Category

ECM

Jan 18
0

Equity Capital Markets: Qingdao Ainnovation Technology Group Co Ltd, Hyundai Engineering Co Ltd, Wanda Commercial Management Group and more

By | Daily Briefs, ECM

In today’s briefing:

  • Qingdao AInnovation Technology Group IPO – Fairly Valued with Mediocre Cornerstones
  • Hyundai Engineering IPO: Valuation Insights
  • AInnovation Technology IPO: Valuation Insights
  • Wanda Commercial Management Group Pre-IPO – The Positives – Aiming for One of HK’s Largest 2022 IPOs

Qingdao AInnovation Technology Group IPO – Fairly Valued with Mediocre Cornerstones

By Clarence Chu

  • Qingdao Ainnovation Technology Group Co Ltd (1853807D CH) is looking to raise up to US$157m in its Hong Kong IPO.
  • Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions. 
  • While we don’t have a fundamental issue with the listing, at asking valuations, the firm appears to be fairly valued with limited upside on its FY23 numbers. 

Hyundai Engineering IPO: Valuation Insights

By Arun George

  • Hyundai Engineering Co Ltd (HEC KS) has launched its IPO to raise US$0.8-1.0 billion at the price range of KRW57,900-75,700 per share.
  • In Hyundai Engineering IPO Initiation: Building on Good Foundations, we stated that HEC has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. 
  • In this note, we look at the syndicate’s valuation methodology and present our valuation methodology. Our valuation analysis suggests that the IPO price range is unattractive. 

AInnovation Technology IPO: Valuation Insights

By Arun George

  • AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It has launched an HKEx IPO to raise up to US$157 million. 
  • In AInnovation Technology IPO Initiation: Code Amber, we stated that the negatives outweigh the positives and we would give the IPO a pass.
  • Our valuation analysis suggests that the IPO price is fair. Due to our concerns about the fundamentals, we remain on the sidelines. Pricing is 20 January, listing on 27 January.

Wanda Commercial Management Group Pre-IPO – The Positives – Aiming for One of HK’s Largest 2022 IPOs

By Sumeet Singh

  • Wanda Commercial Management Group (WCMG) is looking to raise up to US$4bn in its upcoming Hong Kong IPO.
  • WCMG is a commercial operation service provider. As of Oct 2021, the firm managed 398 malls with total gross floor area (GFA) under management of 56.5m sqm.
  • In this note, we will talk about the positive aspects of the deal.

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Jan 17
0

Equity Capital Markets: Qingdao Ainnovation Technology Group Co Ltd and more

By | Daily Briefs, ECM

In today’s briefing:

  • AInnovation Technology IPO Initiation: Code Amber

AInnovation Technology IPO Initiation: Code Amber

By Arun George

  • AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It is set to launch an HKEx IPO to raise up to US$157 million.  
  • The fundamentals are mixed as diverging growth profiles of key segments, low market share and cash burn are accompanied by a narrowing loss margin. 
  • Overall, we believe the negatives outweigh the positives and we would give the IPO a pass. 

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Jan 16
0

Equity Capital Markets: LG Energy Solution and more

By | Daily Briefs, ECM

In today’s briefing:

  • ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • LG Energy Solution (373220 KS) saw very strong demand for its mega US$10bn+ IPO.
  • While other IPO markets were in torpor, a number of placements continued to flow in.

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Jan 15
0

Equity Capital Markets: LG Energy Solution and more

By | Daily Briefs, ECM

In today’s briefing:

  • LG Energy Bookbuilding: Detailed Results

LG Energy Bookbuilding: Detailed Results

By Sanghyun Park

  • This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
  • Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
  • As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.

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Jan 12
0

Equity Capital Markets: Hyundai Engineering Co Ltd, CTOS Digital Bhd, Huitongda and more

By | Daily Briefs, ECM

In today’s briefing:

  • Hyundai Engineering IPO Initiation: Building on Good Foundations
  • CTOS Digital Lock-Up Expiry:High Chance of Slow Motion Creador Exit but There Should Be Ample Buyers
  • Huitongda (汇通达) Pre-IPO – PHIP Updates and Competitive Landscape

Hyundai Engineering IPO Initiation: Building on Good Foundations

By Arun George

  • Hyundai Engineering Co Ltd (HEC KS)/HEC is a leading global EPC (Engineering, Procurement and Construction) contractor. It is seeking to raise up to $1 billion.  
  • HEC is offering 16.0 million shares with a primary/secondary split of 25/75 at an indicative price range of KRW57,900-66,800 per share.
  • HEG has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. 

