Daily Brief ECM: DH Shipbuilding IPO Valuation Analysis and more

In today’s briefing:

DH Shipbuilding IPO Valuation Analysis
China Healthcare Weekly (Jun.29) – Biotech Valuation Bubble Is About to Burst, Innovent’s Placement
Weekly Deals Digest (29 Jun) – FWD, HDB, Santos, PointsBet, New World, Dickson, HKBN, OneConnect

DH Shipbuilding IPO Valuation Analysis

Our base case valuation of DH Shipbuilding IPO is target price of 67,576 won per share, which represents a 35% upside to the high end of the IPO price range.
Given the solid upside, we have a Positive view of this IPO. Our valuation sensitivity analysis suggests a market cap range of 2.3 trillion won to 2.9 trillion won.
Our target valuation multiple of 5.7x is 20% premium to the comps’ P/B valuation multiple which is justified due to the company’s higher ROE, operating margins and stronger balance sheet.

The valuation bubble of innovative drug companies is about to burst as some founders/shareholders have started to reduce their holdings and cash out. We recommend investors to be rational.
Domestic innovative drugs market size would be about RMB600 billion by 2035. It is estimated the whole innovative drug industry’s CAGR would be about 15% for the next decade.
Innovent announced Placement with the Placing price of HK$78.36/share. However, valuation is clearly at a high level. A more suitable option is to take profits rather than buy.

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: FWD Group Holdings (1828 HK) and HDB Financial Services Ltd (0117739D IN) IPOs.
Event-Driven developments: Santos Ltd (STO AU), Humm Group (HUM AU), PointsBet Holdings (PBH AU), New World Resources (NWC AU), Dickson Concepts Intl (113 HK), HKBN Ltd (1310 HK), OneConnect.

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