Category

IPOs and Placements

Equity Capital Markets: Kakao Pay, CIMB Group Holdings, Novotech Holdings, Freshworks, Arrail Group and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • FSC’s Sudden Action on Local Financial Platforms: A Fatal Blow to Kakao Pay’s IPO Valuation
  • CIMB Group Placement – Has Sold Before, past Deals Did Just About Ok
  • Novotech Health IPO: Valuation First-Look
  • Kakao Pay IPO: Payments Business Is Running Out of Payments to Process
  • Freshworks IPO Preview
  • Kakao Pay IPO – Valuation and Likely Impact of Latest Announcement
  • Pre-IPO Arrail Group – The Outlook May Not Be Optimistic

FSC’s Sudden Action on Local Financial Platforms: A Fatal Blow to Kakao Pay’s IPO Valuation

By Sanghyun Park

From now on, for financial platforms such as Kakao Pay and Naver Financial to compare and recommend customized financial products, they must register with the Financial Services Commission in accordance with the Financial Consumer Protection Act.

So far, they have been able to stay under the regulation radar, insisting that they were advertising, not brokering financial products.

The FSC held a meeting in this regard yesterday. Through this meeting, the FSC concluded that financial platforms such as Kakao Pay should be viewed as intermediaries if they intended to sell financial products rather than simply provide product information.

The specific business cases of the financial platform are specified below, and all of these actions are categories as brokerage, so business registration is required with the FSC. (The original press release document is attached below.)

The tightening of regulations on financial platforms by the Financial Services Commission is the cause of the sharp decline in the stock prices of Kakao and Naver today.


CIMB Group Placement – Has Sold Before, past Deals Did Just About Ok

By Sumeet Singh

Khazanah aims to raise around US$119m via selling 1% of CIMB Group. This is not the first selldown by Khaznah and most of the past deals have managed to hold above deal price. 

We covered one of the past selldown by MUFJ in our earlier note CIMB Group Placement – End of Strategic Ties with MUFG?.

In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


Novotech Health IPO: Valuation First-Look

By Arun George

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost & Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise $0.5-1.0 billion, according to press reports.

In Novotech Health IPO Initiation: On-Demand Science, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 

In Novotech Health IPO: A Solid Start to 2021, we examined the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we maintained our view that the fundamentals look attractive. 

In this note, we present our forecasts and take the first look at Novotech’s potential valuation range. 


Kakao Pay IPO: Payments Business Is Running Out of Payments to Process

By Oshadhi Kumarasiri

Kakao Pay (377300 KS) filed a revised prospectus on 31st August 2021 to restart the IPO process with a new offer price range of 60,000-90,000 won. The new offer price range is 4.8-6.3% below the previous price range of 63,000-96,000 won, implying a revised market cap of 8.1-12.2trn won.

The revised IPO valuation does not make Kakao Pay appear cheap compared to peers and the company’s core payments business is likely to decelerate rapidly after exhausting most of the growth avenues available. Despite the fragilities of the payment business, we continue to like Kakao Pay as we see long term value in its financial services business which is still at very early stages.


Freshworks IPO Preview

By Douglas Kim

Freshworks (FRSH US)is getting ready to complete its IPO in the US Nasdaq market in the coming weeks. Freshworks is a fast growing, customer engagement SaaS software company. The company provides comprehensive SaaS services for marketing, sales, and customer support services. Freshworks was originally found in Chennai, India in 2010 by Rathna Girish Mathrubootham and Shan Krishnasamy. Today, Freshworks is headquartered in San Mateo, California and has customers in more than 120 countries. 

IPO could be valued at about $10 billion – The company has put an IPO placeholder value of $100 million but this is likely to get revised up substantially. Back in April 2021, Reuters mentioned that Freshworks IPO could be valued at nearly $10 billion.

Strong growth in sales and profit margins – The company has excellent financials highlighted by strong revenue and significant improvement in operating margins. The company generated revenue of 249.7 billion won in 2020, up 44.8% YoY and 168.9 billion won in 1H 2021, up 52.9% YoY. Operating margins improvement has been very impressive going from -22.5% in 2020 to -4.8% in 1H 2021, driven by higher sales base and lower R&D and G&A expenses as a percentage of revenues.


Kakao Pay IPO – Valuation and Likely Impact of Latest Announcement

By Sumeet Singh

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.

As of 1H21, KP had a total of 36m users and around 20m monthly active users (MAU). It processed a total GMV of KRW66.9tn in 2020 and it had already generated KRW47.9tn GMV in 1H21 itself. As of the end of 1H21, it had dealings with more than 610,000 affiliated stores and 100 financial institutions.

Since spinning out from Kakao in 2017, the number of MAUs have grown 14x from 2Q17 to 2Q21, while the quarterly transaction amount grew 61x from KRW0.4tn in 2Q17 to KRW24.5tn in 2Q21. 

Over the past few years the company has been expanding its offering beyond payment processing to include other financial products. On the back of this, its revenue has been growing faster than its GMV.

We have covered most aspects of the deal in our earlier notes, Kakao Pay IPO – Guided by Ant Financial to be a mini Ant and  Kakao Pay IPO – Peer comparison – local and international.

In this note we will talk about valuations and the latest announcement by the regulators.


Pre-IPO Arrail Group – The Outlook May Not Be Optimistic

By Xinyao (Criss) Wang

In recent years, with the steady improvement of residents’ consumption level, people’s attention to dental care is also increasing, which promotes the rapid development of private dental clinics in China. On July 1, 2021, Arrail Group (ARR HK), the largest premium private dental services provider in China, formally submitted its IPO prospectus to the HKEX, aiming to list on the main board. However, if look closely, Arrail is actually facing many challenges, and its outlook may not be optimistic. This insight mainly analyzed the concerns of the Company that worth the investors’ attention. 


Before it’s here, it’s on Smartkarma

Equity Capital Markets: Broncus, Helen’s International Holding, Megaworld Real Estate Investment Trust, Freshworks, K Car, Simplex Holdings and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Broncus IPO: Every Breath They Take
  • Helens International Holdings IPO Valuation
  • MREIT IPO – Needs to Be Priced a Whole Lot Lower
  • Freshworks IPO Preview. India’s First SaaS Unicorn
  • K Car IPO – Peer Comparison and Valuation
  • Broncus Holdings IPO: Say No to Lung Diseases
  • Simplex Holdings IPO – Valuation Looks Ok, past Performance Will Weigh on Sentiment

Broncus IPO: Every Breath They Take

By Arun George

Broncus (BRC HK) is a medical device company focused on the development of interventional pulmonology products. Broncus has 17 products and major product candidates under various development stages. The core products are InterVapor, the world’s first and only thermal vapour energy ablation system to treat lung diseases and RF-II, which is the only radiofrequency ablation system that specifically targets lung cancer.

