Daily BriefsIPOs and Placements

Equity Capital Markets: JD Logistics, Waterdrop Inc, Monde Nissin Corp and more

In today’s briefing:

  • JD Logistics (京东物流) Pre-IPO – PHIP Updates and Fine-Tuning Valuation
  • Waterdrop IPO – Valuation Has Nearly Tripled over the past Year
  • A Quick Run Through Technology & The Business Model of Monde Nissin’s Alternative Meat Brand “Quorn”
  • Waterdrop IPO: Attractive at the Lower End of the IPO Pricing
  • Waterdrop IPO Valuation Analysis

JD Logistics (京东物流) Pre-IPO – PHIP Updates and Fine-Tuning Valuation

By Zhen Zhou, Toh

JD Logistics (JDL HK) is looking to raise US$4bn in its upcoming Hong Kong IPO. 

JD Logistics (JDL) was the leading supply chain solutions and logistics services provider in China in terms of revenue in 2018 and 2019. The company offers a full spectrum of supply chain solutions and logistics services ranging from warehousing to distribution, spanning across manufacturing to end-customers, covering regular and specialized items. 

In this note, we briefly look at the JDL’s PHIP filing which includes FY2020 numbers and fine-tune our valuation model.

We had previously covered the IPO in:


Waterdrop IPO – Valuation Has Nearly Tripled over the past Year

By Sumeet Singh

Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, aims to raise up to US$360m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.

In this note, we’ll run the deal through our ECM framework and talk about valuations.


A Quick Run Through Technology & The Business Model of Monde Nissin’s Alternative Meat Brand “Quorn”

By Oshadhi Kumarasiri

We are positive about the Monde Nissin Corp (0191881D PM) IPO due to two main reasons. The cash cow, the APAC food and beverage business, generate steady earnings growth and sufficient cash flows to pay a decent dividend and facilitate investments in the fast-growing alternative meat business.

The second reason and perhaps the most important in determining the fair value of Monde Nissin is its exposure to the fast-growing meat alternatives market.  We look at Monde Nissin’s Alternative Meat Brand Quorn in details below.


Waterdrop IPO: Attractive at the Lower End of the IPO Pricing

By Shifara Samsudeen, ACMA, CGMA

The leading Chinese insurance and healthcare platform Waterdrop Inc (WDH US)  has set the terms for its US IPO. According to iResearch, Waterdrop was ranked the largest independent third-party insurance platform in China in terms of life and health insurance first year premiums (FYP) distributed in 2020.

The company plans to issue 30m ADS’ at an indicative price range of US$10-12 per ADS. Each ADS represents 10 ordinary shares of the company and the offer represents about 7.6% of the company’s total outstanding shares post IPO. At the midpoint of the IPO price of US$11 per ADS, Waterdrop will raise net proceeds of US$301.6m (assuming over-allotment option is not exercised) at a market capitalisation of US$4.3bn and a post-money EV of US$3.7bn.

A number of cornerstone investors have agreed to subscribe for at least US$210m worth of ADS’ offered at the IPO and these investors include Boyu Capital, HOPU Investments and Kevin Sunny Holdings. Waterdrop plans to use approx. 50% of the net IPO proceeds on enhancing and expanding its healthcare service and insurance business, 30% of the net IPO proceeds on R&D and the remainder will be used for general corporate purposes.


Waterdrop IPO Valuation Analysis

By Douglas Kim

Our base case value of Waterdrop is $4.6 billion or $11 per share. This is essentially at the mid-point of the IPO valuation range. Given the limited upside, we would pass on this IPO deal.
Our valuation of $4.6 billion is based on EV/S multiple of 5.8x using our estimated sales of $670 million (4.3 billion RMB) in 2021. Our EV/S multiple of 5.8x is based on the median valuation multiple of our comparable companies in 2021. This valuation multiple is also close to the average EV/S multiple of 6.1x for the two China online insurance/healthcare related stocks including ZhongAn Online P&C insurance and Ping An Good Doctor. According to our valuation sensitivity analysis, the IPO valuation ranges from $8.4 per share to $13.9 per share. 
Given that the mutual aid platform has been one of the key generators of user traffic, discontinuing this operation would result in a major change in the company’s business operations and its ability to generate sufficient sales and customers growth. As such, we believe this is a major risk factor for the company. 

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