CTOS Digital Lock-Up Expiry:High Chance of Slow Motion Creador Exit but There Should Be Ample Buyers

By Sumeet Singh

  • CTOS Digital (CTOS) raised around US$291m in its Malaysian IPO in Jul 2021. It is majority owned by Creador, a PE firm.
  • The stock has done well since listing and is now trading 72% above its IPO price. 
  • In this note, we talk about the updates since listing and the upcoming lock-up expiry.

Huitongda (汇通达) Pre-IPO – PHIP Updates and Competitive Landscape

By Clarence Chu

  • Huitongda (1566215D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
  • While the numbers from the growth of member stores look promising, it did not translate to stronger revenue from member stores and HTD did not give a clear explanation.
  • In this note, we look at PHIP updates and competitive landscape.

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Jan 10
0

Equity Capital Markets: Nippon Paint Holdings and more

By | Daily Briefs, ECM

In today’s briefing:

  • Nippon Paint Holdings Placement – Nothing Particularly Exciting, Needs to Correct

Nippon Paint Holdings Placement – Nothing Particularly Exciting, Needs to Correct

By Sumeet Singh

  • A group of shareholders of Nippon Paint Holdings, plan to raise around US$1.4bn via selling nearly 6% of the stock.
  • The shares haven’t done much this year and despite having corrected by around 40% since the start of 2021, they are trading just about inline with analyst average target price.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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Jan 09
0

Equity Capital Markets: LG Energy Solution and more

By | Daily Briefs, ECM

In today’s briefing:

  • Local Battery ETFs Fast Entry Rule Changes: Official Regulatory Filings
  • ECM Weekly (9th Jan 2022) – LG Energy, Hyundai Engineering, JL Mag, 2022 Pipeline, 2021 Performance

Local Battery ETFs Fast Entry Rule Changes: Official Regulatory Filings

By Sanghyun Park

  • The two largest battery-themed ETFs in Korea, TIGER (305540) and KODEX (305720), have confirmed the Fast Entry rules for IPO stocks AND spin-off companies due to equity carve-out (ECO).
  • The official application date for these rule changes is January 26th for KODEX and January 28th for TIGER. LG Energy will be subject to the new Fast Entry rules.
  • For LG Energy, 0.32% of SO will flow through KODEX, and TIGER will be 0.2%. LG Chem will experience a combined passive outflow of 1.8x ADTV for one day.

ECM Weekly (9th Jan 2022) – LG Energy, Hyundai Engineering, JL Mag, 2022 Pipeline, 2021 Performance

By Sumeet Singh

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Jan 04
0

Equity Capital Markets: LG Energy Solution, SKonec Entertainment, JL Mag Rare-Earth Co Ltd and more

By | Daily Briefs, ECM

In today’s briefing:

  • LG Energy Passive Flow from Overseas ETFs: Global X Lithium & Battery (LIT)
  • LG Energy IPO – Valuation
  • Skonec Entertainment IPO Preview
  • JL Mag Rare-Earth H-Share Listing: Valuation Insights

LG Energy Passive Flow from Overseas ETFs: Global X Lithium & Battery (LIT)

By Sanghyun Park

  • Given the AUM of the Global X Lithium Battery ETF (ticker: LIT), the potential passive impact on LG Energy and LG Chem should be worthy of our careful attention.
  • If LIT revises its methodology, the timing to include LG Energy is expected to be the April rebalancing.
  • LG Energy will have a 2-3% index weight, welcoming a passive inflow of ₩130-200B (0.2-0.3% of SO). In contrast, ₩232.1B from LIT will likely escape LG Chem, 0.5% of SO.

