ChinaDaily Briefs

China: Excellence Commercial Property, Trip.com, Guangzhou Baiyun International Airport, Radiance Holdings, Link REIT, Medco Energi and more

In today’s briefing:

  • ECM Weekly (11 October 2020) – Excellence Comm, MR DIY, Converge ICT, Simcere, SciClone, JW Thera
  • Trip.com – All Systems Go
  • Guangzhou Baiyun Intl Airport (600004 CH): Sep Marked the First Dual YoY Growth
  • Radiance Holdings Pre-IPO: Shoring Up the Balance Sheet as Regulators Set Deleverage Targets
  • Link REIT – Weak Results Preview
  • Morning Views Asia: Alam Sutera Realty, Anton Oilfield, China SCE, Guangzhou R&F Properties

ECM Weekly (11 October 2020) – Excellence Comm, MR DIY, Converge ICT, Simcere, SciClone, JW Thera

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.

This week we got a good mix of ECM deals across Asia. Starting with the usual, Hong Kong saw Excellence Commercial Property (1611267D CH) launch its bookbuild which we covered in:

For upcoming IPOs, there were news of Shimao Services Holdings (SSH HK) and KWG Living Group (KLG HK) seeking listing approval from Hong Kong Exchange and likely to premarket soon. Simcere Pharmaceutical Group (SIMCERE HK) has already gotten approval and its PHIP has been filed already. Bookbuild of these IPOs will likely launch soon and we covered them in:

HK biotech IPOs are still looking strong. JHBP (Genor) (6998 HK) and Everest Medicines (1952 HK) listings this week did well which should continue bode well for sentiment for subsequent deals to come. Ke Yan, CFA, FRM continued his coverage of upcoming biotech IPOs:

In the U.S,  MINISO (名创优品) IPO – Reasonable Towards the Low-End launched its bookbuild just about two weeks after its F-1 filing. Our valuation and earlier coverage is as follows:

In other parts of Asia, starting with the Philippines, Converge ICT Solutions Inc (ITC PM) launched its bookbuild and was said to price towards the low-end of the price range. In Malaysia, MR D.I.Y. Group (MRDIY MK), on the other hand, counted a long list of institutional investors as cornerstone, leaving little for others.

There hasn’t been a whole lot of placement activities in Hong Kong but Japan saw Danone SA (DANOY US) selling down its remaining stake in Yakult Honsha (2267 JP).

IPOs debuting this coming week:

Accuracy Rate:

Our overall accuracy rate is 73.3% for IPOs and 66.5% for Placements 

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

New IPO filings this week

  • Dida Inc (US$500m, Hong Kong)
  • Lufax (US$2bn, the U.S.)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

Analysis on Upcoming IPOs

Name Insight
Hong Kong
Ant Group Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles 
Ant Group Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials 
Ant Group Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask – Falling Fees, Margins, Cash Flow 
Ant Group Ant Financial IPO Early Thought: Understand Fintech Empire, Growth & Risk Factors
Ant Group Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News 
Ant Group Ant Group – Index Inclusion Possibilities & Timeline 
Blue Moon

Blue Moon Group Pre-IPO – The Positives – Dominant Market Share, Strong Online Sales 

Blue Moon

Blue Moon Group Pre-IPO – The Negatives – Flagging Offline Sales, Not Really a Primary Raising 

Blue Moon

Blue Moon: No. 1 But No Exclusive Advantage, Observation on the Ground 

Blue Moon

Blue Moon Group Pre-IPO – Online Reviews and Peer Comparison 

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 

E-Star Comm

E-Star Commercial Management Pre-IPO – Better Disclosure in New Prospectus 

E-Star Comm

E-Star Commercial Management Pre-IPO – Still Largely Reliant on Galaxy, Poor Disclosure Doesn’t Help 

Genor

Genor (嘉和生物) Pre-IPO: Slow R&D Progress in the past but that Might Change 

Jiayuan Svcs

Jiayuan Services (佳源服务) Pre-IPO – Another Small Property Management Company 

Jinke Svcs

Jinke Smart Services (金科智慧服务) Pre-IPO – GFA Growth at the Expense of Fees 

Kilcoy

Kilcoy Global Foods Pre-IPO – Rapid Earnings Growth on the Back of Margin Improvement 

