ECM Daily Briefs | Smartkarma

In today’s briefing:

China Resources Beverage (Holdings) Pre-IPO Tearsheet
Afcons Infrastructure Limited Pre-IPO – The Negatives – But Overdue Trade Receivables Increasing

China Resources Beverage (Holdings) Pre-IPO Tearsheet

China Resources Beverage (Holdings) Company Limited is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are BofA, BOCI, Citic, and UBS.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
According CIC, it was the second largest company in the packaged drinking water market in China and the largest company in the purified drinking water market in 2023.

Afcons Infrastructure Limited Pre-IPO – The Negatives – But Overdue Trade Receivables Increasing

Afcons Infrastructure Limited (6595396Z IN) is looking to raise US$840m in its upcoming India IPO.
Afcons Infrastructure Limited (Afcons) is the flagship infrastructure engineering and construction company of the Shapoorji Pallonji group.
In this note, we talk about the not-so-positive aspects of the deal.

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Apr 25

Daily Brief ECM: HD Hyundai Marine Solution: IPO Book Building Results Analysis and more

In today’s briefing:

HD Hyundai Marine Solution: IPO Book Building Results Analysis
A Review of Post IPO Price Performance of Top 13 IPOs in Korea Past 8 Months
99 Speedmart Holding Pre-IPO – Consistent Network Expansion, Although Margins Remain Well Below Peak
OceanaGold Philippines IPO – Updated Thoughts on Valuation – Too Expensive Even at This Price
Pre-IPO Sunho Biologics (PHIP Updates) – Some Points Worth the Attention
Afcons Infrastructure Limited Pre-IPO – The Positives – Profitability More than Doubled

HD Hyundai Marine Solution: IPO Book Building Results Analysis

By Douglas Kim

HD Hyundai Marine Solution’s IPO price has been determined at 83,400 won per share, which is at the high end of the IPO price range.
A total of 2,021 institutional investors participated in this IPO book building. The demand ratio was 201 to 1. HD Hyundai Marine Solution will start trading on 8 May 2024.
Our base case valuation of HD Hyundai Marine Solution is target price of 98,254 won per share, which represents an upside of 18% from the IPO price.

A Review of Post IPO Price Performance of Top 13 IPOs in Korea Past 8 Months

By Douglas Kim

In this insight, we review the share price performances of the top 13 IPOs (in terms of market cap) in Korea in the past 8 months.
We review the the share price performances over different time periods (1 day, 1 week, and 1 month). We also analyze the demand ratios and lock-up periods of the IPOs.
On average, 12.7% of the IPO shares are under lockup periods for the 13 companies listed below. HD Hyundai Marine Solution IPO has 45.8% of shares under lock-up.

99 Speedmart Holding Pre-IPO – Consistent Network Expansion, Although Margins Remain Well Below Peak

99 Speed Mart Retail Holdings (99SPD MK) is looking to raise US$300m in its upcoming Malaysia IPO.
99 Speed Mart Retail Holdings (99 Speedmart) operates the “99 Speedmart” chain of mini-market outlets, retailing daily necessities across Malaysia.
In this note, we look at the firm’s past performance.

OceanaGold Philippines IPO – Updated Thoughts on Valuation – Too Expensive Even at This Price

OceanaGold Philippines (OGP PM) is looking to raise up to US$106m in its Philippines IPO.
OceanaGold Philippines (OGPI) is a producer of gold and copper in the Philippines, and a subsidiary of OceanaGold Corporation, a Toronto Stock Exchange (TSX) listed gold mining and exploration company.
In our previous note, we talked about the company’s historical performance and shared our quick thoughts on valuation. In this note, we share our updated thoughts on valuation.

Pre-IPO Sunho Biologics (PHIP Updates) – Some Points Worth the Attention

Sunho’s pipeline has high risk and there is a long way to go to demonstrate their final clinical value. It’s highly uncertain if Sunho would bring expected return to investors.
The entities involved in the process of reorganization were all related parties. Investment from Efung Anhe/Efung Ansheng sparked concern from CSRC. Sunho is required to explain whether there’s any benefit transfer.
Due to the lack of strong fundamentals, there is no reason for high valuation. It’s not surprising if Sunho’s valuation finally falls below HKD1.53 billion (or even below HK$1 billion).

