Equity Capital Markets

Aisin (7259 JP) is looking to raise US$290m from selling its entire stake in Exedy Corp (7278 JP).
While the selldown doesn’t seem to be particularly well-flagged, this appears to be another cross-shareholder unwind in Japan.
In this note, we will talk about the placement and run the deal through our ECM framework.

2. Barito Renewables Lockup Expiry – US$8bn Lockup Expiry for Largest Indonesian Market Cap Stock

Barito Renewables Energy (BREN IJ) raised around US$200m in its Indonesian IPO, after pricing at the top end at IDR780/share. Its eight-month lockup will expire on 29th May 2024.
Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
In this note, we will talk about the lock-up dynamics and updates since our last note.

3. Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance

By Steve Zhou, CFA

Alibaba Group Holding (9988 HK) and JD.com (9618 HK) both announced the issuance of convertible debt last week (Alibaba on May 23 and JD.com on May 21).
Both have mentioned that the reasons for the issuance are the low funding cost (0.25% coupon for JD.com and 0.5% for Alibaba) and to fund their current share repurchase program.
I think the convertible debt structures makes sense and it is beneficial for both companies to buy back as much as possible at the current share price.

4. Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull

Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
We have looked at the company’s performance in our past notes. In this note, we talk about valuations.

5. Shift Up IPO: Valuation Insights

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
We previously discussed the IPO in Shift Up IPO: The Investment Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that Shift Up is attractively valued in the IPO price range. We would participate in the IPO.

6. Shift Up IPO: The Investment Case

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
Shift Up now focuses only on game development and has a policy of publishing games in cooperation with global partners such as Tencent (700 HK) and Sony Corp (6758 JP).
The investment case rests on a stellar game development track record, several growth drivers, high profitability and cash generation.

7. Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition

Hoshino Resorts Reit (3287 JP) is looking to raise US$125m from a primary follow-on. Proceeds will be used to acquire the OMO7 Osaka asset.
The REIT has been active on the acquisition front, undertaking a number of capital raisings in recent years.
In this note, we will talk about the placement and run the deal through our ECM framework.

8. Shift Up IPO – Peer Comparison – Small in Size but Ranks High on Growth and Margins

Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In our previous note, we looked at the company’s past performance. In this note, we will undertake a peer comparison.

9. ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering

Asmedia Technology (5269 TT) is looking to raise up to US$335m in its global depository receipts (GDRs) offering.
Overall, the deal would be a relatively small one for the stock to digest at just 5.6 days of its three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

10. ECM Weekly (27th May 2024) – Renesas, AUB, Modec, Tata Tech, MUFG, Shift Up, Novelis, Shulan

By Travis Lundy, Quiddity Advisors

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, Go Digit managed to do well despite somewhat tepid subscription rates, while Shift Up (462870 KS) was looking to be the next hot listing in Korea.
On the placement front, Renesas Electronics (6723 JP) mega-block kept the cross-shareholding unwind going.

May 26

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Weekly Top Ten Equity Capital Markets – May 26, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come)

Today post-close, Denso Corp (6902 JP) (via BofA) announced a selldown of 78,127,800 shares of Renesas Electronics (6723 JP). This is the latest in a line of block exits.
There was the 130mm offering in November last year by INCJ. There was 123mm shares in Jan 2024 by NEC and Hitachi. A month later, 50mm shares from Mitsubishi Electric.
In general, they have been absorbed, but one hasn’t needed to buy in the market. Some have broken price. Here, the pricing range is aggressive.

2. Shift Up IPO Preview

Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.

3. MODEC (6296 JP): The Current Playbook

Since the US$535 million secondary placement announcement, Modec Inc (6269 JP)’s shares are down 15% from the undisturbed price of JPY3,320 per share (14 May).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Modec’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 22 May. Investors who have participated in previous large Japanese placements tend to secure positive returns.

4. Renesas Block – While Not Particularly Well Flagged, Recent Selldowns in the Stock Have Done Well

Denso Corp (6902 JP) is looking to raise US$1.39bn from selling a portion of its stake in Renesas Electronics (6723 JP).
DENSO’s selldown is a small one at just 4.3 days of ADV. While there is an overhang of around 4% of TSO, DENSO will be locked up for 270 days.
In this note, we will talk about the placement and run the deal through our ECM framework.

5. Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues

Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In this note, we talk about the not-so-positive aspects of the deal.

