Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Amorepacific Corporation / Equity Bottom-Up

<div class="content-highlight">
<p><strong>Amorepacific Corp is our 2021 high conviction idea in Korea. It is a turnaround play as the top company in the Korean cosmetics sector after a 'once in a century' pandemic.</strong></p>
<h3><strong>Key catalysts are as follows:</strong></h3>
<ul>
<li>An inverse relationship between cosmetics consumption and wearing masks &amp; COVID-19 cases</li>
<li>Improving data on overseas online sales of luxury cosmetics segment </li>
<li>A big restructuring</li>
</ul>
<h3><strong>Valuation</strong></h3>
<p>If we apply a 3.6x P/B multiple (25% lower than the 5-year historical average) on Amorepacific using an estimated book value of 4.7 trillion won (at end of 2021), this would suggest an implied market cap of 17 trillion won, or 291,000 won per share (representing a 48% upside to current levels over a one year view). Given this attractive upside, we have a positive view of Amorepacific Corp.</p>
</div>


Amorepacific Corp is our 2021 high conviction idea in Korea. It is a turnaround play as the top company in the Korean cosmetics sector after a 'once in a century' pandemic.
Key catalysts are as follows:

An inverse relationship between cosmetics consumption and wearing masks &amp; COVID-19 cases
Improving data on overseas online sales of luxury cosmetics segment 
A big restructuring

Valuation
If we apply a 3.6x P/B multiple (25% lower than the 5-year historical average) on Amorepacific using an estimated book value of 4.7 trillion won (at end of 2021), this would suggest an implied market cap of 17 trillion won, or 291,000 won per share (representing a 48% upside to current levels over a one year view). Given this attractive upside, we have a positive view of Amorepacific Corp.


2021 High Conviction in Korea: Amorepacific Corp - Turnaround After 'Once in a Century' Pandemic

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.

Equity Capital Markets

Blue Moon Group Holdings / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> , a leading consumer household care company in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to raise about US$1bn. The company offers a wide range of products under three segments fabric care, personal hygiene products and home care products and has been the first to launch several new products such as liquid detergent and liquid soap to the Chinese market and the first mover advantage has helped the company grow its revenues and market share.</p><p>In our previous insight on the company’s IPO <a href="https://www.smartkarma.com/insights/blue-moon-ipo-product-innovation-and-online-channels-are-the-secrets-to-a-gentle-clean" target="_blank" data-smartkarma-citation="insights:41196" rel="noopener">Blue Moon IPO: Product Innovation and Online Channels Are the Secrets to a Gentle Clean</a> , we examined the company’s business model, segments, financials and outlook. The company released its Post Hearing Information Pack (PHIP) on the 18th and this insight on focuses on new data points from the PHIP.</p>

Blue Moon Group Holdings (BMG HK) , a leading consumer household care company in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to raise about US$1bn. The company offers a wide range of products under three segments fabric care, personal hygiene products and home care products and has been the first to launch several new products such as liquid detergent and liquid soap to the Chinese market and the first mover advantage has helped the company grow its revenues and market share.In our previous insight on the company’s IPO Blue Moon IPO: Product Innovation and Online Channels Are the Secrets to a Gentle Clean , we examined the company’s business model, segments, financials and outlook. The company released its Post Hearing Information Pack (PHIP) on the 18th and this insight on focuses on new data points from the PHIP.

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.

Yatsen Holding Ltd / Equity Capital Markets

<div><p>Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. </p></div><div><p>I have covered various aspects of the deal in my earlier notes, links to which are below:</p></div><div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-pre-ipo-growing-fast-but-slowing-down" target="_blank" rel="noopener">Yatsen Pre-IPO - Growing Fast but Slowing Down</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-ipo-pricey-but-it-comes-with-strong-investor-backing" target="_blank" rel="noopener">Yatsen IPO - Pricey but It Comes with Strong Investor Backing</a></li></ul><p>In this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.</p>

Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. I have covered various aspects of the deal in my earlier notes, links to which are below:Yatsen Pre-IPO - Growing Fast but Slowing DownYatsen IPO - Pricey but It Comes with Strong Investor BackingIn this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.