Afcons Infrastructure Limited Pre-IPO – The Positives – Profitability More than Doubled

Afcons Infrastructure Limited (6595396Z IN) is looking to raise US$840m in its upcoming India IPO.
Afcons Infrastructure Limited (Afcons) is the flagship infrastructure engineering and construction company of the Shapoorji Pallonji group.
In this note, we talk about the positive aspects of the deal.

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Apr 24

Daily Brief ECM: Horizon Robotics Pre-IPO – The Positives – Rapid Revenue Growth and more

In today’s briefing:

Horizon Robotics Pre-IPO – The Positives – Rapid Revenue Growth
Horizon Robotics Pre-IPO – The Negatives – Large Part of the Growth Stems from Its JV
ZEEKR IPO Valuation Update: Likely To Price IPO Below Last Round Valuation of ~$13B

Horizon Robotics Pre-IPO – The Positives – Rapid Revenue Growth

Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities.
Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
In this note, we talk about the positive aspects of the deal.

Horizon Robotics Pre-IPO – The Negatives – Large Part of the Growth Stems from Its JV

Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities.
Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
In this note, we talk about the not-so-positive aspects of the deal.

ZEEKR IPO Valuation Update: Likely To Price IPO Below Last Round Valuation of ~$13B

By Andrei Zakharov

ZEEKR, a Chinese EV maker, plans to raise up to $500M in US IPO. The company put its offering on hold in 2023 due to a mismatch in valuation expectations.
A fast-growing company will offer ADSs, and the size of the company’s potential IPO is down from their initial target of up to $1B, a negative sign for ZEEKR shares.
EV stocks have significantly underperformed the broader market this year amid price wars, slow growth ahead and intense competition, especially in China.

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Apr 23

Daily Brief ECM: Krafton Placement – Stock Has Been Doing Well and more

In today’s briefing:

Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong
Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected
Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong

SK Square is looking to raise around US$198m via selling 2.1% of Krafton (259960 KS).
The stock has been doing well over the past few months and its earnings and price momentum remain strong.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected

Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.

Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

Remegen’s product revenue fails to cover R&D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.

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Apr 22

Daily Brief ECM: ECM Weekly (22nd Apr 2024) – Kokusai and more

In today’s briefing:

ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar
Xunfei Healthcare Technology Pre-IPO – Appears to Be in the Early Stages of Commercialization

ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Sichuan Baicha Baidao Industrial (2555 HK)‘s deal launch made it the first large HK IPO for this year.
On the placement front, Vodafone Idea (IDEA IN) deal was live. Also there are lockup expiries in Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) coming up.

Xunfei Healthcare Technology Pre-IPO – Appears to Be in the Early Stages of Commercialization

Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO.
Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
In this note, we look at the firm’s past performance.

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Apr 20

Daily Brief ECM: Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public? and more

In today’s briefing:

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

By Sanghyun Park

The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

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Apr 19

Daily Brief ECM: Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment and more

In today’s briefing:

Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment
Aadhar Housing Finance Pre-IPO – Refiling Updates – Growth Picking Up
Zhubajie Pre-IPO – Profitability Looks like a Long Shot

Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment

By Andrei Zakharov

Mobvoi, an emerging AIGC market player in China, set terms for an IPO and plans to raise ~HK$330M (~$42M) in Hong Kong. CICC and CMB International are leading the offering.
The initial public offering is expected to be between HK$3.70 and HK$4.10. At the midpoint of the range, Mobvoi has a market value of ~HK$5.8B based on 1491.5M outstanding shares.
In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenarios for each business segment under my base case.

Aadhar Housing Finance Pre-IPO – Refiling Updates – Growth Picking Up

Aadhar Housing Finance (AHF) is now looking to raise around US$600m in its India IPO, via selling a mix of primary and secondary shares.
AHF is focused on the low income housing segments (ticket size less than INR1.5m) in India. It offers a range of mortgage-related loan products.
In this note, we look at the updates from the company’s recent filings.

