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

China Youran Dairy Group Ltd / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/china-youran-dairy-group-ltd" target="_blank" data-smartkarma-citation="entities:31075:1" rel="noopener">China Youran Dairy Group Ltd (1836774D CH)</a>  is looking to raise up to US$500m in its upcoming Hong Kong IPO. </p><div id="ember1586"><div id="ember1593">
<div><p>CYD is an integrated provider of products and services in the upstream dairy industry. The company is a leader in the various upstream industries that it operates in even though they are mostly fragmented.</p></div>
<div><p>In this note, we will look at the industry landscape and compare CYD to Hong Kong listed peers.</p></div>
<div><p>We have previously covered the IPO in:</p></div>
<div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/china-youran-dairy-pre-ipo-a-leader-pulling-ahead-in-a-fragmented-market" target="_blank" rel="noopener">China Youran Dairy(悠然牧业) Pre-IPO - A Leader Pulling Ahead in a Fragmented Market<br></a></li>
<li>
<a href="https://www.smartkarma.com/insights/china-youran-dairy-pre-ipo-phip-updates-much-better-disclosure" target="_blank" data-smartkarma-citation="insights:51794" rel="noopener">China Youran Dairy(悠然牧业) Pre-IPO - PHIP Updates - Much Better Disclosure</a> </li>
</ul></div>
</div></div>

China Youran Dairy Group Ltd (1836774D CH)  is looking to raise up to US$500m in its upcoming Hong Kong IPO. 
CYD is an integrated provider of products and services in the upstream dairy industry. The company is a leader in the various upstream industries that it operates in even though they are mostly fragmented.
In this note, we will look at the industry landscape and compare CYD to Hong Kong listed peers.
We have previously covered the IPO in:

China Youran Dairy(悠然牧业) Pre-IPO - A Leader Pulling Ahead in a Fragmented Market 

China Youran Dairy(悠然牧业) Pre-IPO - PHIP Updates - Much Better Disclosure 



China Youran Dairy(悠然牧业) Pre-IPO - Peer Comparison - Youran Is the Leader

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.

<div><p><a href="https://www.smartkarma.com/entities/china-youran-dairy-group-ltd" target="_blank" data-smartkarma-citation="entities:31075:1" rel="noopener">China Youran Dairy Group Ltd (1836774D CH)</a> is the world’s largest raw milk provider as measured by herd size of dairy cows as of 30 June 2020 and raw milk production volume in 1H20, according to Frost &amp; Sullivan. Youran was once a wholly-owned subsidiary of <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a> until PAG Capital’s investment in 2015. Youran is pre-marketing an HKEx IPO to raise $800 million, according to press reports.   </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-youran-dairy-group-ipo-initiation-ecownomics" target="_blank" data-smartkarma-citation="insights:51709" rel="noopener">China Youran Dairy Group IPO Initiation: Ecownomics</a>, we stated that notwithstanding its high revenue dependence on Yili, Youran is capitalising on the favourable demand-supply imbalance for raw milk in China by delivering strong organic growth (on a pro-forma basis), rising margins and accretive acquisitions. We concluded that Youran is worth a look. In this note, we present our forecasts and take the first look at Youran's potential valuation range. </p></div></div></div>

China Youran Dairy Group Ltd (1836774D CH) is the world’s largest raw milk provider as measured by herd size of dairy cows as of 30 June 2020 and raw milk production volume in 1H20, according to Frost &amp; Sullivan. Youran was once a wholly-owned subsidiary of Inner Mongolia Yili Industrial Group (A) (600887 CH) until PAG Capital’s investment in 2015. Youran is pre-marketing an HKEx IPO to raise $800 million, according to press reports.   In China Youran Dairy Group IPO Initiation: Ecownomics, we stated that notwithstanding its high revenue dependence on Yili, Youran is capitalising on the favourable demand-supply imbalance for raw milk in China by delivering strong organic growth (on a pro-forma basis), rising margins and accretive acquisitions. We concluded that Youran is worth a look. In this note, we present our forecasts and take the first look at Youran's potential valuation range. 

China Youran Dairy Group IPO: Valuation First-Look

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

China Mengniu Dairy Co / Equity Bottom-Up

<div class="content-highlight">
<p>One of the biggest trends that COVID-19 has resulted has been the impact on the global population as millions of people delay having babies due to so many uncertainties associated with virus. China has been no exception. As such, the <a href="https://www.cnbc.com/2021/04/15/chinas-central-bank-pboc-paper-suggests-dropping-childbirth-limits.html" target="_blank" rel="noopener">People's Bank of China</a> released a working paper on 14 April that suggested that China faces severe population problems and that <strong>China allow three or more children per household. </strong></p>
<p>All in all, despite this urgent message from the People's Bank of China regarding the need to scrap the restriction in childbirth policy, this is not yet official. Nonetheless, given the fact that this document is coming from the People's Bank of China combined with the need to combat the big negative impact of COVID-19 on people having children, there could be an increasing probability that the Chinese government could indeed announce a change its policy to allow three or more children in 2021.</p>
</div><p>Some of the key infant formula related stocks that could benefit from the Chinese government allowing three or more children include <a href="https://www.smartkarma.com/entities/a2-milk-co-ltd-95d4fbed-afa1-41e9-bafb-a5f1ef97622e" target="_blank" data-smartkarma-citation="entities:22775:1" rel="noopener">A2 Milk Co Ltd (A2M AU)</a>, Beingmate Baby &amp; Child Food (002570 CH), and <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>.</p>