Broncus has a credible management team with a commendable commercialisation track record and blue-chip backers. Pre-IPO investors include Qiming Venture Capital, DiNovA Capital, Lake Bleu Capital, FountainVest and Intuitive Surgical (ISRG US). Broncus is pre-marketing an HKEx IPO to raise $300 million, according to press reports. 

Broncus currently generates revenue primarily from navigation systems (LungPoint Plus, LungPro, LungPoint and planners) where it ranks second in China with a market share of 37.5% measured by sales revenue for the years ended 2018, 2019 and 2020, according to Frost & Sullivan. However, the market is relatively small as the market size of interventional pulmonology diagnostic consumables in China reached just $26.3 million in 2020, according to Frost & Sullivan. 

Broncus’s core products aim for a large addressable market by targeting the pulmonary disease treatment market. The core products’ differentiation in terms of technology and target indications increases the probability of success. Overall, we believe that Broncus’ product portfolio is attractive. 


Helens International Holdings IPO Valuation

By Oshadhi Kumarasiri

  • The largest pub chain in China, Helen’s International Holding (9869 HK) is expected to price its IPO on 9th September 2021, within its indicative price range of HK$ 18.82-20.72 per share, which implies a market cap and EV range of HK$ 23.5-25.8bn and HK$ 20.8-22.9bn respectively.
  • The company will raise gross proceeds of around HK$ 2.5-2.8bn from the proposed Hong Kong IPO by selling 135m primary shares.

MREIT IPO – Needs to Be Priced a Whole Lot Lower

By Sumeet Singh

MREIT, sponsored by Megaworld, aims to raise up to US$475m in its Philippines listing.  It will be a 100% secondary shares offering.

We have looked at MREITs in our earlier notes:

Apart from MREIT we have also covered prior listings of the three currently listed, and one soon to be listed, REIT in the Philippines:

In this note, we will comment on valuation and run the deal through our ECM framework.


Freshworks IPO Preview. India’s First SaaS Unicorn

By Andrei Zakharov

Freshworks (FRSH US) , a leading provider of cloud-based customer engagement software, filed for a $100 million placeholder IPO. Form S-1 starts with a founder letter, where Mr. Girish Mathrubootham describes the vision of a company: “What if we can create an iPhone moment in business software by blending existing technology with unified, intuitive, and delightful experiences? Just as the iPhone freed users from the hassles of carrying separate devices, we envision a new product experience that breaks down data silos and creates unified experiences”. Freshworks has applied to list shares of Class A common stock on the Nasdaq Global Select Market under the symbol “FRSH”. Morgan Stanley, J.P. Morgan and Bank of America are lead underwriters on the IPO.


K Car IPO – Peer Comparison and Valuation

By Zhen Zhou, Toh

K Car (KCAR KS)  is looking to raise up to US$629m in its upcoming South Korea IPO.

K Car is a used car marketplace and dealership operating in South Korea. The company operates 41 offline dealership branches across South Korea, as of July, 2021. The company also operates online platforms like www.kcar.com and K Car App that allows customers purchase used cars.

In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.

Our previous coverage of the IPO:


Broncus Holdings IPO: Say No to Lung Diseases

By Shifara Samsudeen, ACMA, CGMA

Broncus (BRC HK) is a medical device company focused on the development of interventional pulmonology products. Broncus offers five interventional therapeutic products and product candidates for lung diseases (including its core products InterVapor and RF-II) and offers six interventional diagnostic medical consumable products including LungPoint. The company was ranked first in China’s interventional pulmonology navigation device market with a market share of 43.2% based on sales volume and ranked second with a market share of 37.5% measured by sales revenue from 2018-2020.

The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to raise proceeds of about US$250-300m. In this insight, we examine the company’s business model, core products and development pipeline, company financials and market prospects.


Simplex Holdings IPO – Valuation Looks Ok, past Performance Will Weigh on Sentiment

By Sumeet Singh

Simplex Holdings’ shareholders aim to raise up to US$304m via selling some of their stake in the company. Simplex has consistently been ranked among the top companies in IDC Fintech rankings over the past nine years.

Simplex provides consulting, system development, maintenance and operations to banks, asset managers and insurance companies in Asia. Simplex was established in Sep 97. It was listed on JASDAQ in Feb 2002 and progressed to the First Section in Sep 2005. The company undertook an MBO, in Apr 2013 and was delisted in Oct 2013. Since delisting, Simplex has expanded its product offering further to cover life insurance and non-life insurance companies as well, along with crypto exchanges.

In this note we will undertake a peer comparison and talk about valuations.


Before it’s here, it’s on Smartkarma

Equity Capital Markets: Novotech Holdings, Kakao Pay and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Novotech Health IPO: A Solid Start to 2021
  • Novotech Health IPO: Structural Tailwinds in the APAC Biotech CRO Market Offers LT Growth
  • Kakao Pay IPO – Peer Comparison – Local and International

Novotech Health IPO: A Solid Start to 2021

By Arun George

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost & Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise up to $1.5 billion, according to press reports.

In Novotech Health IPO Initiation: On-Demand Science, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 

In this note, we examine the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we continue to maintain our view that the fundamentals look attractive. 


Novotech Health IPO: Structural Tailwinds in the APAC Biotech CRO Market Offers LT Growth

By Shifara Samsudeen, ACMA, CGMA

Novotech Holdings (NVT HK) is an Asia-Pacific biotech-focused CRO that provides clinical research services for customers from Phase I to Phase IV trials across multiple countries in the Asia-Pacific region including Greater China, South Korea and Australia/New Zealand. According to Frost & Sullivan, the company had a market share of 4.1% in the Asia-Pacific clinical CRO market for biotech companies and small and medium pharmaceutical companies in terms of revenue in 2020.

The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange and according to news media outlets, it plans to raise about $1.5bn through its IPO.

In this insight, we examine Novotech’s business model, growth drivers, revenues, margins and the outlook on the company. Novotech has not yet set the terms for its IPO and we would be discussing the company’s valuation in a follow-up insight.


Kakao Pay IPO – Peer Comparison – Local and International

By Sumeet Singh

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.

As of 1H21, KP had a total of 36m users and around 20m monthly active users (MAU). It processed a total GMV of KRW66.9tn in 2020 and it had already generated KRW47.9tn GMV in 1H21 itself. As of the end of 1H21, it had dealings with more than 610,000 affiliated stores and 100 financial institutions.