Yatsen IPO Trading - A Little More Pricey Now

JD Health International  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/jd-health-international" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (JDH HK)</a> , the largest online healthcare platform and retail pharmacy in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange.</p><p>In our previous two insights on the JD Health, we examined the company’s business model, financials and also compared the company’s financials against its rivals Ping An Healthcare Technology and Alibaba Health Information Technology. Find below an extract from our previous insight on the company’s IPO:</p><div class="content-highlight"><p>Having analysed the company’s business model and its financials, we remain positive on the company’s future growth prospects. The online retail pharmaceutical and healthcare market is undergoing structural changes in China where the market is increasingly shifting towards digitisation. The Covid-19 outbreak has further accelerated this transition towards online channels, and we believe the company’s business is sustainable beyond Covid-19. JD Health launched its telehealth platform in December 2017, and we expect the telehealth business to drive part of the company’s future growth as people have become increasingly reluctant to visit hospitals and out-patient clinics with the outburst of the pandemic.</p></div><p>JD Health released its post-hearing information pack (PHIP) on Sunday (15<sup>th</sup> November) and this insight focuses on the company’s new data points from the PHIP.</p>

JD Health (JDH HK) , the largest online healthcare platform and retail pharmacy in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange.In our previous two insights on the JD Health, we examined the company’s business model, financials and also compared the company’s financials against its rivals Ping An Healthcare Technology and Alibaba Health Information Technology. Find below an extract from our previous insight on the company’s IPO:Having analysed the company’s business model and its financials, we remain positive on the company’s future growth prospects. The online retail pharmaceutical and healthcare market is undergoing structural changes in China where the market is increasingly shifting towards digitisation. The Covid-19 outbreak has further accelerated this transition towards online channels, and we believe the company’s business is sustainable beyond Covid-19. JD Health launched its telehealth platform in December 2017, and we expect the telehealth business to drive part of the company’s future growth as people have become increasingly reluctant to visit hospitals and out-patient clinics with the outburst of the pandemic.JD Health released its post-hearing information pack (PHIP) on Sunday (15th November) and this insight focuses on the company’s new data points from the PHIP.

JD Health IPO: PHIP Data Re-Affirms Our Positive View on the Company

<p><a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 256.0pt;"><p><strong>Yatsen Holding IPO Details</strong></p></td></tr>
<tr>
<td style="width: 165.65pt;"><p>No. of ADSs Issued</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">58,750,000</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Ordinary Shares per ADS</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">4</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Shares Outstanding Post IPO (m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">2,662</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Offer as a % of Outstanding Shares</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">8.83%</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Price per ADS (US$)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">8.50-10.50</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Net Proceeds from IPO (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">521.5</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Market Capitalisation (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">                  6,322.07</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Enterprise Value (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">                  5,514.20</p></td>
</tr>
</tbody></table><div class="content-caption"><em>Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)</em></div><p>The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.</p><p>In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:</p><div class="content-highlight"><p><em>Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitability</em></p></div><p>In this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.</p>

Yatsen Holding (YSG US) , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.
Yatsen Holding IPO Details

No. of ADSs Issued
58,750,000


Ordinary Shares per ADS
4


Shares Outstanding Post IPO (m)
2,662


Offer as a % of Outstanding Shares
8.83%


Price per ADS (US$)
8.50-10.50


Net Proceeds from IPO (US$m)
521.5


Market Capitalisation (US$m)
                  6,322.07


Enterprise Value (US$m)
                  5,514.20

Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitabilityIn this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.

Yatsen Holding IPO: Expensive Valuation Does Not Reflect the Fundamentals

China

Yatsen Holding Limited operates as a holding company. The Company, through its subsidiaries, retails cosmetics, skincare, and other beauty products. Yatsen Holding serves customers worldwide.

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Yatsen Holding Ltd (YSG US)

2021 High Conviction in Korea: Amorepacific Corp - Turnaround After 'Once in a Century' Pandemic

Amorepacific Corp is our 2021 high conviction idea in Korea. It is a turnaround play as the top company in the Korean cosmetics sector after a...

Douglas Kim

Blue Moon IPO: Home Clean Home

Blue Moon, a leading consumer household care company in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to...

Shifara Samsudeen, FCMA, CGMA

Yatsen IPO Trading - A Little More Pricey Now

Yatsen Holding raised around US$617m in its US IPO, by pricing its IPO at the top-end of its range. The company is backed by Hillhouse, Tencent and...

Sumeet Singh

JD Health IPO: PHIP Data Re-Affirms Our Positive View on the Company

JD Health released its post-hearing information pack (PHIP) on Sunday (15th November) and this insight focuses on the company’s new data points...

Shifara Samsudeen, FCMA, CGMA

Yatsen Holding IPO: Expensive Valuation Does Not Reflect the Fundamentals

Yatsen Holdings, the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO and will raise net proceeds of...

Shifara Samsudeen, FCMA, CGMA

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