6. Shift Up IPO Valuation Analysis

Our base case valuation of Shift Up is target price of 95,510 won, which is 59% higher than the high end of the IPO price range (60,000 won).
We believe Shift Up deserves higher valuation multiples than its peers mainly due to higher sales growth, much higher operating margins, and higher ROE.
Since its launch in April of this year, Stellar Blade (PS console game) has ranked first in sales in eight countries, including the United States, United Kingdom, Canada, and Japan.

7. Shift Up IPO – The Positives – All Games Have Done Well

Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In this note, we talk about the positive aspects of the deal.

8. Raspberry Pi IPO Preview

Established in 2012, Raspberry Pi is getting ready to complete its IPO in London soon. Raspberry Pi provides small, single-board computers.
Raspberry Pi is backed by Sony and ARM Holdings. Nearly 72% of the company’s sales come from commercial customers embedding its products into various consumer devices and other systems.
The company generated sales of US$265.8 million (up 41.5% YoY) and operating profit of US$37.5 million (up 87% YoY) in 2023.

9. Lalatech Holdings: FCF Growth Accelerated, Margins Improved, Fair Value May Be North of $10B

Lalatech Holdings, a technology based global logistics company, has updated its application for Hong Kong IPO and disclosed financial results for 2023.
Lalatech Holdings is aiming to raise up to $1B and the company’s IPO looks imminent in the coming months as cash flow growth accelerated, while margins and profitability improved.
My fair valuation of Lalatech Holdings is close to $10B and investors should buy into upcoming IPO given the company’s substantial scale, massive network effects and operating efficiency.

10. Go Digit IPO Trading – Low Subscription Rate, Not All Shares Are Locked Up

By Travis Lundy, Quiddity Advisors

Go Digit General Insurance raised around US$315m in its India IPO.
Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.

May 19

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Weekly Top Ten Equity Capital Markets – May 19, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. YUUUGE Modec (6269) Offering To Stay Listed in TSE Prime – Effectively a Re-IPO

In March, Modec Inc (6269 JP) announced the TSE had said Modec at 29.3% (end-Dec-23) was below the required 35% tradable shares level required for continued listing on TSE Prime.
It announced a “Basic Plan” to comply with the criteria which involved convincing one of the three major corporate holders to sell some. They needed to sell about 6%.
Mitsui E&S has announced it will sell 32%, and 37% including greenshoe. This is overdoing it in a huge way. Mitsui E&S is getting out. This is a re-IPO.

2. Modec Placement – Deal Seems a Little Opportunistic but Not Particularly Expensive

Mitsui E&S Holdings (7003 JP) is looking to raise approximately US$451m through a secondary follow-on offering, via selling approximately 21.9m shares (32% of TSO) of Modec Inc (6269 JP)’s stock.
The deal is a large one to digest at 81 days of three month ADV.
In this note, we will talk about the placement and run the deal through our ECM framework.

3. MODEC (6296 JP): A US$535 Million Secondary Offering

Modec Inc (6269 JP) has announced a secondary offering of up to 25.2 million shares (including overallotment). The largest shareholder, Mitsui E&S Holdings (7003 JP), is the seller.
MODEC’s goal with the secondary offering is to reconfigure its shareholder mix to have a diverse base of shareholders who support its long-term strategies and a better tradable share ratio.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 22 and 28 May (likely 22 May).

4. Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well

HD Korea Shipbuilding & Offshore Engineering (009540 KS) is looking to raise approximately US$258m, via selling 2.6m shares (2.9% of TSO) of HD Hyundai Heavy Industries (329180 KS) stock.
The deal is a large one to digest at 14.6 days of three month ADV.
In this note, we will talk about the placement and run the deal through our ECM framework.

5. Giant Biogene Placement – Has Been Doing Well but Doesn’t Need the Cash

Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement.
We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

6. ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

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, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.

7. Olympus Corp (7733 JP): ¥100B Buyback Plan Offers an Attractive Exit Opportunity Amid Bleak Outlook

By Tina Banerjee

Olympus Corp (7733 JP) has announced a buyback plan for up to 60M shares, representing 5.15% of outstanding shares, by spending ¥100B from May 13 to December 31, 2024.
The company has posted mixed FY24 results, with revenue beating and operating and net profits missing guidance. Olympus has guided for just 9% revenue growth for FY25.
Overall business outlook of the company seems to be bleak. With limited upside potential expected, it will be wise to tender shares through the company’s buyback offer.