Since spinning out from Kakao in 2017, the number of MAUs have grown 14x from 2Q17 to 2Q21, while the quarterly transaction amount grew 61x from KRW0.4tn in 2Q17 to KRW24.5tn in 2Q21. 

Over the past few years the company has been expanding its offering beyond payment processing to include other financial products. On the back of this, its revenue has been growing faster than its GMV.

We have covered most aspects of the deal in our earlier note, Kakao Pay IPO – Guided by Ant Financial to be a mini Ant.

In this note we will undertake a peer comparison.


Before it’s here, it’s on Smartkarma

Equity Capital Markets: Kakao Pay, K Car, Imeik Technology Development and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • ECM Weekly (5th September 2021) – JR West, Kakaobank, Helen’s, ANE, Weilong Snacks, NewMed
  • K Car Pre-IPO – Dominant Leadership in the Online Space
  • Pre-IPO Imeik Technology Development (300896 CH) – Is High Profitability Sustainable?

ECM Weekly (5th September 2021) – JR West, Kakaobank, Helen’s, ANE, Weilong Snacks, NewMed

By Zhen Zhou, Toh

Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.

Events next week:

In Hong Kong this week, Helen’s International Holding (9869 HK) launched its IPO bookbuild 

We initiated coverage on other upcoming IPOs like ANE Logistics (1292621D CH) and Shanghai NewMed Medical (NMM HK) while Ming Lu took a trip down to the local supermarket and convenience store in China to get a sense of how Weilong Delicious Global (WDG HK)‘s products compare to competitors. 

In Japan, we shared our thoughts on peer comparison and valuation of Simplex Holdings (4373 JP). We also initiated on upcoming South Korean IPOs like Kakao Pay (377300 KS) and K Car (KCAR KS) which are looking to raise up to US$1.3bn and US$629m, respectively.

There were a handful of placements too. Most notably, West Japan Railway Co (9021 JP) was launched its unexpected US$2.7bn follow-on offering to fund strategic investments and repay debt.

The deal will price on 13th September. In Japan, Korea Post sold its entire (US$947m) stake in KakaoBank (323410 KS) in a block trade. The deal only represented 1.5 days ADV and was reported to be multiple times covered. Share price is still holding above deal price on Friday.

Finally, in Hong Kong, Dongyue Group (189 HK) raised about US$440m in its placement. The deal closed 15% above its deal price with books also multiple times covered.

Accuracy Rate:

Our overall accuracy rate is 74% for IPOs and 67.8% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings this week

  • AirPower Technologies (Hong Kong, US$1bn)
  • Jinmao Property Development (Hong Kong, US$300m)
  • Laowang Holding (Hong Kong, US$200m)
  • Biocytogen Pharmaceuticals (Hong Kong, US$150m)
  • MapmyIndia (India, US$137m)

News on Upcoming IPOs

Hong Kong/China

US/China ADRs

India

Japan/Korea

Others

Analysis on Upcoming IPOs

NameInsight
Hong Kong
APM Monaco

APM Monaco Pre-IPO – China’s Resilience Shines 

Anjuke

Anjuke Pre-IPO – Mixed (Positive and Negative) Developments 

Ambio

AmbioPharm (昂博制药) Pre-IPO: Peptide CDMO Leader Turning Licensor 

Biel Crystal

Biel Crystal (伯恩光学) Pre-IPO – Cash Flow Generative Business but Underlying Trend Is Worrying 

Broncus

Broncus (堃博医疗) Pre-IPO: Big Potential to Be Tested 

ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

ByteDance

ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 

ByteDance

ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) Pre-IPO – Globally the Most Downloaded App for Jan 2020 Driven by India 

ByteDance

ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Mixed PHIP Update, Updated Thoughts on Valuation 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Initial Thoughts on Valuation 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Tencent Music Peer Comp, Regulatory Impact 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Was in the Slow Stream, Playing Catch-Up 

Edda 

EDDA Healthcare Pre-IPO – RoboDoc – Has Been Around for a While but Is Just Getting the Robo Going 

Dingdang

Dingdang Health Tech (叮当健康) Pre-IPO – Impressive Growth but Not Without Concerns 

Intco Med

Intco Medical (英科医疗) A+H: From China No.1 to Global No. 1 

Imeik

Imeik Tech (爱美客) A/H Pre-IPO – Dermal Filler Leader Capitalizing on Its Valuation 

Jenscare

Jenscare (宁波健世科技) Pre-IPO: Differentiated Heart Valve Portfolio 

MicroPort Medbot

MicroPort MedBot Pre-IPO – RoboDoc – Pre-Revenue, Has a Large Competitor but a Large Market as Well 

NewMed

NewMed (纽脉医疗) Pre-IPO: Uphill Battle for TAVR but Leads the TMVR 

Neusoft Xikang

Neusoft Xikang (东软熙康) Pre-IPO: A Long Way to Profit 

Neusoft Med

Neusoft Medical Systems (东软医疗系统) Pre-IPO: Unattractive Fundamentals 

Novotech

Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation 

WeDoctor WeDoctor (微医) Pre-IPO -App Walk Through – The Online Medical Directory and More 
WeDoctor WeDoctor (微医) Pre-IPO – A More Focused Online Medical Svc Provider than Ping An Good Doctor 
WeDoctor We Doctor (微医) Pre-IPO – Peer Comparison – Picking Its Battles Wisely 
WeDoctor We Doctor (微医) Pre-IPO – Forecasts, Early Thoughts on Valuation, and Acquisition Gripes 
Weilong Weilong Delicious Global Pre-IPO – The Positives – Fast Growth, Strong Backers 
Weilong Weilong Delicious Global Pre-IPO – The Negatives – Spicy Valuation 
WM Tech WM Tech Pre-IPO – Peer Comparison and Pre-IPO Valuation – Some Signs of Advantage 
WM Tech WM Tech Pre-IPO – Digitalization Efforts Coming Through but Not Well Substantiated 
India
Aadhar Housing Aadhar Housing Finance Pre-IPO – Decent past Growth but Comes with Weird Disclosures 
Aditya AMC Aditya Birla Sun Life AMC Pre-IPO – Strong Profit Growth but It’s Losing Market Share 
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotel

Bharat Hotels Pre-IPO – Catching up with Peers 

Bajaj En

Bajaj Energy Pre-IPO – Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 

Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
ESAF SFB ESAF Small Finance Bank Pre-IPO – Growing Fast but Remains Highly Dependant on a Related Party 
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
Emami Cem Emami Cement Pre-IPO – Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some

LIC

Life Insurance Corporation of India Pre-IPO – Early Take on India’s Largest IPO 
Penna Cem Penna Cement – Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 
PNB MetPNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
Philippines
MREIT MREIT Pre-IPO – Mediocre Performance, Convoluted Lease, Low Asset Yield 

K Car Pre-IPO – Dominant Leadership in the Online Space

By Zhen Zhou, Toh

K Car (KCAR KS)  is looking to raise up to US$629m in its upcoming South Korea IPO.