Kilcoy

Kilcoy Global Foods Pre-IPO – A Lot of Things Still Remain Unexplained 

KWG Living

KWG Living (合景悠活) Pre-IPO – Strong Growth and Margin Expansion but Overly Reliant on KWG Group 

Megvii Megvii (旷视) Pre-IPO – Remarkable Growth (Part 1) 
Megvii Megvii (旷视) Pre-IPO – A Bet on the Future – Segments, Revenue Drivers and Growth Potential 
Megvii Megvii (旷视) Pre-IPO – The Real Race Is in Research – Founders’ Profile and Talent 
Megvii Megvii (旷视) Pre-IPO – Competitive Landscape and Peer Analysis 
Megvii Megvii (旷视) Pre-IPO –  Initial Thoughts on Valuation 
Ocumension Ocumension (欧康维视) Pre-IPO: All Ready for a Great Listing Except a Block Buster 
Pop Mart Pop Mart Pre-IPO – The Negatives – Is It a Brand Owner or Just a Retailer? 
Pop Mart Pop Mart Pre-IPO – The Positives – Expanding Portfolio+Wider Distribution= Explosive Earnings Growth 
Pop Mart Pop Mart Pre-IPO – Peer Set and Valuation 
Pop Mart Pop Mart Pre-IPO Quick Note – On the Ground – Pop-Up Stores Are Effective 
Radiance Radiance Holdings (金辉控股) Pre-IPO – Property Mgt Svc Sold Out at a Ridiculously Cheap Valuation 
Shimao Svcs Shimao Services (世茂服务) Pre-IPO – Community VAS Segment Is the Star 
Sunac Svcs Sunac Services (融创服务) Pre-IPO – Promising Growth & Diversifying Away from Sunac Via Acquisitions 
RemeGen RemeGen (荣昌生物) Pre-IPO: Thoughts on Valuation of RC18 and RC48 
Simcere Simcere (先声制药) Pre-IPO: Long History but Products Concentrated 
Toplist Toplist China Pre-IPO – Overwhelmingly More Negatives than Positives 
Tasly Tasly Biopharm (天士力生物) IPO: Visible Growth from Approved Drug but Lacks Blockbusters 
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 
India
ASK ASK Investment Managers Pre-IPO – Riding on a Wave of Wealth 
Anmol Ind Anmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotel

Bharat Hotels Pre-IPO – Catching up with Peers 

Burger King

Burger King India Pre-IPO – Has Been Growing Fast and Plans to Grow Even Faster 

Burger King

Burger King India Pre-IPO – Peer Comparison Yields Interesting Nuggets on Profitability and Capex 

Bajaj En

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

CMS Info CMS Info Systems Pre-IPO – When a PE Sells to Another PE… Only One Gets the Timing Right
Crystal Crop Crystal 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 
Equitas SFB Equitas Small Finance Bank Pre-IPO – Another Forced Small Finance Bank Listing 
Equitas SFB Equitas Small Finance Bank Pre-IPO – Another Forced Small Finance Bank Listing 
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 
IRFC Indian Railway Finance Pre-IPO – Low Risk, Low Margin Business 
NSE NSE IPO Preview- Not Only Fast..its Risky and Expensive
NSE National Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some
Mrs. Bector Mrs. Bectors Food Specialities Pre-IPO Quick Take – Sales for Its Main Segment Have Been Sta

LIC

Life Insurance Corporation of India Pre-IPO – Early Take on India’s Largest IPO 

Lodha

Lodha Developers Pre-IPO – Second Time Lucky but Not Really that Much Affordable
Lodha Lodha Developers IPO: Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt
Penna Cem Penna Cement – Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 
PNB Met PNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Samhi Hotels Samhi Hotels Pre-IPO – Assets and Borrowings Are Growing, but Earnings Haven’t Kept Pace 
Malaysia
QSR QSR Brands Pre-IPO – As Healthy as Fast Food
Thailand
PTTOR PTT Oil and Retail IPO – F&B Business Is the Profit Driver 
The U.S
CDP CDP Holdings Pre-IPO Review – Highly Reliant on Best Inc. 
CloudMinds CloudMinds Inc Early Thoughts – Still Nascent