8. ZEEKR IPO: Strong First-Day Return and Upsized Offering

ZEEKR, a rapidly growing premium EV maker, has successfully completed its IPO and raised ~$441M. The offering was priced at the top of the range at $21 per share.
The company sold a total of 21M ADSs, up from the initial target of 17.5M shares. ZEEKR’s stock soared more than 30% following its strong debut on NYSE on Friday.
Geely Auto, Mobileye and CATL have acquired ~14.3M ADSs and overall investor sentiment was positive. I believe ZEEKR may succeed as a high-volume EV maker worldwide.

9. Lalatech Holdings Limited Pre-IPO – Refiling Updates – Continues to Improve, Valuation Gap Narrowing

Lalatech Holdings is looking to raise about US$1bn in its upcoming HK IPO.
Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
We have looked at the company’s past performance in our earlier notes. In this note we will talk about the updates from its refiling.

10. Aadhar Housing Finance IPO Trading – More Loved by Institutional Investors than Retail

Aadhar Housing Finance(AHF) raised around US$360m 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.
We have looked at the company’s performance and valuation in our past notes. In this note, we talk about the trading dynamics.

May 12

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Weekly Top Ten Equity Capital Markets – May 12, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. ZEEKR (ZK US) IPO: Valuation Insights

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

2. HD Hyundai Marine Solution IPO Trading – Strong Demand and Peers Continue to Rise

HD Hyundai Marine Solution (443060 KS) had raised around US$539m in its Korean IPO, after pricing the deal at the top end of KRW83,400/share.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In this note, we will talk about the demand for the deal and other trading dynamics.

3. Zeekr IPO – Missed Targets and Related Party Deals – We Would Stick to the Bottom-End

ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$370m in its US listing.
Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
We have looked at the company’s past performance in our earlier notes. In this note, we talk about the updates from its recent filings and have a relook at valuations.

4. Aadhar Housing Finance IPO – Larger and Slower, at a Reasonable Discount

Aadhar Housing Finance (AHF) is now looking to raise around US$360m 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.
We have looked at the company’s performance in our past note. In this note, we talk about valuations.

5. ECM Weekly (6th May 2024) – Aadhar, Indegene, TBO Tek, Super Hi, China Resources Bev, Honasa, Worley

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, a number of deals were launched in India, while HD Hyundai Marine Solution (443060 KS) will list in the coming week.
On the placement front, the two deals in Australia, WorleyParsons Ltd (WOR AU) and Endeavour Group /Australia (EDV AU) delivered opposing results.

6. Swiggy Pre-IPO Early Look – Innovation Leader, Profitability Laggard

Swiggy aims to raise US$1.25bn in its upcoming India IPO. The company has filed confidentially for its IPO, which is likely to be launched towards the end of the year.
Swiggy, along with Zomato, operates a duopoly that has come to dominate the food delivery market in India. In 1H24, Swiggy serviced over 274,000 restaurants via its 370,000 delivery partners.
In this note, we will take an early look at the company based on the publicly available financials.

7. Innospace IPO Preview

Innospace is getting ready to complete its IPO in June 2024. According to bankers’ valuation, the implied market cap of Innospace is from 347 billion won to 434 billion won.
Innospace engages in the satellite launch vehicle production and launch service business.
The company estimates its sales to increase from 0.2 billion won in 2023 to 2.0 billion won in 2024, 47.8 billion won in 2025, and 97.2 billion won in 2026.

8. Zeekr IPO Trading – Not as Cheap as It Looks but Float Is Tiny

By Daniel Hellberg, Tracking Traffic

ZEEKR (ZK US), a premium EV brand by Geely, raised around US$440m in its US listing, after the deal was upsized and priced at the top.
Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
We have looked at the company’s past performance and provided our thoughts on valuations in our earlier notes. In this note, we talk about the trading dynamics.

9. Lalatech IPO: New Filing Shows March From Losses To Profits Between 2021 and 2023

In this insight we show drivers of LalaTech’s +US$1bn turnaround in OpInc
We also evaluate which drivers are likely to generate future improvements
Lalatech won’t repeat incredible 2021-23 CoR, OpEx performances, in our view

10. TBO Tek IPO – RHP Updates & Quick Thoughts on Valuation

TBO Tek (0395045D IN) is looking to raise approximately US$200m in its upcoming India IPO.
TBO Tek is a global travel distribution platform. Its two-sided technology platform serves companies involved in the travel industry such as hotels, airlines, travel agencies and travel management companies.
In this note, we provide a summary of its RHP updates and share our quick thoughts on valuation.