K Car is a used car marketplace and dealership operating in South Korea. The company operates 41 offline dealership branches across South Korea, as of July, 2021. The company also operates online platforms like www.kcar.com and K Car App that allows customers purchase used cars.

In this note, we will look at the company’s operational and financial performance and share our initial thoughts on the IPO.


Pre-IPO Imeik Technology Development (300896 CH) – Is High Profitability Sustainable?

By Xinyao (Criss) Wang

On July 29, 2021, Imeik Technology Development (300896 CH), which has been listed in A shares, submitted its prospectus to the HKEX and is expected to become the first company in medical aesthetic industry with “A+H” shares listing. Meanwhile, Imeik also released its 2021/1H financial results recently. The revenue was RMB633 million, up 161.87% YoY, and the net profit was RMB425 million, up 195.42% YoY, maintaining high growth momentum. This insight mainly analyzed the industry characteristics, the business, the financial position and the concerns of the Company. 


Before it’s here, it’s on Smartkarma

Equity Capital Markets: Novotech Holdings, Kakao Pay and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Novotech Health IPO Initiation: On-Demand Science
  • Ant Group’s Regulatory Risks in China Must Be Reflected in Kakao Pay’s IPO Valuation
  • Kakao Pay IPO – Guided by Ant Financial to Be a Mini Ant

Novotech Health IPO Initiation: On-Demand Science

By Arun George

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost & Sullivan.

The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech is set to pre-market an HKEx IPO to raise up to $1.5 billion, according to press reports.

While the Chinese regulatory reset has wreaked havoc on several sectors, investor sentiment on the China CRO industry remains relatively solid with the H-shares of WuXi AppTec Co. Ltd. (2359 HK) and Pharmaron Beijing Co Ltd-H (3759 HK) up 18% and 30% YTD, respectively.

Unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. On balance, we think that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 


Ant Group’s Regulatory Risks in China Must Be Reflected in Kakao Pay’s IPO Valuation

By Sanghyun Park

What was the real reason for the Financial Supervisory Service’s request to Kakao Pay to revise the securities report? At first, we all thought it was a price adequacy problem due to excessive valuation. However, Kakao Pay revised down the price band by only 4-6%.

Indicative price band revisionPreviousRevisedChange in %
Lower end₩63,000₩60,0004.76%
Upper end₩96,000₩90,0006.25%
Source: DART

If the FSS really requested a price revision, this level (4-6%) of price revision doesn’t really make sense. In fact, in terms of valuation, Kakao Bank caused more serious controversy. Nonetheless, the Financial Supervisory Service requested only Kakao Pay to revise the securities report, which, of course, is quite questionable. All this implies that the real reason shouldn’t be valuation.

Surely, including Paypal and Square in the valuation peer group is absurd. Therefore, Kakao Pay excluded them and selected two new companies as valuation peers. However, that still leaves the question of whether these new valuation peers are suitable as valuation peers. This is because they are not free from the controversy over whether the business and financial similarities are sufficient.

If there were a meaningful level of price adjustment, the FSS’s request for correction would have been more understandable, but it was not the case. So we should come to one conclusion. The valuation issue was secondary, and the key reason was something else. And this is also the general view of the local street at this point.


Kakao Pay IPO – Guided by Ant Financial to Be a Mini Ant

By Sumeet Singh

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.

As of 1H21, KP had a total of 36m users and around 20m monthly active users (MAU). It processed a total GMV of KRW66.9tn in 2020 and it had already generated KRW47.9tn GMV in 1H21 itself. As of the end of 1H21, it had dealings with more than 610,000 affiliated stores and 100 financial institutions.

KP began operation in Sep 2014 as a fintech division of Kakao to facilitate online payments. Ant Financial invested US$200m in the company in Feb 2017 and the division was spun out of Kakao in Apr 2017. Since spinning out, the number of MAUs have grown 14x from 2Q17 to 2Q21, while the quarterly transaction amount grew 61x from KRW0.4tn in 2Q17 to KRW24.5tn in 2Q21. 

Over the past few years the company has been expanding its offering beyond payment processing to include other financial products. On the back of this, its revenue has been growing faster than its GMV.


Before it’s here, it’s on Smartkarma

Equity Capital Markets: West Japan Railway Co, Weilong Delicious Global, Helen’s International Holding, Hyundai Heavy Industries, K Car and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • West Japan Railway Placement – A Large, Unexpected Dilution
  • Weilong Delicious Global: A Store Visit for “Spicy Stick”
  • Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects
  • Hyundai Heavy Industries – Will EU & Japan Finally Block the Acquisition of DSME?
  • K Car IPO Valuation Analysis

West Japan Railway Placement – A Large, Unexpected Dilution

By Zhen Zhou, Toh

West Japan Railway Co (9021 JP)  (JR West) is looking to raise up to US$2.7bn (including over-allocation) in its upcoming Japan follow-on offering.

In this note, we take a brief look at fundamentals, recent results, and share our thoughts on deal dynamics. We will also run the deal through our ECM framework.


Weilong Delicious Global: A Store Visit for “Spicy Stick”

By Ming Lu

  • We saw that customers chose Weilong in stores.
  • There are many brands in the market.
  • This is a low-end food market.
  • The industry has a low entry barrier.
  • Weilong’s advantage is that the company started advertising early.

Helens International Holdings IPO: Valuation Takes The Steam Out of Encouraging Growth Prospects

By Oshadhi Kumarasiri

  • Helen’s International Holding (9869 HK) is the largest pub chain in China with around 528 pubs across a number of cities in the Eastern part of China. The company intends to raise around US$ 315-347m from the proposed Hong Kong IPO by selling 135m primary shares at an offer price range of HK$ 18.82-20.72 per share.
  • We think the IPO price range is rather expensive as it indicates a trailing EV/Sales of 21.1-23.2x. Although the growth prospects of Helens International seems excellent, the company may need to increase its revenue by around 6.0-7.0x to even remotely justify its IPO multiple.

Hyundai Heavy Industries – Will EU & Japan Finally Block the Acquisition of DSME?

