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

Angelalign Technology  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (AAT HK)</a> is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. </p><p>At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.</p><p>In <a href="https://www.smartkarma.com/insights/angelalign-ipo-initiation-if-tooth-be-told" target="_blank" data-smartkarma-citation="insights:51881" rel="noopener">Angelalign IPO Initiation: If Tooth Be Told</a>, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.</p><div class="content-highlight"><p>On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   </p></div>

Angelalign Technology (AAT HK) is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. At the proposed IPO price range of HK$147-173 per share, Angelalign will have a market cap of HK$24.4-28.7 million ($3.1-3.7 billion). At the mid-point of the IPO price range, the gross proceeds are $347 million.In Angelalign IPO Initiation: If Tooth Be Told, we stated that Angelalign is ideally positioned to benefit from China's clear aligner market opportunity due to its high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look.On a relative valuation basis, Angelalign looks attractive to its peers on a PEG basis but expensive on a P/E basis. Our base-case DCF value is HK$171.83 per share which is a 7% upside to the mid-point of the IPO price range. Due to the limited upside to our DCF valuation, we think that the IPO price range is full. Overall, while we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on the sidelines for a more attractive entry point.   

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<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (AAT HK)</a> is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. Angelalign is pre-marketing an HKEx IPO to raise $300 million, according to press reports. </div>
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</div></div></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/angelalign-ipo-initiation-if-tooth-be-told" target="_blank" data-smartkarma-citation="insights:51881" rel="noopener">Angelalign IPO Initiation: If Tooth Be Told</a>, we stated that Angelalign is ideally positioned to benefit from this market opportunity due to high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look. In this note, we present our forecasts and take the first look at Angelalign's potential valuation range. </p></div></div></div>



Angelalign Technology (AAT HK) is a leading clear aligner treatment solution provider in China. It is the second-largest player accounting for 41.0% market share in 2020 as measured by case shipments, according to CIC. Angelalign is pre-marketing an HKEx IPO to raise $300 million, according to press reports. 

In Angelalign IPO Initiation: If Tooth Be Told, we stated that Angelalign is ideally positioned to benefit from this market opportunity due to high market share, strong growth, rising margins and prodigious cash generation. We concluded that Angelalign is worth a look. In this note, we present our forecasts and take the first look at Angelalign's potential valuation range. 

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<p>Invisible orthodontics has gradually become a new choice for patients and dentists because of its aesthetic and comfortable features. On January 29, 2021, <a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (AAT HK)</a>, founded in 2003, reached a new turning point when it submitted its prospectus to the Hong Kong Stock Exchange. However, how could Angelalign stand out in the face of strong competitors such as <a href="https://www.smartkarma.com/entities/align-technology-inc" target="_blank" data-smartkarma-citation="entities:2817:1" rel="noopener">Align Technology (ALGN US)</a>, <a href="https://www.smartkarma.com/entities/smiledirectclub-inc" target="_blank" data-smartkarma-citation="entities:28298:1" rel="noopener">SmileDirectClub Inc (SDC US)</a>, Straumann, Dentsply Sirona, 3M and other domestic companies? The following mainly discuss both the strength and concerns for Angelalign.</p>

Invisible orthodontics has gradually become a new choice for patients and dentists because of its aesthetic and comfortable features. On January 29, 2021, Angelalign Technology (AAT HK), founded in 2003, reached a new turning point when it submitted its prospectus to the Hong Kong Stock Exchange. However, how could Angelalign stand out in the face of strong competitors such as Align Technology (ALGN US), SmileDirectClub Inc (SDC US), Straumann, Dentsply Sirona, 3M and other domestic companies? The following mainly discuss both the strength and concerns for Angelalign.

Pre-IPO Angelalign Technology - Promising Market but Full of Challenges

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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.

SmileDirectClub Inc / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/smiledirectclub-inc/overview" target="_blank" rel="noopener">SmileDirectClub (SDC US)</a> is a direct-to-consumer teeth-aligner startup which uses teledentistry to virtually connect licensed dentists and orthodontists with customers who require teeth aligners. SDC ships clear aligners directly to its customers whereas the dentists remotely monitor the progress of the patient. The company has filed for an IPO to raise approximately USD1.1bn (after underwriting and related expenses) and has set the IPO price in the range of USD19-22 per share, resulting in a valuation of about USD8bn for the company.</p><p>The company revenues have grown over the last two years though at a declining rate while the operating losses have shrunk significantly over the last ten quarters. About 65% of the company revenues are generated through the SmilePay program which offers customers credit through an installment plan. We have observed significant growth in accounts receivables while the cash balance has declined significantly at the end of 1H2019 alongside an increase in borrowings. Moreover, the company has been under criticism for providing dental solutions without in-patient visits.</p><p>In addition, we have also observed several red flags related to the company’s governance such as dual-class shares, a controlling shareholder who holds majority voting power, a board lacking a majority of independent directors, etc.</p><p>We discuss the details below.</p>

SmileDirectClub (SDC US) is a direct-to-consumer teeth-aligner startup which uses teledentistry to virtually connect licensed dentists and orthodontists with customers who require teeth aligners. SDC ships clear aligners directly to its customers whereas the dentists remotely monitor the progress of the patient. The company has filed for an IPO to raise approximately USD1.1bn (after underwriting and related expenses) and has set the IPO price in the range of USD19-22 per share, resulting in a valuation of about USD8bn for the company.The company revenues have grown over the last two years though at a declining rate while the operating losses have shrunk significantly over the last ten quarters. About 65% of the company revenues are generated through the SmilePay program which offers customers credit through an installment plan. We have observed significant growth in accounts receivables while the cash balance has declined significantly at the end of 1H2019 alongside an increase in borrowings. Moreover, the company has been under criticism for providing dental solutions without in-patient visits.In addition, we have also observed several red flags related to the company’s governance such as dual-class shares, a controlling shareholder who holds majority voting power, a board lacking a majority of independent directors, etc.We discuss the details below.

SmileDirectClub IPO: The Perfect Smile Comes at a Very Big Cost

United States

SmileDirectClub, LLC designs and manufactures dental equipment. The Company supplies invisible aligners and braces to  get straight teeth. SmileDirectClub serves customers in the United States.

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SmileDirectClub Inc (SDC US)

Angelalign IPO: Valuation Insights

While we like Angelalign's fundamentals, due to the full IPO price range and the current weak market sentiment on IPOs, we are inclined to wait on...

Arun George

Angelalign IPO: Valuation First-Look

Angelalign is pre-marketing an HKEx IPO to raise $300 million, according to press reports. In this note, we present our forecasts and take the...

Arun George

Pre-IPO Angelalign Technology - Promising Market but Full of Challenges

This article analyzed Angelalign in terms of the market potential, capital support behind, financial position, and also include concerns and...

Xinyao (Criss) Wang

SmileDirectClub IPO: The Perfect Smile Comes at a Very Big Cost

SmileDirectClub (SDC US) is a direct-to-consumer teeth-aligner startup which uses teledentistry to virtually connect licensed dentists and...

Shifara Samsudeen, FCMA, CGMA

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