APAC IPOs & Placements

Zhen Zhou, Toh

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 Capital Markets

Hua Hong Semiconductor / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/nec-corp" target="_blank" data-smartkarma-citation="entities:17084:1" rel="noopener">NEC Corp (6701 JP)</a> is looking to sell its entire 7.6% stake in <a href="https://www.smartkarma.com/entities/hua-hong-semiconductor-ltd" target="_blank" data-smartkarma-citation="entities:7201:1" rel="noopener">Hua Hong Semiconductor (1347 HK)</a>. This is a clean-up trade.In this note, we will discuss the recent Q4 2020 results from Hua Hong, share our thoughts on deal dynamics, and scores on our ECM framework.

NEC Corp (6701 JP) is looking to sell its entire 7.6% stake in Hua Hong Semiconductor (1347 HK). This is a clean-up trade.In this note, we will discuss the recent Q4 2020 results from Hua Hong, share our thoughts on deal dynamics, and scores on our ECM framework.

Hua Hong Semiconductor Placement - NEC Selling Its 7.6% Stake in Hua Hong

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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 Bottom-Up

Operating profit doubled year-on-year on flat sales in the three months to December due to strong demand for 5G telecom equipment and submarine cable systems, restructuring, and a smaller negative impact from COVID-19.New orders increased for the second quarter in a row led by 5G base stations and public infrastructure.Management left full-year FY Mar-21 guidance unchanged, implying 36% year-on-year growth in operating profit on a 7% increase in sales in 4Q.Sales and profits should continue to rise over the next 2-3 years supported by 5G, the digitalization of government and financial services, the Avaloq acquisition and improvements in the cost structure. 26% potential upside to our ¥8,000 price target.

Operating profit doubled year-on-year on flat sales in the three months to December due to strong demand for 5G telecom equipment and submarine cable systems, restructuring, and a smaller negative impact from COVID-19.New orders increased for the second quarter in a row led by 5G base stations and public infrastructure.Management left full-year FY Mar-21 guidance unchanged, implying 36% year-on-year growth in operating profit on a 7% increase in sales in 4Q.Sales and profits should continue to rise over the next 2-3 years supported by 5G, the digitalization of government and financial services, the Avaloq acquisition and improvements in the cost structure. 26% potential upside to our ¥8,000 price target. 

NEC (6701 JP): Further Upside After Strong 3Q

Japan's Open RAN 5G solution continues to gain traction.<ul>
<li>On December 16, NEC was selected by Telefonica as the system integrator for the first Open RAN pilot system in Germany.</li>
<li>Deutsche Telekom is working with NEC, Fujitsu, Dell, Nokia and others, targeting its first deployment of 4G and 5G Open RAN in 2021.</li>
<li>In late November, Malaysia's Communications and Multimedia Minister Gobind Singh Deo met with NEC, Fujitsu and Rakuten to discuss their 5G proposals.</li>
</ul>This follows the announcement of NEC's 5G Open RAN initiatives in the UK and India. <a href="https://www.smartkarma.com/insights/nec-6701-jp-open-ran-center-to-replace-huawei-5g-in-the-uk" target="_blank" data-smartkarma-citation="insights:45536" rel="noopener">NEC (6701 JP): Open RAN Center to Replace Huawei 5G in the UK</a> .As for NEC's current business, new orders began to recover in 2Q of FY Mar-21. Sales and profits should follow in 2H, led by the Public Infrastructure and Enterprise segments.Our profit forecast brings NEC's projected P/E ratio down to 14x in FY Mar-23, suggesting long-term upside potential of 40% or more.

Japan's Open RAN 5G solution continues to gain traction.
On December 16, NEC was selected by Telefonica as the system integrator for the first Open RAN pilot system in Germany.
Deutsche Telekom is working with NEC, Fujitsu, Dell, Nokia and others, targeting its first deployment of 4G and 5G Open RAN in 2021.
In late November, Malaysia's Communications and Multimedia Minister Gobind Singh Deo met with NEC, Fujitsu and Rakuten to discuss their 5G proposals.
This follows the announcement of NEC's 5G Open RAN initiatives in the UK and India. NEC (6701 JP): Open RAN Center to Replace Huawei 5G in the UK .As for NEC's current business, new orders began to recover in 2Q of FY Mar-21. Sales and profits should follow in 2H, led by the Public Infrastructure and Enterprise segments.Our profit forecast brings NEC's projected P/E ratio down to 14x in FY Mar-23, suggesting long-term upside potential of 40% or more. 