By Douglas Kim

In this insight, we provide a detailed analysis about one of the biggest risks for Hyundai Heavy Industries (HHI) IPO which involves the regulators potentially blocking its acquisition of Daewoo Shipbuilding & Marine Engineering (042660 KS) (DSME). We also discuss five other major recent issues which could impact the IPO of Hyundai Heavy Industries. The following are the major issues we discuss in this insight:

  • Issue #1 [Will EU & Japan Finally Block the Acquisition of Daewoo Shipbuilding?] [Negative]
  • Issue #2 [Solid Results of Employees Stock Ownership Association Subscription of IPO Shares] [Positive]
  • Issue #3 [Low Free Float] [Positive]
  • Issue #4 [BOK raises interest rate] [Negative]
  • Issue #5 [Share Price Performances of HHI’s Comps] [Positive]
  • Issue #6 [Impact of steel plate price deals with POSCO for 2H 2021] [Negative]

We continue to maintain a Negative view of the Hyundai Heavy Industries IPO. Despite improving shipbuilding orders, low free float, and solid employees subscription to the IPO shares, we believe the negatives outweigh these positives.  


K Car IPO Valuation Analysis

By Douglas Kim

Our base case valuation of K Car is implied market cap of 2.8 trillion won or 55,441 won per share, which is 28% higher than the high end of the IPO price range of 43,200 won per share. Given the attractive upside, we have a POSITIVE view of the K Car IPO and we would subscribe to the IPO deal. 

Given K Car’s solid financials combined with its dominant market share in the online used car segment in Korea, we believe that many investors would be willing to attach higher valuation multiples on the company than its peers. In the first few days of trading, we believe that investors could push K Car’s shares higher towards the high end of our valuation range 67,084 won per share, which would be 55% higher than the high end of the IPO valuation range. 


Before it’s here, it’s on Smartkarma

Equity Capital Markets: KakaoBank, Simplex Holdings, Shanghai NewMed Medical, Simone Accessories Collection and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Kakao Bank Placement – Its Expensive but the Discount Is Enticing
  • Simplex Holdings Pre-IPO – Peer Comp, Valuation – Lagging in Size but Leading in Growth and Margins
  • NewMed (纽脉医疗) Pre-IPO: Uphill Battle for TAVR but Leads the TMVR
  • Simone Accessories Collection IPO Preview


Simplex Holdings Pre-IPO – Peer Comp, Valuation – Lagging in Size but Leading in Growth and Margins

By Sumeet Singh

Simplex Holding’s shareholders aim to raise around US$300m via selling some of their stake in the company. Simplex has consistently been ranked among the top companies in IDC Fintech rankings over the past nine years.

Simplex provides consulting, system development, maintenance and operations to banks, asset managers and insurance companies in Asia. Simplex was established in Sep 97. It was listed on JASDAQ in Feb 2002 and progressed to the First Section in Sep 2005. The company undertook an MBO, in Apr 2013 and was delisted in Oct 2013.

Since delisting, Simplex has expanded its product offering further to cover life insurance and non-life insurance companies as well, along with crypto exchanges. It has been reporting steady revenue growth over the past few years, although its margins have been volatile. Its performance prior to delisting wasn’t great, as it missed its medium term targets, and it now appears to be at peak margins.

We have looked at the company’s past performance in our earlier note, Simplex Holdings Pre-IPO – Steady topline growth but appears to be at peak margins.

In this note we will undertake a peer comparison and talk about valuations.


NewMed (纽脉医疗) Pre-IPO: Uphill Battle for TAVR but Leads the TMVR

By Ke Yan, CFA, FRM

Shanghai NewMed, a China-based heart valve medical device company, plans to raise up to USD 200m via a Hong Kong listing.

The company’s core TAVR (transcatheter aortic valve replacement) product Prizvalve is a few years behind its competitors, despite its unique balloon expandable design. The selling point for the company is that in the international market such design is better than the self-expandable design which is mainstream in China. On the other hand, the company is leading the TMVR (transcatheter mitral valve replacement) development which is potentially a bigger market than the TAVR. 

The company has quality institutional investors alongside individual investors, as well as an experienced management team. We think investors should follow the IPO.


Simone Accessories Collection IPO Preview

By Douglas Kim

Simone Acc. Collection is one of the most well known luxury handbag makers in Korea. Established in 1987, Simone is one of the first ODM players in Asia to have tapped into the luxury handbag manufacturing market. In 1987, the founder and chairman Park Eun-Kwan approached Donna Karan New York (DKNY) to win supply rights.

The company manufactures and sells luxury handbags and small leather goods (SLG)  mainly on ODM/OEM basis. The company has manufacturing operations in Vietnam, Cambodia, and Indonesia, trying to capitalize on lower labor costs and more attractive tariff rates.

Simone Acc Collection is getting ready to complete its IPO in Korea in October. The IPO price range is from 39,200 won to 47,900 won. The IPO base deal size is from US$283 million to US$346 million.

  • According to the bankers’ valuation, the expected market cap is from 1.3 trillion won to 1.6 trillion won.
  • The book building for the institutional investors starts on 24 September. The lead bankers for this deal include Samsung Securities and Mirae Asset Securities. 
  • This is the second attempt for Simone to complete its IPO. The company previously tried to complete its IPO in 2018 but it failed due to weak business performance. 

Major shareholders – Chairman Park Eun-Kwan is the controlling shareholder with a 37.2% stake in the company. His wife Oh In-Shil has a 24% stake in the company. Other insiders and related parties own 8.8%. Blackstone has a 30% stake in the company. 

Deal Specifics of Simone Acc Collection Co IPO
Lead underwriters of the IPO: Samsung Securities, Mirae Asset Securities, Korea Investment & Securities
Expected IPO price per share: 39,200 won (low)/47,900 won (high)
Number of Shares for IPO:8.37m shares (new shares)
IPO base deal size: US$283 mn (low);  US$346mn (high)
Expected common shares outstanding, fully diluted (post-IPO):  33.5m shares
Expected market cap after IPO:1,313 billion won (low)/1,605 billion won (high)
Book open: 24-Sep-21
Book closed:27-Sep-21
Listing date: TBC
Source: Company data

Before it’s here, it’s on Smartkarma

Equity Capital Markets: Dongyue Group, Kakao Pay, Helen’s International Holding, K Car, ANE Logistics, B.J.ZH.F.Panther Medical Equipment and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Dongyue Group (东岳集团) Placement – Opportunistic Raise at All Time High but Easily Digestible
  • Kakao Pay – Updated Valuation With Revised IPO Price Range
  • Helens Intl (海伦司国际) IPO – Cheap Drinks, Expensive Valuation
  • Kakao Pay Listing: Revision Summary & Pricing Details
  • K Car (Korea’s Carvana?): Offering Details, Pricing Structure, & Valuation Issues
  • ANE Logistics Pre-IPO – Margins Expanding but Appears to Be Falling Behind
  • Pre-IPO B.J.ZH.F.Panther Medical Equipment – Insights on the Industry, the Business and the Concerns

Dongyue Group (东岳集团) Placement – Opportunistic Raise at All Time High but Easily Digestible

By Zhen Zhou, Toh

Dongyue Group (189 HK)  is looking to raise US$443m in its placement to fund the enhancement of its production capacity. 

