Daily BriefsIPOs and Placements

Equity Capital Markets: China Resources Mixc Lifestyle Services, Yatsen Holding, ABKO Co, Netjoy, Beijing Kuaishou Technology Co Ltd and more

In today’s briefing:

  • CR Mixc Lifestyle Services (华润万象生活) Pre-IPO – SOE-Linked Parentage Didn’t Help
  • Yatsen IPO: Comparison with Leading Domestic Brands
  • Abko IPO Valuation Analysis
  • Netjoy (云想科技) Pre-IPO: Growth Stalled for the Short Video Marketer
  • Kuaishou Technology Pre-IPO – The Positives – Hot Segment, Fast Growth

CR Mixc Lifestyle Services (华润万象生活) Pre-IPO – SOE-Linked Parentage Didn’t Help

By Zhen Zhou, Toh

China Resources Mixc Lifestyle Services (CRML HK) (CRML) is looking to raise US$1bn in its upcoming Hong Kong IPO. 

CRML is the property management arm of China Resources Land (CR Land). The company provides property management and value-added services (VAS) to residential properties. It also manages and operates a portfolio of commercial properties that includes shopping malls and office buildings. As of 30th June 2020, the company has a total GFA under management (including residential and commercial) of 106.6m sqm.

We didn’t like the fact that CRML’s SOE-linked parentage puts CRML in a position where it had to manage old properties. While they don’t account for a significant proportion of residential properties’ revenue, it still reflects the quality of properties that could come to CRML in the future.

In this note, we will look at updates from PHIP, peer comparison, and discuss our thoughts on assumptions and forecasts.


Yatsen IPO: Comparison with Leading Domestic Brands

By Arun George

Yatsen Holding (YSG US) is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. Founded in 2016, Yasten has three colour cosmetics and skincare brands: Perfect Diary, Little Ondine and Abby’s Choice

In Yatsen IPO Initiation: Face the Facts, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. Yasten will likely be compared to its A-Share listed peers – Proya Cosmetics (603605 CH), Guangdong Marubi Biotechnology and Shanghai Jahwa United Co A (600315 CH).

Despite differing end-product revenue exposure, we think that this comparison is appropriate as they are all plays on China’s beauty market and share some overlap in customers and products. Our analysis suggests that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. 


Abko IPO Valuation Analysis

By Douglas Kim

Our base case valuation for Abko suggests an implied market cap of 279 billion won or an implied price per share of 27,484 won. The IPO price range is from 21,400 won to 24,300 won so our price target would suggest a 20% upside from the mid-point of the IPO price range. Given the reasonable upside, we have a POSITIVE view of this IPO. The book-building for the institutional investors starts on 17 November. 


Netjoy (云想科技) Pre-IPO: Growth Stalled for the Short Video Marketer

By Ke Yan, CFA, FRM

Netjoy, a leading short video marketing solution player, is raising USD 200m via a listing in Hong Kong.

Netjoy rode the wave of emergence of short video platforms such as Tiktok and Kuaishou. It specialises in short video marketing. Online gaming is the main spender on ads through Netjoy.

We note that key operating metrics such as revenue per click and revenue per advertiser has been trending down in the track record period. The company’s shareholders are mainly individuals with no significant investments from institutional investors. 

We also note that the company didn’t disclose operating data in 2020 hence it is challenging to assess the recent development. We provide our preliminary thought on its valuation.


Kuaishou Technology Pre-IPO – The Positives – Hot Segment, Fast Growth

By Sumeet Singh

Beijing Kuaishou Technology Co Ltd (1496219D CH) (KT) is a content community and social platform. The company is backed by Tencent Holdings (700 HK), Sequoia China, Baidu (BIDU US), DST Global, Boyu Capital, Temasek and others.

 As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20.

 As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.

In this note, I’ll talk about the positive aspects of the deal.


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