NEC (6701 JP): Japan's Open RAN a Growing Alternative to Huawei

NEC has announced the establishment of a Global Open RAN Center for Excellence in the UK to contribute to the build-out of 5G and promote its global telecom equipment and services businesses. The Center will work with an Open RAN Laboratory in India.After banning equipment from Huawei, the British government has invited NEC to support the development of 5G in the UK. Open RAN (O-RAN, or Open Radio Access Network) standards allow different companies to supply different parts of a telecommunications network, facilitating the development of multivendor alternatives to Huawei, Nokia and Ericsson.NEC's sales and profits rebounded in the three months to September, recovering from the COVID downturn. FY Mar-21 guidance was left unchanged. We remain bullish on NEC on a long-term view.

NEC has announced the establishment of a Global Open RAN Center for Excellence in the UK to contribute to the build-out of 5G and promote its global telecom equipment and services businesses. The Center will work with an Open RAN Laboratory in India.After banning equipment from Huawei, the British government has invited NEC to support the development of 5G in the UK. Open RAN (O-RAN, or Open Radio Access Network) standards allow different companies to supply different parts of a telecommunications network, facilitating the development of multivendor alternatives to Huawei, Nokia and Ericsson.NEC's sales and profits rebounded in the three months to September, recovering from the COVID downturn. FY Mar-21 guidance was left unchanged. We remain bullish on NEC on a long-term view.

NEC (6701 JP): Open RAN Center to Replace Huawei 5G in the UK

<ul>
<li>The acquisition of Swiss financial software company Avaloq should make a meaningful contribution to NEC's Public Solutions division as it expands its digital government services business in Europe, Asia-Pacific and elsewhere. </li>
<li>It follows the acquisition of KMD, a Danish software and IT company specializing in digital government, in 2019, and Northgate Public Services of the UK, which provides software and services to the public sector, in 2018.</li>
<li>The deal is valued at CHF2.05 billion (¥236 billion), or 3.4x Aviloq's 2019 sales and 21x EBITDA. Avaloq's EBITDA/Sales ratio was 16% in 2019, compared with 9.5% for NEC in FY Mar-20.</li>
<li>Aviloq's own growth potential and synergies with NEC's overall business justify the price, in our view. Last December, Aviloq renewed and expanded its 10-year relationship with DBS Bank.</li>
<li>We remain bullish on NEC, targeting more than 30% potential upside to ¥8,000 on the basis of historical valuation ranges.</li>
</ul>


The acquisition of Swiss financial software company Avaloq should make a meaningful contribution to NEC's Public Solutions division as it expands its digital government services business in Europe, Asia-Pacific and elsewhere. 
It follows the acquisition of KMD, a Danish software and IT company specializing in digital government, in 2019, and Northgate Public Services of the UK, which provides software and services to the public sector, in 2018.
The deal is valued at CHF2.05 billion (¥236 billion), or 3.4x Aviloq's 2019 sales and 21x EBITDA. Avaloq's EBITDA/Sales ratio was 16% in 2019, compared with 9.5% for NEC in FY Mar-20.
Aviloq's own growth potential and synergies with NEC's overall business justify the price, in our view. Last December, Aviloq renewed and expanded its 10-year relationship with DBS Bank.
We remain bullish on NEC, targeting more than 30% potential upside to ¥8,000 on the basis of historical valuation ranges.


NEC (6701 JP): Avaloq Acquisition Positive for Earnings and Long-Term Growth

Japan

NEC Corporation manufactures and markets computers, telecommunication equipment, electronic devices, semiconductors, and software.  The Company's products include printers, modems, cellular phones, plasma display panels (PDP), network systems, memory, integrated circuits (IC), thin film transistor-liquid crystal display (TFT-LCD), and printed circuit boards (PCB). NEC operates worldwide.

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NEC Corp (6701 JP)

Hua Hong Semiconductor Placement - NEC Selling Its 7.6% Stake in Hua Hong

NEC Corp (6701 JP) is looking to sell its entire 7.6% stake in Hua Hong Semiconductor (1347 HK). This is a clean-up trade.

Zhen Zhou, Toh

NEC (6701 JP): Further Upside After Strong 3Q

Operating and net profit more than doubled YoY in 3Q due to strong demand for 5G telecom equipment, restructuring and other factors that should...

Scott Foster

NEC (6701 JP): Japan's Open RAN a Growing Alternative to Huawei

New opportunities in Germany and Malaysia expand the potential for Japanese Open RAN telecom technology beyond Rakuten and the UK. NEC is likely to...

Scott Foster

NEC (6701 JP): Open RAN Center to Replace Huawei 5G in the UK

With the establishment of its Open RAN Center of Excellence, NEC replaces Huawei as the chief provider of support for 5G in the UK. This should...

Scott Foster

NEC (6701 JP): Avaloq Acquisition Positive for Earnings and Long-Term Growth

xxx Avaloq Group AG (Avaloq), a leading Swiss financial software company

Scott Foster

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