In this briefing:
- Telekom Malaysia Placement – Khazanah Back on the Market to Sell
- Softbank Corp Placement – Smaller Than Expected, but Overhang Weighs
- Yeahka IPO: Attractive Business at an Expensive Price Tag
- China ADRs Secondary Listing – Holding Foreign Companies Accountable Act – I’m Coming Home
- ERW : 2Q20 Will Be the Bottom Quarter
Khazanah is looking to sell 123m shares in Telekom Malaysia (T MK) for about US$125m. Post sell down, Khazanah will still hold about 22.9% stake in the company.
We covered Khazanah’s 2016 sell down in:
In this note, we will look at its Q1 results, performances of previous placements, and run the deal through our framework.
Softbank Group (9984 JP) (SBG) is looking to raise almost US$3bn by selling some of its shares (5%) in Softbank Corp (9434 JP) (SBC). Post sell down, SBG will still hold about about 2.9bn shares (about 61.5% stake in SBC).
We have previously looked at the potential selldown (post announcement selling assets to fund buyback) and its 2018 IPO in:
- Softbank Group-Driven Placement – Softbank Corp – Sell Down Will Be Supported by Yield
- Valuation from a retail investor POV – Softbank IPO Review – Attractive from a Retail Perspective, Could Provide Short-Term Upside
- Valuation from an institutional investor POV – Softbank Corp IPO Review – Yield Ensured Demand May Not Guarantee Performance
- Updates from prospectus – Softbank Corp IPO Review – Segment Breakdown, Capex, and Risks
- Operating metric comparison – Softbank Telecom Pre-IPO – Higher Yield to Compensate for Poorer Metrics
- Impact of Rakuten entry and FCF and dividend sustainability analysis – Softbank Telecom Pre-IPO – All About the Yield
- Company background and overview – Softbank Telecom Pre-IPO Review – Vision Is Needed to Arrive at US$90bn Valuation
In this insight, we will look at the deal dynamics, recent performance of the company, and run the deal through our deal framework.
- Yeahka is a leading payment-based technology platform in China who provides payment and business services to merchants and customers and is looking to raise US$161-212m through its HK IPO.
- The company is the second largest non-bank independent QR code payment service provider in China, with approximately 14.0% market share in terms of transaction count in 2019.
- In our previous insight on the company (read our previous insight: Yeahka IPO: A Secure Payment ), we discussed the company’s business segments, financials and outlook for the company. In this follow-up insight, we will be discussing the company’s valuation and how attractive it is compared to the peers.
Ever since Alibaba successfully completed its secondary listing in Hong Kong in Nov 2019, markets have been abuzz with news of other companies that are planning to follow in Baba’s footsteps. Since then JD.com Inc (ADR) (JD US) and NetEase Inc (NTES US) have both filed for a secondary listing in Hong Kong.
In our previous insights:
- China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020, we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing.
- In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List For the sake of brevity published last week, we looked at the recent developments and provided an revised short-list
In this insight, I’ll talk about the bill (Holding Foreign Companies Accountable Act) that was passed in the Senate overnight and its implications on China ADRs and secondary listings.
We downgrade from BUY to HOLD rating and cut our target price by 39% to Bt2.63 derived from 26.7xPE’21E, which is equal to -1SD of its three-year trading average. We maintain our positive view toward its outlook beyond 2020 given its growth plan and location advantage as its hotels have full coverage with almost every part in Thailand.
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