Zhubajie Pre-IPO – Profitability Looks like a Long Shot

Zhubajie Co Ltd (ZHUHKZ HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
Zhubajie (ZBJ) is a customized enterprise services e-commerce platform in China. The firm focuses on matching and facilitating the transactions between enterprise clients and service providers through its ZBJ platform.
In this note, we talk about the firm’s historical performance.

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Apr 18

Daily Brief ECM: Jeil M&S IPO Bookbuilding Results Analysis and more

In today’s briefing:

Jeil M&S IPO Bookbuilding Results Analysis
Cloudchain Pre-IPO – The Negatives – But Still Not Convinced
Mao Geping Cosmetics Pre-IPO Tearsheet
Pre-IPO Belle Fashion Group – Performance Has Picked Up, but Not yet Reversed

Jeil M&S IPO Bookbuilding Results Analysis

By Douglas Kim

Jeil M&S reported excellent IPO bookbuilding results. Jeil M&S’s IPO price has been determined at 22,000 won per share (22% higher than the high end of the IPO price range).
A total of 2,164 institutional investors participated in this IPO book building. The demand ratio was 646 to 1. Samhyun will start trading on 30 April 2024.
Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 11% higher than the IPO price.

Cloudchain Pre-IPO – The Negatives – But Still Not Convinced

Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO.
Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
In this note, we will talk about the not-so-positive aspects of the deal.

Mao Geping Cosmetics Pre-IPO Tearsheet

Mao Geping Cosmetics (1478187D CH) is looking to raise around US$300m in its upcoming Hong Kong IPO. The bookrunner on the deal is CICC.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
As per F&S, MGC was the only domestic market player among the top ten premium beauty groups in China, ranking eighth by 2022 retail sales.

Pre-IPO Belle Fashion Group – Performance Has Picked Up, but Not yet Reversed

The core of Belle’s transformation is to inject “digitalization” into existing massive store assets, with strategy of “omnichannel+multi brands”. Belle also devotes significant resources to online channels and online-to-offline integration.
Benefiting from the DTC retail model, Belle increases the probability of success when launching products. Licensing/acquisition are important ways to empower new brands and promote growth. Belle’s performance has rebounded.
However, the path of transformation hasn’t yet been completed. Belle still mainly relies on heavy asset mode and is exposed to inventory risks. There ‘s still room for further improvement.

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Apr 17

Daily Brief ECM: Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry and more

In today’s briefing:

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
Belle Fashion IPO: The Investment Case
Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model
Cloudchain Pre-IPO – The Positives – Turned Profitable Recently

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry

By Travis Lundy

Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.

Belle Fashion IPO: The Investment Case

By Arun George

Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO.
Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage.

Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model

The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO.

Cloudchain Pre-IPO – The Positives – Turned Profitable Recently

Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO.
Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
In this note, we will talk about the positive aspects of the deal.

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Apr 16

Daily Brief ECM: Baicha Baidao (2555 HK) IPO: Valuation Insights and more

In today’s briefing:

Baicha Baidao (2555 HK) IPO: Valuation Insights
Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains
Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers
Johor Plantations Pre-IPO – Assets in Prime Yield Stage But Industry Isn’t Really Expected to Grow

Baicha Baidao (2555 HK) IPO: Valuation Insights

By Arun George

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case.
There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.

Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains

By Andrei Zakharov

Horizon Robotics, a consumer-centric and fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, filed for an IPO and plans to raise up to $500M in Hong Kong.
Horizon Robotics was founded in 2015 by Dr. Yu Kai, Dr. Chang Huang, Ms. Feiwen Tao, and a group of scientists and tech entrepreneurs.
I have a positive view of an upcoming IPO and believe Horizon Robotics is in a great position to capitalize on rapidly growing smart vehicles market in China and worldwide.

Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers

Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
We have looked at the company’s performance in our past note. In this note, we talk about valuations

Johor Plantations Pre-IPO – Assets in Prime Yield Stage But Industry Isn’t Really Expected to Grow