Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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

Shandong Fengxiang / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a> (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong IPO.</p><div><p>I had looked at the company background in my previous note,<a href="https://www.smartkarma.com/insights/shandong-fengxiang-ipo-looks-cheap-but-is-at-peak-margins" target="_blank" rel="noopener"> Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins</a>.</p></div><div><p>In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. </p></div>

Shandong Fengxiang (9977 HK) (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong IPO.I had looked at the company background in my previous note, Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins.In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. 

Shandong Fengxiang IPO Trading - Lack of Over-Allocation Won't Help Post Deal Performance

<p><a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>  Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking to raise upto US$220m in its Hong Kong listing. SF has a market share of 3.1% in 2019, by volume. SF is also the largest white-feathered broiler meat exporter in the PRC in terms of revenue and volume with a market share of 8.6% and 10.4% in 2018.</p><p>The company caters mostly to the B2B segment with some of the largest quick-service restaurant chains (Yum China, and McDonald's) as its customers. It has long term relationships with some stretching for more than 15 years.</p><p>Earnings have grown rapidly over the reporting period of FY16-19, revenue grew at 18.6% CAGR while PAT (without bio gains) grew at 94% CAGR or was up 7.3x, although the growth hasn’t been even.</p><p>Earnings growth has mostly been driven by the industry-wide price increase, as processed meat is the only segment that has consistently grown its volumes. </p><p>The industry overall has been shrinking since 2015 due to supply issues, as per the industry report. This is expected to reverse in 2020, although the forecasts appear rosy. There are also related party issues with SF entering into many transactions with related entities.</p>

Shandong Fengxiang (9977 HK)  Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking to raise upto US$220m in its Hong Kong listing. SF has a market share of 3.1% in 2019, by volume. SF is also the largest white-feathered broiler meat exporter in the PRC in terms of revenue and volume with a market share of 8.6% and 10.4% in 2018.The company caters mostly to the B2B segment with some of the largest quick-service restaurant chains (Yum China, and McDonald's) as its customers. It has long term relationships with some stretching for more than 15 years.Earnings have grown rapidly over the reporting period of FY16-19, revenue grew at 18.6% CAGR while PAT (without bio gains) grew at 94% CAGR or was up 7.3x, although the growth hasn’t been even.Earnings growth has mostly been driven by the industry-wide price increase, as processed meat is the only segment that has consistently grown its volumes. The industry overall has been shrinking since 2015 due to supply issues, as per the industry report. This is expected to reverse in 2020, although the forecasts appear rosy. There are also related party issues with SF entering into many transactions with related entities.

Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins

China

Shandong Minhe Animal Husbandry Co., Ltd. engaging in the breeding, hatching, and the growing of chickens and the processing, preparation, and packaging of its product lines.

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Shandong Minhe Animal Hus A (002234 CH)

Shandong Fengxiang IPO Trading - Lack of Over-Allocation Won't Help Post Deal Performance

Shandong Fengxiang (9977 HK) (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong...

Sumeet Singh

Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins

Shandong Fengxiang (9977 HK) Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking...

Sumeet Singh

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