May 05

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Weekly Top Ten Equity Capital Markets – May 5, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Worley Placement – Largest Shareholder Selling at an Attractive Discount

DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

2. Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged

Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

3. SHEIN IPO: The Biggest IPO in 2024 in London?

Although Shein has yet to formally announce the listing destination, there is a growing anticipation that the listing venue could be London, rather than New York.
It has been reported that the company has more than doubled its net profit to more than US$2 billion in 2023.
The company is currently seeking a corporate value of nearly US$70 billion to US$90 billion in the Shein IPO which would be one of the biggest IPOs globally in 2024.

4. Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash

Super Hi International Holding (9658 HK) aims to raise around US$100m in its US ADR IPO. MS and Huatai are on the deal.
Super Hi International (SHI) is a Chinese cuisine restaurant brand, operating Haidilao hot pot restaurants in the international market.
In this note, we talk about the deal dynamics and the listing impact.

5. Indegene Limited Pre-IPO: Subscribe on Profitable Niche Business Model and Attractive Valuation

By Tina Banerjee

Indegene Limited (1864095D IN) has set IPO price band at INR430–452 per share. The IPO consists of fresh issue as well as OFS by existing shareholders.
Considering FY24 annualized post-IPO EPS of INR13.48, Indegene seeks a P/E valuation of 31.9–33.5x.
Considering niche business focus, proven execution capability, marquee clientele, long-standing client relationship, life science focus, and comprehensive offering, Indegene’s valuation seems quite attractive.

6. China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market

China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In this note, we talk about the positive aspects of the deal.

7. ECM Weekly (29th Apr 2024) – IDEA, Kokusai, J&T, Krafton, Horizon, Oceana, ChaPanda, 99 Speed, Afcon

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) and Mobvoi (2438 HK)‘s listing doesn’t really help the HK sentiment.
On the placement front, Vodafone Idea (IDEA IN) managed to do well, while Krafton (259960 KS) followed Samsung Electronics (005930 KS) footsteps.

8. Indegene Pre-IPO – RHP Updates – Client Base Continued to Grow, and Margins Have Begun Stabilizing

Indegene Limited (1864095D IN) is looking to raise about US$220m in its upcoming India IPO.
Indegene is a “digital-first” commercialisation firm with an exclusive focus on the global life sciences industry.
We looked at the firm’s past performance in an earlier note. In this note, we look at the RHP updates.

9. Pre-IPO Ximalaya – The Potential Risks and the Outlook

By Xinyao (Criss) Wang

The key to Ximalaya turning losses into profits is not the outstanding performance in revenue side, but rather the effective cost control. The Company seems to have encountered growth bottleneck.
To achieve long-term stable profits, it’s necessary to continuously optimize content quality, improve user experience, and expand paying user scale, but Ximalaya has shown “signs of fatigue” in this regard.
AI technology brings big room for imagination, but the question here is how much would truly translate into a leap in financial performance? Ximalaya’s valuation could be lower than peers.

10. China Resources Beverage Pre-IPO – The Negatives – Remains a Minnow in Other Markets

China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In this note, we talk about the not-so-positive aspects of the deal.

Apr 28

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Weekly Top Ten Equity Capital Markets – Apr 28, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. HD Hyundai Marine Solution: IPO Book Building Results Analysis

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.

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

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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 99 Speedmart Holding Pre-IPO – Consistent Network Expansion, Although Margins Remain Well Below Peak

By Travis Lundy, Quiddity Advisors

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.

Apr 21

0

Weekly Top Ten Equity Capital Markets – Apr 21, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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

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.

2. Baicha Baidao (2555 HK) IPO: Valuation Insights

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.

3. Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

4. ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo

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, the focus remained on HD Hyundai Marine Solution (443060 KS), even as Sichuan Baicha Baidao Industrial is gearing up to launch its IPO.
On the placement front, there were deals across India, South Korea and Australia.

5. Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

6. Belle Fashion IPO: The Investment Case

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.

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

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.

8. 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

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

By Sanghyun Park, Clepsydra Capital

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.

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

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.

Apr 14

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Weekly Top Ten Equity Capital Markets – Apr 14, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. HD Hyundai Marine Solution IPO Valuation Analysis

Our base case valuation of HD Hyundai Marine Solution is target price of 98,254 won per share, representing an 18% upside from the high end of the IPO price range.
The company’s ROE averaged 67% in 2022 and 2023. In comparison, the comps’ ROE averaged 10.6% in the same period. [HD Hyundai Marine Solution > Comps]
Our base case valuation is based on 24.7x P/E (comps’ average) using our estimated net profit of 178.7 billion won for the company in 2024.