LG Energy IPO – Valuation

By Mio Kato

  • LG Energy is being benchmarked against CATL for its IPO valuation and we believe this is incorrect.
  • CATL’s position within China’s supply chain and LFP technology should drive a significant premium against other North Asian peers in our view. 
  • If LG Energy were to simply be benchmarked against Samsung SDI it starts to look expensive and while a premium may be reasonable we do not consider it a given.

Skonec Entertainment IPO Preview

By Douglas Kim

  • SKonec Entertainment (276040 KS), which specializes in VR based metaverse technologies, is getting ready to complete an IPO in the Korean stock market in the next several weeks.
  • Currently, Skonec Entertainment has a gray market value of 34,000 won, which is 183% higher than the high end of the IPO price range of 12,000 won. 
  • The company has been one of the first game companies to develop VR based gun shooting games in Korea.

JL Mag Rare-Earth H-Share Listing: Valuation Insights

By Arun George

  • JL Mag Rare-Earth Co Ltd (300748 CH) is a leading producer of high-performance rare earth permanent magnets. It has launched an H-Share listing to raise $570 million at the mid-point. 
  • In JL Mag Rare-Earth Secondary Listing: Magnetic Moments, we stated that it has attractive fundamentals and the secondary listing is worth a closer look. 
  • Our valuation analysis suggests that the H-Share price range is fair. Pricing is expected on 17 January with an H-Share listing on 14 January.

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Apr 12
0

Brief IPOs & Placements: Keppel Infrastructure Trust Placement – Scaled Down but Large Deal; Very Well Flagged Deal and more

By | ECM

In this briefing:

  1. Keppel Infrastructure Trust Placement – Scaled Down but Large Deal; Very Well Flagged Deal
  2. Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent
  3. CanSino Biologics (康希诺) IPO: Valuation Update (Part 3)
  4. Embassy Office Parks REIT IPO – FY19 Revised Down, Yield Propped up by Zero Coupon Bond

1. Keppel Infrastructure Trust Placement – Scaled Down but Large Deal; Very Well Flagged Deal

Previous%20deal

Keppel Infrastructure Trust (KIT SP) plans to raise US$450m via an equity placement and non-renounacable preferential offering. Its sponsor, Keppel Corp Ltd (KEP SP) will subscribe in the placement and the preferential offering to maintain its 18.2% stake.

KIT announced the acquisition of IXOM in Nov 2018 and has been talking about the need to issue equity ever since. Its earlier presentations seem to indicate a preference for raising a large sum via an equity issuance. Furthermore, despite the smaller raise the accretion to DPU is probably only marginal. 

2. Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent

Dividend

Dongzheng Automotive Finance (2718 HK) is raising up to US$428m in its upcoming IPO. We have covered the background of the company in Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth. 

In this insight, we will look into the company’s valuation, compare it to listed auto peers, and run the deal through our framework.

3. CanSino Biologics (康希诺) IPO: Valuation Update (Part 3)

Cansino%20pipeline%20feb%202019

CanSino is a China-based biotechnology company with a focus on vaccine development. In our previous insight (link to Part 1 and Part 2), we have discussed CanSino’s drug pipeline, the competitive landscape, and the valuation. 

As the company is starting pre-marketing, we will provide an updated valuation based on new information obtained from the approved application document. Our base case valuation for CanSino is USD 856 million on a pre-money basis. Majority of the rNPV based SOTP valuation still comes from its meningococcal conjugate vaccine (MCV2 and MCV4). Over the past few months, the company has completed Phase III for MCV4 and submitted NDA (new drug application) for MCV2 candidates.

4. Embassy Office Parks REIT IPO – FY19 Revised Down, Yield Propped up by Zero Coupon Bond

Lock up

Embassy Office Parks REIT (EOP IN) plans to raise around US$680m in its India IPO. Of this, it has already raised around US$125m from Capital Group, who came in as a strategic investor. EOP will primarily hold office assets in Bengaluru, Pune and Noida with a total portfolio size of around US$4.5bn. 

In my previous insights I’ve covered the company background, its projected growth and compared it to its main listed peer and other yield assets in India: 

In this insight, I’ll cover the deal dynamics, compare the revised forecast in the RHP with the earlier one from the DRHP, comment on the yield boost from the zero coupon debt and run the deal through our framework.

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