In this note, we take a brief look at the company’s recent results and share our thoughts on the deal.


Kakao Pay – Updated Valuation With Revised IPO Price Range

By Douglas Kim

Kakao Pay announced its new IPO price range today. The company lowered the IPO price range to 60,000 won to 90,000 won per share (down from 63,000 won to 96,000 won per share previously). The IPO offering range has also been revised down slightly to US$879 million to US$1,319 million. The book building for the institutional investors starts on 29 September. 

Deal Specifics of the Kakao Pay IPO (Revised)
 
Lead underwriters of the IPO: 
Samsung Securities, Goldman Sachs, JP Morgan, Daishin Securities
Expected IPO price per share: 
60,000 won (low)/90,000 won (high)
Number of Shares for IPO:
17m shares (new shares)
IPO base deal size: 
US$879 mn (low);  US$1,319 mn (high)
Expected common shares outstanding, fully diluted (post-IPO):  
135.9m shares
Expected market cap after IPO:
8,154 billion won (low)/12,231 billion won (high)
Book open: 
29-Sep-21
Book closed:
30-Sep-21
Listing date: 
14-Oct-21
Source: Company data
 

Our base case valuation of Kakao Pay is an implied market cap of 12.2 trillion won or 89,739 won per share (0.5% higher than previous valuation).

  • Our base case valuation is based on 10.6x EV/Sales multiple and applying this to our estimated sales of 954 billion won in 2022. 
  • The EV/S multiple of 10.6x is based on the median valuation multiple of the comps in 2022. Among the comps, the valuation multiple of Upstart Holdings has increased materially in the past two months, which was offset by lower valuation multiples of 360 Digitech and Lemonade.

The IPO price range is from 60,000 won to 90,000 won. If the IPO is priced near the high end of the IPO price range, we would avoid this deal. On the other hand, if the IPO is priced close to the low to mid end of the IPO price range, we would be more comfortable with taking the deal.


Helens Intl (海伦司国际) IPO – Cheap Drinks, Expensive Valuation

By Zhen Zhou, Toh

Helen’s International Holding (9869 HK) (HIH) is looking to raise up to US$358m in its Hong Kong IPO. 

Helens International Holdings (HIH) is the operator of a bar chain called “Helen’s”. The company was the largest bar chain in China in 2018 –  March 2021, in terms of the number of bars, according to Frost and Sullivan (F&S).

In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.

Our previous coverage of the IPO:


Kakao Pay Listing: Revision Summary & Pricing Details

By Sanghyun Park

Revision summary

Kakao Pay has just submitted a revised securities declaration with a downward revision of the indicative price band. The new price band is ₩60,000 to ₩90,000, which is about a 4~6% cut from the previous one. The total number of publicly offered shares is still 17 million shares. As a result, the funds to be raised through this IPO are between ₩1.02T and ₩1.53T.

Indicative price bandLow, PreviousHigh, PreviousLow, RevisedHigh, Revised
Price₩63,000₩96,000₩60,000₩90,000
Base deal size₩1.07T₩1.63T₩1.02T₩1.53T
– Institutional allotment₩0.59T₩0.90T₩0.56T₩0.84T
Implied market cap₩8.21T₩12.52T₩7.82T₩11.73T
Source: DART

The revised schedule is as follows. The book for overseas institutional investors (through Goldman Sachs and JP Morgan) opens on September 23rd and closes on the 30th at 5 pm (local time). For your reference, the book for those local institutions dealing with Samsung Securities opens on September 29th. The payment date is October 8, and the listing date will be announced later.

Schedule
IR begins2021. 09. 23
Book open2021. 09. 29
Book close2021. 09. 30
Allotment2021. 10. 01
Subscription2021. 10. 05
Payment2021. 10. 08
ListingTBA
Source: DART

K Car (Korea’s Carvana?): Offering Details, Pricing Structure, & Valuation Issues

By Sanghyun Park

Offering overview

K Car (formerly known as SK Encar), the largest used car brokerage company in Korea, has filed a securities declaration. K Car will be listed on the KOSPI, and a total of 16.83M shares will be offered through this IPO. This is 35.90% of the total number of shares before listing. The amount allocated to institutions is 55-75%.

Offering size
BourseKOSPI
Pre-IPO SO46,884,369
Offering16,830,288
– % of SO35.90%
Institutional allotment9,256,659
– % of the offering55.00%
Source: DART

Yes, we have a massive secondary offering here. The secondary offering percentage is a whopping 92.86%. This is basically a private equity-owned company. One of the largest local PEs, Hahn & Company, owns a full 100% stake. It acquired full ownership from SK Inc in 2018. Hahn & Co has been pushing to sell its stake in K Car since last year. The most well-known candidate was Lotte Rental. However, as these attempts ended in vain, Hahn & Co opted for an exit strategy through IPO.

Split
Primary %7.14%
Secondary %92.86%
Post-IPO shares outstanding48,086,533
Capital increase rate2.56%
Dilution2.50%
Source: DART
ShareholdingPost-IPOSharesLock-up
Hahn & Company65.00%31,256,2451 year
ESOP (post-IPO)7.00%3,366,0571 year
IPO28.00%13,464,231
Total100.00%48,086,533
Source: DART

The schedule is as follows. The book opens on September 13th and closes on the 28th. The payment date is October 6, and the listing date will be announced later.

Schedule
Book open2021. 09. 13
Book close2021. 09. 28
Allotment2021. 09. 29
Subscription2021. 09. 30
Payment2021. 10. 06
ListingTBA
Source: DART

ANE Logistics Pre-IPO – Margins Expanding but Appears to Be Falling Behind

By Sumeet Singh

ANE, an express freight network operator in China for less-than-truckload (LTL) market, aims to raise around US$500m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.

As per iResearch, ANE’s network was the largest in China in terms of total freight volume over 2017-20 with a market share of 17.2% in 2020.

By Dec 2020, it had collaborated with approximately 26,400 freight partners and agents to serve 3.6m shippers across approximately 96% of the counties and townships in China. Both the freight partners and freight agents operate under its brand and are required to adhere to its service guidelines and policies.