2. Samsung Electronics Placement – Better Timing This Time Around

KEB Hana Bank, on behalf of Lee Boo-Jin, is looking to raise up to US$325m via selling 0.1% of Samsung Electronics (005930 KS).
The deal appears to be somewhat well flagged and the company recently reported better operating numbers for 1Q24.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

3. WT Micro Placement – Another Well-Flagged Taiwan GDR Offering, This One Is Easier to Digest

WT Microelectronics (3036 TT) is looking to raise US$341m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
The deal is a very well flagged one, and will be a relatively small one to digest at just 4.8 days of the stock’s three month ADV.
In this note, we run the deal through our ECM framework and comment on the deal dynamics.

4. Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss

Government of India raised around US$513m via selling some of its stake in Bharti Hexacom’s IPO.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

5. HD Hyundai Marine Solution IPO Industry Analysis

In this insight, we highlight some of the important industry factors impacting HD Hyundai Marine Solution.
Eco-Friendly ships are high-value-added ships that require more parts than conventional ships and are mechanically more complex, so the unit cost of parts is higher than that of conventional ships.
Therefore, the ship AM (aftermarket) is a key industry that is expected to benefit from higher customer demand and increase service prices.

6. ZEEKR IPO: Latest Updates as the IPO Process Restarts

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has restarted its IPO process to raise US$500 million by listing on the NYSE.
We previously discussed the IPO in ZEEKR IPO: The Bull Case and ZEEKR IPO: The Bear Case.
The latest SEC filings reinforce the bear case due to weak industry sentiment, rapidly slowing growth, ongoing operating losses and volatile FCF.

7. Baicha Baidao IPO: The Bull Case

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports.
Biacha is China’s third largest freshly-made tea shop company in terms of retail sales value in 2023, according to Frost & Sullivan.
The bull case rests on a rising market share, high revenue growth, sector-leading margins, cash generation and a strong balance sheet.

8. ECM Weekly (8th Apr 2024) – Hyundai Marine, Waaree Energies, Horizon Robotics, Bharti Hexacom

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, the focus remained on HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom (6597372Z IN).
On the placement front, India remained at the forefront with JSW Energy Ltd (JSW IN) and the potential share sale of Vodafone Idea (IDEA IN).

9. ICTK IPO Preview

By Michael Causton, JapanConsuming

ICTK is getting ready to complete its IPO in KOSDAQ in May. The IPO price range is from 13,000 won to 16,000 won.
According to the bankers’ valuation, the expected market cap of the company after the listing is 171 billion won to 210 billion won.
ICTK is a security company specializing in Internet of Things (IoT) based on physical copy prevention technology.

10. Trial to Become 5th Biggest Supermarket Post-IPO

Trial, the discount FMCG and retail technology company, completed its IPO last month, achieving an initial market capitalisation higher than most of its rivals in the supermarket sector.
If forecasts for FY2023 are achieved, it will become the 5th largest chain in the country and its proprietary technology should give it an important advantage in the medium term.
But its position at the centre of the fast-growing discount sector will drive the real growth, and the Kyushu-based firm will emerge as challenger to leading retailers.

Apr 07

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Weekly Top Ten Equity Capital Markets – Apr 7, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry

Kokusai Electric (6525 JP)’s 180-day IPO lock-up period for 71% of outstanding shares expires on 22 April. The shares exiting the lock-up period are worth US$4.8 billion.
The likely seller will be KKR & (KKR US) as it was the sole selling shareholder in the IPO. The shares are currently trading at 2.4x the IPO price.
Kokusai anticipates a return to growth and margin improvement in FY24. However, Kokusai trades at a material premium to peer multiples and is fully priced.

2. ECM Weekly (1st Apr 2024) – Shinhan, GlobalWafers, Mankind, Hyundai Marine, Bharti Hexacom, ChaPanda

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, HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom were in the market trying to raise over US$500m each.
Placements flow continued unabated this week as well, India, Taiwan and South Korea seeing large blocks.

3. HD Hyundai Marine Solutions IPO: Valuation Insights

HD Hyundai Marine Solution (443060 KS), the ship after-service subsidiary of HD Hyundai (267250 KS), aims to raise up to US$550 million.
We previously discussed the IPO in HD Hyundai Marine Solutions IPO: The Investment Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that the HMS is, at best, fairly valued at the IPO price range. We would pass on the IPO.

