In today’s briefing:
- CATL A/H Listing – Thoughts on A/H Premium
- Chagee Holdings (CHA US) IPO: The Bull Case
- Chagee Pre-IPO – Market Leading Growth but Showing Signs of Fatigue
- Pre-IPO Chagee Holdings – The Business Model, the Concerns Behind and Valuation Outlook
- SmartStop Self Storage (SMA): Upside Surprise, IPO Pops 8% at Open and Trades Higher
CATL A/H Listing – Thoughts on A/H Premium
- Contemporary Amperex Technology (CATL) (300750 CH), one of the world’s largest battery solutions providers, aims to raise at least US$5bn in its H-share listing.
- CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
- We have looked at the company’s past performance in our earlier notes. In this note, we talk about its recent updates and provide our thoughts on valuations.
Chagee Holdings (CHA US) IPO: The Bull Case
- Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO.
- According to iResearch, as of December 31, 2024, Chagee was the largest premium freshly made tea drink brand in China by the number of stores.
- The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.
Chagee Pre-IPO – Market Leading Growth but Showing Signs of Fatigue
- Chagee Holdings (CHA US) is planning to raise up to US$500m through its upcoming US IPO.
- Chagee is a leading premium tea drinks brand, serving healthy and delicious freshly-made tea drinks.
- In this note, we look at the firm’s past performance.
Pre-IPO Chagee Holdings – The Business Model, the Concerns Behind and Valuation Outlook
- Chagee adopts the “1+1+9+N” business model, which ensures the successful replication of the single store model. However, we saw performance decline in 2024, and future performance growth sustainability is uncertain.
- In terms of valuation, comparable companies include Starbucks and MIXUE. We think valuation of Chagee should be lower than MIXUE and Starbucks as both have proved themselves in the industry.
- Future growth would inevitably slow down. Investors may need more ‘safety margins’ on valuation because despite short-term strong demand, investors need to be alert to the performance validation after IPO.
SmartStop Self Storage (SMA): Upside Surprise, IPO Pops 8% at Open and Trades Higher
- SmartStop priced a full-size deal of 27.0mm shares at $30.00 and opened for trading at $32.40 for a gain of 8% at first trade.
- The offering finished five-times oversubscribed with the underwriter stating that the deal had sizable participation from long-only and REIT-dedicated accounts.
- A low-risk storage unit company which pays a monthly dividend, like SmartStop, attracted the right buyer for this deal to work given the current economic environment.
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