Trip.com – All Systems Go

By Thomas J. Monaco

*Trip.com Should Continue to Get a Significant Upward Re-Rating: Mainland China has been at the epicenter of this tourism slowdown. If the virus impact continues to be held in check for 2-3 weeks post-Golden Week, the risk to tourism and confidence should start to seriously abate; and 

*Travel Rebound Underway: The good news is that mainland China hasn’t “officially” reported local COVID-19 infections since August 15th, although there were two asymptomatic cases disclosed in late September. After nine plus months of hiding and the Covid-19 pandemic largely under control in mainland China, the Ministry of Culture and Tourism stated that the first four days of the Golden Week holiday beginning October 1st witnessed nearly 425 mn local trips – nearly 80% of the level posted in 2019.


Guangzhou Baiyun Intl Airport (600004 CH): Sep Marked the First Dual YoY Growth

By Osbert Tang, CFA

There is full recovery in both domestic aircraft movement and passenger throughput at Guangzhou Baiyun International Airport (600004 CH) in Sep, which registered YoY growth of 8.5% and 0.7%, respectively. The figures suggested further strength in the domestic market and should reflect positively on a QoQ in GBIA’s profitability improvement. Also, the initial figures for the Golden Week have pointed to a 4.9% higher daily aircraft movement and 8.2% higher daily passenger throughput than the average in Sep. 

We believe the rebound of international passenger will be an increasingly important driver for GBIA’s traffic recovery over the next 12 months. For example, China Southern Airlines (1055 HK) has already increased its international flights departing from Guangzhou from 16 in Sep to 20 in Oct. GBIA has also obtained approval for non-public issuance of A-shares to its parent to raise fresh equity of Rmb3.2bn, and we believe these are all positive developments for the company.


Radiance Holdings Pre-IPO: Shoring Up the Balance Sheet as Regulators Set Deleverage Targets

By Oshadhi Kumarasiri

Radiance Holdings (RH HK) is a property developer in China focused mainly on providing high-quality residential properties to first-time home buyers and first-time upgraders. The company has over 20 years of experience and was ranked 40th in terms of contracted sales in a fragmented real estate market.

The company has filed for an IPO on the Hong Kong Stock Exchange and plans to use the IPO proceeds to:

  • Finance the construction of the following development projects: Shaoxing New Block Guanlan Garden, Shaoxing Mirror Lake, Fuzhou Jinhui Lanlixuan. Xi’an Jinghe Town, Suzhou New Block Four Seasons Garden, and Chongqing Changjiang King’s Garden.
  • Repay a portion of its existing trust loans.
  • General business operations and working capital purposes.

We analyse China’s residential property market conditions and their impact on Radiance Holdings below.


Link REIT – Weak Results Preview

By Thomas J. Monaco

*Weak Numbers Expected: Link REIT (823.HK) [Link] hosted a pre-blackout investor presentation on Oct 8, 2020.The outcome was generally a negative earnings pre-announcement whereby DPU is set to decline 7.6% – the first dividend decline since Link was listed in 2005. The culprit for the poor pre-announcement was a negative rental reversion rate and increased rental concessions (which we believe are not one off) in Hong Kong, factors which are anticipated to continue to place intense pressure on results for the foreseeable future; and  

*Hong Kong Pressures Are Very Apparent: This recent London transaction is so far away from Link REIT’s core competencies speaks volumes as to where it believes its core Hong Kong retail business is heading. This doesn’t seem like smart diversification and smells more of panic leverage when one considers the price and location of this deal. We are hopeful that management doesn’t let the large cash position burn another hole its pocket.   


Morning Views Asia: Alam Sutera Realty, Anton Oilfield, China SCE, Guangzhou R&F Properties

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


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