ANE’s overall volume and top line growth has been decent. However, not all of its offerings have been growing, while some of its revenue growth was driven by accounting changes. 

Moreover, despite claiming to be the largest player in its segment, it appears to be losing market share and like the rest of the industry, it appears to have little pricing power.


Pre-IPO B.J.ZH.F.Panther Medical Equipment – Insights on the Industry, the Business and the Concerns

By Xinyao (Criss) Wang

On June 29, 2021, B.J.ZH.F.Panther Medical Equipment (BJZ HK) filed a prospectus with the HKEX in preparation for listing on the main board. Panther is a leading provider of intelligent minimally invasive surgical solutions in China, with a focus on surgical staplers. In fact, Panther has had IPO plan since many years ago, and tried to go public in the GEM in 2017, 2019 and the SSE STAR Market in 2020, but all failed. So, could Panther make it this time? This insight mainly analyzed the industry characteristics, the business and the concerns of the Company. 


Before it’s here, it’s on Smartkarma

Equity Capital Markets: ForgeRock and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • ForgeRock IPO Preview and Valuation Analysis

ForgeRock IPO Preview and Valuation Analysis

By Andrei Zakharov

ForgeRock (FORG US) , global identity leader and next-gen cloud identity unicorn, filed for a $100 million IPO. It didn’t specify expected price range and how many shares of Class A common stock it would offer. ForgeRock has applied to list its shares on the NYSE under the trading symbol “FORG”. Morgan Stanley and J.P. Morgan are leading the IPO.


Before it’s here, it’s on Smartkarma

Equity Capital Markets: Simplex Holdings, Iljin Hysolus, Helen’s International Holding and more

By | Daily Briefs, IPOs and Placements

In today’s briefing:

  • Simplex Holdings Pre-IPO – Steady Topline Growth but Appears to Be at Peak Margins
  • Iljin Hysolus IPO: Allocation, Lockups, & Float Schedule
  • Helens Intl (海伦司国际) Pre-IPO – Largest Bar Chain Targeted at Youths
  • ECM Weekly (29th August 2021) – Imeik, Helen’s, Jenscare, Dingdang, Simplex, Hyundai Heavy

Simplex Holdings Pre-IPO – Steady Topline Growth but Appears to Be at Peak Margins

By Sumeet Singh

Simplex Holding’s shareholders aim to raise around US$300m via selling some of their stake in the company in its Japan IPO. Simplex has consistently been ranked among the top companies in IDC Fintech rankings over the past nine years.

Simplex provides consulting, system development, maintenance and operations to banks, asset managers and insurance companies in Asia

Simplex was established in Sep 97. It was listed on JASDAQ in Feb 2002 and progressed to the First Section in Sep 2005. The company undertook an MBO, in Apr 2013 and was delisted in Oct 2013.

Since delisting, Simplex has expanded its product offering further to cover life insurance and non-life insurance companies as well, along with crypto exchanges. It has been reporting steady revenue growth over the past few years, although its margins have been volatile. 

Its performance prior to delisting wasn’t great, as it missed its medium term targets, and it now appears to be at peak margins.


Iljin Hysolus IPO: Allocation, Lockups, & Float Schedule

By Sanghyun Park

Subscription

Iljin Hysolus was decided at ₩34,300, which is the upper end of the indicative price band. As a result, Iljin Hysolus raises ₩373.6B through this IPO, with a market cap of ₩1.25T.

Aggressive IPO pricing could be expected from a fairly favorable institutional response in the bookbuilding. As the competition rate for institutional subscriptions recorded 1,471 to 1, it was again close to a historical record.

Iljin Hysolus also raised more than ₩36T in margin in retail subscriptions. This is by far the highest level among IPOs of this size (around ₩1T).

Subscription by institution typeInstitution%Demand%
1. Local publicly raised funds25615.89%1,442,953,00016.37%
2. Local brokerages/investment advisories191.18%111,838,0001.27%
3. Local pensions, funds managing proprietary assets, banks, and insurance companies22513.97%1,198,819,00013.60%
4. Local others (discretionary investment companies, mostly local hedge funds)76447.42%4,215,805,00047.83%
5. Foreign (foreign IPO funds & hedge funds)1257.76%674,141,0007.65%
6. Foreign others (mostly local hot money)22213.78%1,170,285,00013.28%
Total1,611100.00%8,813,841,000100.00%
Institutional subscription rate1,471.01
Source: DART

And virtually all institutions, regardless of institution type, put prices in the upper end of the indicative price band.

Pricing by institution typeAbove the upper end + Unspecified% of total demandsHolding tendencies
1. Local publicly raised funds94.53%15.83%Long-term
2. Local brokerages/investment advisories89.47%1.16%Short-term
3. Local pensions, funds managing proprietary assets, banks, and insurance companies92.00%12.84%Long-term
4. Local others (discretionary investment companies, mostly local hedge funds)95.68%46.15%Short-term
5. Foreign (foreign IPO funds & hedge funds)98.40%7.65%Long or short-term, depends
6. Foreign others (mostly local hot money)91.44%11.99%Short-term
Source: DART

Allocation

In the ESOP subscription, more forfeited shares occurred than expected. As a result, institutional allocation rose to 66.9%, and retail took 30%. Compared to post-IPO SO, institutional investors will hold 20.07%, retail will retain 9%, and ESOP will sit on 0.93%.

The allocation ratio among institutional investors is also quite ideal. The proportion of locally publicly raised funds and pension funds with long-term holding tendencies (nearly half of the institutional offering) is also not bad, given its size. In addition, it is a good start for a company of this size by securing foreign ownership of more than 7%, which can be said to be an indicator of increasing external credibility in the initial stage of listing.

Allocation by investor typeInitial allocation% of the institutional offering% of the total offering% of post-IPO SO
Institutional55.00%66.90%66.90%20.07%
1. Local publicly raised funds36.20%24.22%7.26%
2. Local Br/IA1.66%1.11%0.33%
3. Local pension, etc.11.20%7.49%2.25%
4. Local others15.94%10.67%3.20%
5. Foreign34.65%23.18%6.95%
6. Foreign, other0.35%0.23%0.07%
Retail25.00%30.00%9.00%
ESOP20.00%3.10%0.93%
Source: DART

Helens Intl (海伦司国际) Pre-IPO – Largest Bar Chain Targeted at Youths

By Zhen Zhou, Toh

Helen’s International Holding (HIH HK) is looking to raise US$300m in its upcoming Hong Kong IPO. 

Helens International Holdings (HIH) is the operator of a bar chain called “Helen’s”. The company was the largest bar chain in China in 2018 –  March 2021, in terms of the number of bars, according to Frost and Sullivan (F&S).

