In today’s briefing:
- Hexaware Technologies IPO: The Bear Case
- ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool
- Pre-IPO Guming Holdings – Thoughts on Valuation
- Softcare Pre-IPO Tearsheet
Hexaware Technologies IPO: The Bear Case
- Hexaware Technologies (HEXW IN), an Indian mid-sized global IT services company, aims to raise up to US$1.0 billion.
- In Hexaware Technologies IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on mid-tier revenue growth, bottom-tier margins, low offshore mix, rising unbilled receivables/contract assets and a large post-IPO share overhang.
ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, neither of the two listings performed last week, while more are lining up to list across the region.
- On the placements front, given the ongoing earnings season there weren’t any deals. We did look at lockups and other possible upcoming deals.
Pre-IPO Guming Holdings – Thoughts on Valuation
- If based on the market value of HK$20.246 billion to HK$23.185 billion in this IPO, a single store market value is about HK$2-2.4 million, higher than that of Baicha Baidao.
- Our forecast of 2024 net profit is RMB1.4 billion. Based on IPO price range of HK$8.68-9.94 per share, P/E is about 13.5-15.5x. There is still some upside room for valuation.
- Investors may need more “safety margins” on valuation due to the pressure of performance growth after IPO.The higher the IPO price, the greater the risk of future valuation downward revisions.
Softcare Pre-IPO Tearsheet
- Softcare (SOFT HK) is looking to raise at least US$300m in its upcoming Hong Kong IPO. The deal will be run by CICC, CITIC and GF Securities.
- SC is principally engaged in the development, manufacturing and sales of baby and feminine hygiene products, focusing on the fast-growing emerging markets, including Africa, Latin America and Central Asia.
- As of September 30, 2024, SC had 18 sales branches in 12 countries, and an extensive sales network across over 2,500 wholesalers, distributors, supermarkets, and other retailers in total.
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