APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

Event-Driven

<ul>
<li>Having first introduced the three red line guidance in late 2020, the government has begun shifting its stance, and relaxing some of its regulatory oversight.</li>
<li>In this note, we looked at recent news developments and how some larger developers fared against the three red lines criterion.</li>
<li>Of the large developers we looked at, there are a few names which stand out which could potentially do a capital raising given their financial standing. </li>
</ul>


Having first introduced the three red line guidance in late 2020, the government has begun shifting its stance, and relaxing some of its regulatory oversight.
In this note, we looked at recent news developments and how some larger developers fared against the three red lines criterion.
Of the large developers we looked at, there are a few names which stand out which could potentially do a capital raising given their financial standing. 


Chinese Developers’ Overview - Shift in Sentiment but a Few Still Needs Some Equity

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.

<ul>
<li>On 20 April, <a href="https://www.smartkarma.com/entities/yuexiu-property-co-ltd" target="_blank" data-smartkarma-citation="entities:18097:1" rel="noopener">Yuexiu Property (123 HK)</a> announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.</li>
<li>Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.</li>
<li>The shares went ex-rights on 2 May and the rights start trading on 15 May. <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>’s trading over its rights period provides the playbook for Yuexiu’s trading.</li>
</ul>


On 20 April, Yuexiu Property (123 HK) announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.
Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.
The shares went ex-rights on 2 May and the rights start trading on 15 May. Link REIT (823 HK)’s trading over its rights period provides the playbook for Yuexiu’s trading.


Yuexiu Property (123 HK): Rights Trade Playbook

Equity Capital Markets

Yuexiu Property   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yuexiu-property-co-ltd" target="_blank" data-smartkarma-citation="entities:18097:1" rel="noopener">Yuexiu Property (123 HK)</a> will raise US$1.1bn through a rights offering - 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.</li>
<li>As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.</li>
<li>Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.</li>
</ul>



Yuexiu Property (123 HK) will raise US$1.1bn through a rights offering - 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.
As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.
Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.


Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> posted 11% profit decline for FY21, with Shenzhen Airlines the main drag. Stripping this and one-off items out, its bottom line would have grown by 46.6%.</li>
<li>Logistics growth pipeline is highly visible, and this adds to potential gains from logistics park transformation and strategic offload of matured and suitable projects through REIT or private fund.</li>
<li>The stock remains a deeply undervalued asset play at just 0.48x P/B. Its willingness to share gains with investors has put its dividend yield at 10.4% on current share price.</li>
</ul>



Shenzhen International (152 HK) posted 11% profit decline for FY21, with Shenzhen Airlines the main drag. Stripping this and one-off items out, its bottom line would have grown by 46.6%.
Logistics growth pipeline is highly visible, and this adds to potential gains from logistics park transformation and strategic offload of matured and suitable projects through REIT or private fund.
The stock remains a deeply undervalued asset play at just 0.48x P/B. Its willingness to share gains with investors has put its dividend yield at 10.4% on current share price.


Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value

<p>We consider the plan by <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> to dispose of its 35.7% direct stake in the Meilin Checkpoint Project a strategic move to move forward its earnings and cash flow from the development. Under normal course, it will have to wait for another 2-3 years to realise such gains and cash. In our view, investors should welcome this decision as the move will also cover an earnings gap in FY21 originally left over from FY20 due to a lack of exceptional gain in this year.</p><p>With a potential capital gain of Rmb2.9bn (HK$3.5bn), SZI is likely to record a historical high net profit for FY21. Moreover, its track record of sharing exceptional gain with investors through special dividends may mean a dividend yield of 12% for FY21 based on the current share price. The enriched financial position will also provide SZI more resources for pursuing logistics expansion, and it has just announced a logistics acquisition in Pingshan, Shenzhen.   </p>

We consider the plan by Shenzhen International (152 HK) to dispose of its 35.7% direct stake in the Meilin Checkpoint Project a strategic move to move forward its earnings and cash flow from the development. Under normal course, it will have to wait for another 2-3 years to realise such gains and cash. In our view, investors should welcome this decision as the move will also cover an earnings gap in FY21 originally left over from FY20 due to a lack of exceptional gain in this year.With a potential capital gain of Rmb2.9bn (HK$3.5bn), SZI is likely to record a historical high net profit for FY21. Moreover, its track record of sharing exceptional gain with investors through special dividends may mean a dividend yield of 12% for FY21 based on the current share price. The enriched financial position will also provide SZI more resources for pursuing logistics expansion, and it has just announced a logistics acquisition in Pingshan, Shenzhen.   

Shenzhen Intl (152 HK): Cashing in Future Earnings

Hong Kong

Shenzhen Investment Limited, through its subsidiaries, develops and invests in properties, sells commercial and industrial goods, and provides transportation services.

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Shenzhen Investment (604 HK)

Chinese Developers’ Overview - Shift in Sentiment but a Few Still Needs Some Equity

Country Garden Holdings just launched a primary placement to raise US$300m, at a fixed 17.7% discount to last close. Proceeds will be used to repay...

Clarence Chu

Yuexiu Property (123 HK): Rights Trade Playbook

Yuexiu shares have declined by -18.2% compared to the TERP of HK$11.74 per share. Link REIT’s trading over its rights period provides the playbook...

Arun George

Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue

As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.

Arun George

Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value

SZIH is an attractive asset play - it does not only has lots of hidden assets, but also the capability to turn them into profit and cash flow, and...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Cashing in Future Earnings

The disposal of Meilin Checkpoint Project should be a welcomed move to shift earnings and cash flow ahead. SZI is likely to share with investors...

Osbert Tang, CFA

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