In this note, we look at the company’s operational and fundamental performance and share our initial thoughts on the IPO.


ECM Weekly (29th August 2021) – Imeik, Helen’s, Jenscare, Dingdang, Simplex, Hyundai Heavy

By Zhen Zhou, Toh

Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.

Events next week:

It is still fairly quiet in the IPO space but Hong Kong’s pipeline is swelling, likely heading for a very busy 4Q 2021. SenseTime, ClouDr, 58 Freight (GogoX), and Samoyed Cloud are the notable new filings this week.

Our Hong Kong IPO coverage this week was skewed towards Healthcare and Biotech companies. We initiated on Imeik Technology Development (300896 CH) (A/H listing), Ambio Pharmaceuticals (ABP HK), Jenscare Scientific (JCS HK), and Dingdang Health Technology Group (DDH HK) .

We also shared our initial thoughts on Helen’s International and Simplex IPOs in Hong Kong and Japan, respectively. The former had been pre-marketing this week, and likely to launch its IPO bookbuild next week while the latter will open books the week after on 7th September.

In India, we initiated on Aditya Birla Sun Life AMC (570499Z IN) which was approved by SEBI earlier this month.

However, recent Indian IPOs have failed to perform. CarTrade (CARTRADE IN) , Aptus Value Housing Finance India (APTUS IN), Nuvoco Vistas (NUVOCO IN) broke their respective IPO prices, mostly due to unattractive valuation.

Back in Korea, Hyundai Heavy Industries (1748326D KS) opened its books on Thursday and was reported to have been covered a day later. We didn’t think there is upside for the IPO based on valuation. On top of that, Korean shipbuilders have been trading weak lately, compared to Chinese shipbuilders. Books will close on Friday, 3rd September and it is expected to list on 16th September.

It was another busy week for placements. Some are long-dated; Activia Properties and Showa Denko will price on 1st and 6th September while OBIC, which we covered last week will price on Tuesday, 31st August. 

Accuracy Rate:

Our overall accuracy rate is 74% for IPOs and 67.6% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings this week

  • SenseTime(Hong Kong, US$2bn)
  • ClouDr (Hong Kong, US$500m)
  • 58 Freight (GogoX) (Hong Kong, US$500m)
  • Samoyed Cloud (Hong Kong, US$500m)
  • Shanghai NewMed (Hong Kong, US$300m)
  • TransThera Sciences (Hong Kong, >US$100m)
  • Powerlong Commercial REIT (Hong Kong, >US$100m)
  • Metro Brands (India, US$300m)
  • Freshworks (U.S., US$100m)

News on Upcoming IPOs

Hong Kong/China

US/China ADRs

India

Japan/Korea

Others

Analysis on Upcoming IPOs

NameInsight
Hong Kong
APM Monaco

APM Monaco Pre-IPO – China’s Resilience Shines 

Anjuke

Anjuke Pre-IPO – Mixed (Positive and Negative) Developments 

Ambio

AmbioPharm (昂博制药) Pre-IPO: Peptide CDMO Leader Turning Licensor 

Biel Crystal

Biel Crystal (伯恩光学) Pre-IPO – Cash Flow Generative Business but Underlying Trend Is Worrying 

Broncus

Broncus (堃博医疗) Pre-IPO: Big Potential to Be Tested 

ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

ByteDance

ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 

ByteDance

ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 

ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 

ByteDance

ByteDance (字节跳动) Pre-IPO – Globally the Most Downloaded App for Jan 2020 Driven by India 

ByteDance

ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Mixed PHIP Update, Updated Thoughts on Valuation 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Initial Thoughts on Valuation 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Tencent Music Peer Comp, Regulatory Impact 

Cloud Village

Cloud Village (NetEase Music) Pre-IPO – Was in the Slow Stream, Playing Catch-Up 

Edda 

EDDA Healthcare Pre-IPO – RoboDoc – Has Been Around for a While but Is Just Getting the Robo Going 

Dingdang

Dingdang Health Tech (叮当健康) Pre-IPO – Impressive Growth but Not Without Concerns 

Intco Med

Intco Medical (英科医疗) A+H: From China No.1 to Global No. 1 

Imeik

Imeik Tech (爱美客) A/H Pre-IPO – Dermal Filler Leader Capitalizing on Its Valuation 

Jenscare

Jenscare (宁波健世科技) Pre-IPO: Differentiated Heart Valve Portfolio 

MicroPort Medbot

MicroPort MedBot Pre-IPO – RoboDoc – Pre-Revenue, Has a Large Competitor but a Large Market as Well 

Neusoft Xikang

Neusoft Xikang (东软熙康) Pre-IPO: A Long Way to Profit 

Neusoft Med

Neusoft Medical Systems (东软医疗系统) Pre-IPO: Unattractive Fundamentals 

Novotech

Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation 

WeDoctor WeDoctor (微医) Pre-IPO -App Walk Through – The Online Medical Directory and More 
WeDoctor WeDoctor (微医) Pre-IPO – A More Focused Online Medical Svc Provider than Ping An Good Doctor 
WeDoctor We Doctor (微医) Pre-IPO – Peer Comparison – Picking Its Battles Wisely 
WeDoctor We Doctor (微医) Pre-IPO – Forecasts, Early Thoughts on Valuation, and Acquisition Gripes 
Weilong Weilong Delicious Global Pre-IPO – The Positives – Fast Growth, Strong Backers 
Weilong Weilong Delicious Global Pre-IPO – The Negatives – Spicy Valuation 
WM Tech WM Tech Pre-IPO – Peer Comparison and Pre-IPO Valuation – Some Signs of Advantage 
WM Tech WM Tech Pre-IPO – Digitalization Efforts Coming Through but Not Well Substantiated 
India
Aadhar Housing Aadhar Housing Finance Pre-IPO – Decent past Growth but Comes with Weird Disclosures 
Aditya AMC Aditya Birla Sun Life AMC Pre-IPO – Strong Profit Growth but It’s Losing Market Share 
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotel

Bharat Hotels Pre-IPO – Catching up with Peers 

Bajaj En

Bajaj Energy Pre-IPO – Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 

Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
ESAF SFB ESAF Small Finance Bank Pre-IPO – Growing Fast but Remains Highly Dependant on a Related Party 
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
Emami Cem Emami Cement Pre-IPO – Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some

LIC

Life Insurance Corporation of India Pre-IPO – Early Take on India’s Largest IPO 
Penna Cem Penna Cement – Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 
PNB MetPNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
Philippines
MREIT MREIT Pre-IPO – Mediocre Performance, Convoluted Lease, Low Asset Yield 

Before it’s here, it’s on Smartkarma