In this briefing:
- ECM Weekly (2 February 2019) – Maoyan, China Tower, Dexin, Chalet Hotels, Bharat Hotels, Wingarc1st
- Semiconductor Memory Business Shrinking Fast
- Netmarble Games + Tencent = The Most Likely Consortium to Acquire NXC Corp/Nexon?
- The Dollar Is Already Dead
1. ECM Weekly (2 February 2019) – Maoyan, China Tower, Dexin, Chalet Hotels, Bharat Hotels, Wingarc1st
Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.
Happy Lunar New Year to everyone from Aequitas Research!
It has been a fairly quiet week leading up to Chinese New Year but it is not stopping Maoyan Entertainment (1896 HK) from listing on Monday. The IPO was priced at the bottom end of its offering range. The last we checked, it traded up 3% in the grey market on Friday. Ke Yan, CFA, FRM will follow up with a short note of his thoughts on post-IPO trading dynamics and bookbuild subscription levels.
Other updates on IPO in Hong Kong include Sinochem Energy allowing its IPO application to lapse while Koolearn (1373356D HK) and Shangde Qizhi Education re-filed for IPO. Edvantage, another new education IPO (and likely to be borderline US$100m deal size) filed for Hong Kong listing this week as well.
China Tower (788 HK)‘s lock-up will be expiring on the 8th of February and Ke Yan, CFA, FRM mentioned in his insight that any potential placement will be a good opportunity to accumulate the stock. Placements from cornerstone investors will likely be a liquidity event.
In India, Chalet Hotels Limited (CHALET IN) closed its bookbuild with a tepid overall demand of 1.57x. The silver lining for the IPO is that the institutional tranche saw a healthy 4.6x demand, similar to that of Lemon Tree Hotels (LEMONTRE IN) in terms of weak overall but strong institutional demand, which ended up performing well in its IPO.
Other upcoming India IPOs include Mazagon Dock Shipbuilders Ltd (9155507Z IN) and Embassy REIT which were said to be seeking listing towards the end of February. Sterling and Wilson is also looking to file its INR50bn IPO with the Sebi soon.
In Japan, Wingarc1st announced its IPO bookbuild to start on the 25th of February and will be listing in March. It is estimated to be raising about US$380m.
Accuracy Rate:
Our overall accuracy rate is 72% for IPOs and 63.8% for Placements
(Performance measurement criteria is explained at the end of the note)
New IPO filings
- Edvantage Group (Hong Kong, ~US$100m)
- Koolearn (Hong Kong, re-filed)
- Shangde Qizhi Education Group (Hong Kong, re-filed)
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
- China’s Sinochem Energy lets Hong Kong IPO application lapse
- India’s Cleartrip eyes IPO as it plans Gulf expansion
- Blackstone set to IPO inaugural $1 billion Reit before March
- Bursa Malaysia’s outgoing CEO says IPO pipeline for 2019 looks strong
- China to Scrap Price, Debut Gain Limits to Entice Tech IPOs
Smartkarma Community’s this week Analysis on Upcoming IPO
- Ebang IPO Preview: Balance Sheet Indicators Point to a Significant Slowdown
- Chalet Hotels IPO Review – Backed up into a Corner
- CStone Pharma IPO Preview: Mixed Prospects of Late-Stage Clinical Drug Candidates
- IPO Radar: KTB Securities, the Only Korean Broker in Thailand
- Shanghai Henlius (复宏汉霖) IPO: Not an Impressive Biosimilar Portfolio
- Dreamtech: Trying for an IPO Again at a Lower Price
- Bharat Hotels Pre-IPO – Catching up with Peers
- China Tower Corp: Trading Idea Before Lock-Up Expiry
- Dexin China (德信中国) Pre-IPO – Related Party Transactions and Partial Asset Listing
List of pre-IPO Coverage on Smartkarma
2. Semiconductor Memory Business Shrinking Fast
Earnings have been announced for Intel, Samsung, SK hynix, and Western Digital, and the memory business is clearly undermining all of these companies’ earnings. In this Insight I review each of the companies to show where they are, and will explain what the future holds for them as today’s oversupply unfolds.
3. Netmarble Games + Tencent = The Most Likely Consortium to Acquire NXC Corp/Nexon?
Netmarble Games (251270 KS) officially announced on January 31st that it is interested in buying Nexon/NXC Corp. We believe that there is a growing likelihood of a potential consortium which includes Tencent and Netmarble Games to acquire NXC Corp/Nexon. Three major reasons why Tencent may want to partner with Netmarble Games to acquire NXC Corp/Nexon include the following:
- Avoid the cultural backlash from Korean gamers
- Among all the companies that Tencent has invested in Korea, Netmarble Games has become the biggest in amount.
- Netmarble Games is more focused on games and has a stronger balance sheet than Kakao Corp, which has also shown interest in acquiring NXC Corp/Nexon.
4. The Dollar Is Already Dead
The past year has all been about dollar strength. That is an accepted wisdom. But the truth of the matter is that the dollar averaged 93.6 on the DXY in 2018 (3 January 2018 to 31 December 2018) and, as we write, stands at 95.5. From 1 January 2015 to 1 July 2017 the DXY averaged 97.2. The dollar is not strong, even by recent history standards. Moreover, it is no longer as important as it once was in policy making terms – and neither is the Federal Reserve.
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