demand from institutional and retail investors performed reasonably well at market debuts.
For that reason, we said in our previous insight that there could be a trading angle to this IPO. Having analysed past IPO performance, we are revising our views, as we think that Nayuki’s IPO is priced rather high, leaving little room for a solid first day performance.


Hong Kong

Nayuki Holdings Limited operates as a holding compnay. The Company, through its subsidiaries, produces and retails tea and bakery products. Nayuki serves customers in China.

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Nayuki Holdings (2150 HK)

Nayuki (奈雪の茶): Teahouse Competition on the Ground

We visited the stores of Nayuki and its competitors. Nayuki has the No. 4 largest customer base among Chinese teahouses, but We believe Heytea is...

Ming Lu

Tea/Coffee Chains: As Asians Acquire a Taste for Coffee, Novelty Seems Like the Way Forward for Tea

Historically, tea dominated the Asian beverages market, but over the last few years we are seeing a renewed interest in coffee and coffee-based...

Oshadhi Kumarasiri

Nayuki Holdings IPO: Trading Debut

Nayuki priced its IPO at HK$19.80 and the shares stood 11% higher at HK$22.00 in the grey market. Our DCF sensitivity and relative valuation...

Arun George

Nayuki (奈雪) IPO Trading - Good Demand

Nayuki Holdings (NYK HK) raised US$656m at HK$19.80 per share, the top-end of its IPO price range. Nayuki is the operator of Nayuki teahouses, a...

Zhen Zhou, Toh

Nayuki IPO: First Day Trading

Though Nayuki offers short term topline growth prospects alongside a tiny store- level profit, we think the IPO is priced in a manner that leaves...

Oshadhi Kumarasiri

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