One of the biggest trends that COVID-19 has resulted has been the impact on the global population as millions of people delay having babies due to so many uncertainties associated with virus. China has been no exception. As such, the People's Bank of China released a working paper on 14 April that suggested that China faces severe population problems and that China allow three or more children per household. 
All in all, despite this urgent message from the People's Bank of China regarding the need to scrap the restriction in childbirth policy, this is not yet official. Nonetheless, given the fact that this document is coming from the People's Bank of China combined with the need to combat the big negative impact of COVID-19 on people having children, there could be an increasing probability that the Chinese government could indeed announce a change its policy to allow three or more children in 2021.
Some of the key infant formula related stocks that could benefit from the Chinese government allowing three or more children include A2 Milk Co Ltd (A2M AU), Beingmate Baby &amp; Child Food (002570 CH), and China Mengniu Dairy Co (2319 HK).

China May Scrap The Restriction of Childbirths - Impact on Baby Formula Related Stocks in China

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>On the 27 September, Jingang Trade, a company wholly-owned by <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>, and the Zhang Group <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0927/2020092700065.pdf" target="_blank" rel="noopener">entered</a> into a Share Subscription Agreement (SSA) with the Offeror,  a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group would transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror would hold 43.75% and be obligated to make a Mandatory General Offer (MGO) for all shares not owned. The MGO would be HK$1.132/share (an 11% premium to last close). The Offer price will not be increased.</p>
<p>The MGO is subject to a 50% (of all shares out) acceptance condition.</p>
<p>The SSA was completed on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0111/2021011100722.pdf" target="_blank" rel="noopener">11 January</a> and the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700009.pdf" target="_blank" rel="noopener">Composite Doc</a> was despatched last night. The first close is the 8 February.</p>
<p>The Offeror has received 14 irrevocable undertakings (IU) from shareholders to accept the Offer in respect of 1,377,008,000 shares or 52.83% of shares out. Therefore, once the IU shareholders tender, the acceptance condition will have been met. Accordingly, the Offer is expected to become unconditional on or prior to the seventh day after the date of this Composite Doc.</p>
<p>The percentage of the Offer Shares made up by all of the IU shares is ~93.92%, therefore compulsory acquisition under section 88 of the Cayman Islands Companies Act and Rule 2.11 of the Takeovers Code will have been met.</p>
<p>As always, more below the fold.</p>
</div>
<div></div>
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<p></p>
</div>


On the 27 September, Jingang Trade, a company wholly-owned by Inner Mongolia Yili Industrial Group (A) (600887 CH), and the Zhang Group entered into a Share Subscription Agreement (SSA) with the Offeror,  a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group would transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror would hold 43.75% and be obligated to make a Mandatory General Offer (MGO) for all shares not owned. The MGO would be HK$1.132/share (an 11% premium to last close). The Offer price will not be increased.
The MGO is subject to a 50% (of all shares out) acceptance condition.
The SSA was completed on the 11 January and the Composite Doc was despatched last night. The first close is the 8 February.
The Offeror has received 14 irrevocable undertakings (IU) from shareholders to accept the Offer in respect of 1,377,008,000 shares or 52.83% of shares out. Therefore, once the IU shareholders tender, the acceptance condition will have been met. Accordingly, the Offer is expected to become unconditional on or prior to the seventh day after the date of this Composite Doc.
The percentage of the Offer Shares made up by all of the IU shares is ~93.92%, therefore compulsory acquisition under section 88 of the Cayman Islands Companies Act and Rule 2.11 of the Takeovers Code will have been met.
As always, more below the fold.






Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded

<div>
<p>On <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101776.pdf" target="_blank" rel="noopener">31 July 2020</a>, dairy farmer <a href="https://www.smartkarma.com/entities/china-zhongdi-dairy-holdings" target="_blank" data-smartkarma-citation="entities:22662:1" rel="noopener">China Zhongdi Dairy (1492 HK)</a> entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>,  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200704.pdf" target="_blank" rel="noopener">completed</a> on 12 August.</p>
<p>Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. </p>
<h3>The New News</h3>
<p>Jingang Trade and the Zhang Group have now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0927/2020092700065.pdf" target="_blank" rel="noopener">entered</a> into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.</p>
<p>The SSA is primarily subject to independent shareholder approval and China's SAMR.</p>
<p>The MGO is subject to a 50% (of all shares out) acceptance condition.</p>
<p>Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.</p>
</div>
<div>
<p>This transaction is highly reminiscent of the recent <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0906/2020090600009.pdf" target="_blank" rel="noopener">conditional voluntary general offer</a> for <a href="https://www.smartkarma.com/entities/yuanshengtai-dairy-farm-ltd" target="_blank" data-smartkarma-citation="entities:17091:1" rel="noopener">Yuanshengtai Dairy Farm (1431 HK)</a> from <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a> discussed in <em><a href="https://skr.ma/uF9jE" target="_blank" rel="noopener">YST Dairy (1431 HK): VGO From China Feihe</a></em>. </p>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


On 31 July 2020, dairy farmer China Zhongdi Dairy (1492 HK) entered into a subscription agreement with Hongkong Jingang Trade Holding Co (Jingang Trade), a company wholly-owned by Inner Mongolia Yili Industrial Group (A) (600887 CH),  pursuant to which Jingang Trade was allotted 432,641,522 shares at HK$0.47/share, representing ~16.6% of the enlarged issued share capital in Zhongdi.  The subscription was completed on 12 August.
Immediately after completion, the shareholding percentage of Zhang Jianshe and Zhang Kaizhan (the Zhang Group) in Zhongdi decreased to approximately 29.51% of the then issued share capital, and the Zhang Group ceased to be the controlling shareholders of Zhongdi. 
The New News
Jingang Trade and the Zhang Group have now entered into a Share Subscription Agreement (SSA) with the Offeror, which is a vehicle jointly held by Yili and the Zhang Group, such that Jingang Trade and the Zhang Group will transfer 432.641mn shares and 707.878mn shares respectively to the Offeror at HK$1.132/share. Upon completion of the SSA, the Offeror will hold 43.75%, and be obligated to make a Mandatory General Offer for all shares not owned. The MGO will be HK$1.132/share (a 11% premium to last close). The price will not be increased.
The SSA is primarily subject to independent shareholder approval and China's SAMR.
The MGO is subject to a 50% (of all shares out) acceptance condition.
Despite the meagre headline Offer premium to last close, Zhongdi shares are up 129% YTD. Apart from timing associated with regulatory approvals, this looks a done deal.


This transaction is highly reminiscent of the recent conditional voluntary general offer for Yuanshengtai Dairy Farm (1431 HK) from China Feihe (6186 HK) discussed in YST Dairy (1431 HK): VGO From China Feihe. 


As always, more below the fold.


Zhongdi Dairy (1492 HK): Possible MGO from Yili

China

YuanShengTai Dairy Farm Limited operates dairy farms. The Company produces raw milk through the breeding, feed management and living conditions of its dairy cow herds.

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YuanShengTai Dairy Farm (1431 HK)

China Youran Dairy(悠然牧业) Pre-IPO - Peer Comparison - Youran Is the Leader

CYD is an integrated provider of products and services in the upstream dairy industry. In this note, we will look at the industry landscape and...

Zhen Zhou, Toh

China Youran Dairy Group IPO: Valuation First-Look

Youran is pre-marketing an HKEx IPO to raise $800 million, according to press reports. In this note, we present our forecasts and take the first...

Arun George

Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded

Done deal. Expect shares to be suspended next month. Buy a spread or two below terms if available - currently trading through terms at HK$1.15...

David Blennerhassett

Zhongdi Dairy (1492 HK): Possible MGO from Yili

After entering into a trading halt on the 4 September "pursuant to The Codes on Takeovers and Mergers and Share Buy-backs", Yuanshengtai Dairy...

David Blennerhassett

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52-week Range

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China Youran Dairy(悠然牧业) Pre-IPO - Peer Comparison - Youran Is the Leader

CYD is an integrated provider of products and services in the upstream dairy industry. In this note, we will look at the industry landscape and...

Zhen Zhou, Toh

China Youran Dairy Group IPO: Valuation First-Look

Youran is pre-marketing an HKEx IPO to raise $800 million, according to press reports. In this note, we present our forecasts and take the first...

Arun George

China May Scrap The Restriction of Childbirths - Impact on Baby Formula Related Stocks in China

The People's Bank of China released a paper on 14 April that suggested that China allow three or more children per household. In this insight, we...

Douglas Kim

Zhongdi Dairy (1492 HK): Doc Out. Compulsory Acquisition Afforded

Done deal. Expect shares to be suspended next month. Buy a spread or two below terms if available - currently trading through terms at HK$1.15...

David Blennerhassett

Zhongdi Dairy (1492 HK): Possible MGO from Yili

After entering into a trading halt on the 4 September "pursuant to The Codes on Takeovers and Mergers and Share Buy-backs", Yuanshengtai Dairy...

David Blennerhassett