4. Waaree Energies Pre-IPO – Riding the Anti-China US Wave

Waaree Energies is looking to raise up to US$400m in its upcoming India IPO.
Waaree Energies is a solar PV module manufacturer in India with an aggregate installed capacity of 12 GW, as of Jun 2023.
In this note, we talk about the company’s past performance.

5. HD Hyundai Marine Solution IPO – Peer Comparison – Not Particularly Exciting

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In our previous note, we talked about the company’s historical performance. In this note, we talk about peer comparison.

6. HD Hyundai Marine Solution IPO – Thoughts on Valuation

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$551m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In our previous notes, we talked about the company’s historical performance and undertook a peer comparison. In this note, we share our thoughts on valuation.

7. Horizon Robotics Pre-IPO Tearsheet

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 International.
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.
HR was the first and the largest Chinese company providing integrated ADAS and AD solutions in terms of annual installation volume since 2021, according to CIC.

8. Weekly Deals Digest (07 Apr) – Kokusai Electric, HD Hyundai Marine, Langham, Jastec, JSR, Best World

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Kokusai Electric (6525 JP) lock-up expiry and HD Hyundai Marine Solution (443060 KS), Bharti Hexacom (6597372Z IN) IPOs.
Event-Driven developments: Langham Hospitality Inv Ss (1270 HK), IntelliCentrics Global Holding (6819 HK) Jastec Co Ltd (9717 JP), JSR Corp (4185 JP), Best World International (BEST SP), Isetan Singapore (ISET SP).

9. Crizac Pre-IPO Tearsheet

Crizac is looking to raise US$120m in its upcoming India IPO. The bookrunners on the deal are Equirus and Anand Rathi.
Crizac is an education platform offering international student recruitment solutions to global institutions of higher education in the United Kingdom, Canada, Republic of Ireland, Australia and New Zealand (ANZ).
Crizac is one of the largest student recruitment solutions providers from India to the UK with a market share of 13.0%, in terms of the number of students in 2023.

10. Ibotta IPO Valuation Analysis

In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenario under my base case.
Considering Ibotta achieved profitability in 2023 driven by strong growth in the segment of third-party publishers, I view EV/Revenue as the most appropriate methodology to value Ibotta.
I have a positive view of the upcoming Ibotta IPO. The company’s efficient B2B2C business model, success-based marketing approach and scale provide Ibotta with a long runway of growth.

Mar 31

0

Weekly Top Ten Equity Capital Markets – Mar 31, 2024

By Smartkarma Content | Equity Capital Markets

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. HD Hyundai Marine Solution IPO Preview

By Douglas Kim

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

2. Globalwafers GDR Offering – Coming to Market Earlier than Anticipated

Globalwafers (6488 TT) is looking to raise up to US$681m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
The deal is a somewhat large one to digest at 20.2 days of three month ADV and the proceeds will be used to purchase raw materials overseas.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

3. Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large

By Sanghyun Park, Clepsydra Capital

BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

4. Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

5. ECM Weekly (25th Mar 2024) – TCS, Akeso, Coforge, ABSL, Tokio Marine, Trial, Migao, Mixue, Reddit

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, Trial Holdings (5882 JP) ended up doing better than we expected, while Hong Kong finally got its first US$100m+ listing for the year.
For placements, India was again at the forefront, this time with a not-so-pleasant results of Tata Consultancy Svcs (TCS IN).

6. Mankind Pharma Placement – Well Flagged, past Deals Have Done Well but Its Expensive

ChrysCap is looking to raise around US$295m via selling a 2.8% stake in Mankind Pharma.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at the IPO, lock-up release and prior placement in our earlier notes. In this note, we talk about the current deal dynamics.

7. Bharti Hexacom IPO: Valuation Insights

Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise up to US$513 million at an IPO price range of Rs542-570 per share.
We previously discussed the IPO in Bharti Hexacom IPO: The Bull Case and Bharti Hexacom IPO: The Bear Case.
Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would not participate in the IPO.

8. HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In this note, we talk about the company’s historical performance.

9. Bharti Hexacom IPO: The Bull Case

Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise around US$500 million at a valuation of US$3.3-4.2 billion.
The offer is a pure secondary offering. The Government of India aims to reduce its stake from 30% to 15% of outstanding shares.
The bull case rests on market share gains, ARPU growth, low churn rates, improving margins, cash generation and low leverage.

10. Bharti Hexacom IPO – Unexciting and at a Half-Decent Discount