Daily BriefsIPOs and Placements

Equity Capital Markets: Roblox, Gcl Poly Energy Holdings Limited, RLX Technology Inc, MicroPort CardioFlow, Linklogis, PTT Oil and Retail and more

In today’s briefing:

  • Roblox Valuation Analysis
  • GCL Poly Energy Holdings Placement – Won’t Solve Its Debt Problems
  • RLX Technology Pre-IPO – Peer Comparison and Valuation
  • MicroPort Cardioflow (微创心通) Pre-IPO: Strong Sales Ramp-Up Despite Being Late in Market
  • Linklogis IPO Initiation: ISupply
  • PTT Oil and Retail IPO – Updated Financials and Competitive Landscape
  • PTT Oil and Retail IPO – Thoughts on Valuation

Roblox Valuation Analysis

By Douglas Kim

Roblox, one of the leading global game platforms, announced on Friday (8 January) that it plans to go public through a Direct Public Listing (DPL), instead of the traditional IPO. Ahead of this direct public listing, Roblox raised $520 million in private financing, valuing the company at $29.5 billion or $45 per share.

Our valuation analysis suggests a base case implied market cap of $50 billion and a target price of $76.20 per share for Roblox. This would represent 69% higher level than its most recent private capital raise of $520 million, valuing the company at $29.5 billion or $45 per share. The direct listing valuation range is from $40.5 billion to $60.5 billion, according to our valuation sensitivity analysis. 


GCL Poly Energy Holdings Placement – Won’t Solve Its Debt Problems

By Sumeet Singh

Gcl Poly Energy Holdings Limited (3800 HK) aims to raise around US$460m via a primary placement to reduce borrowings. 

The shares have done exceedingly well since Aug 2020 in the face of multiple headwinds.


RLX Technology Pre-IPO – Peer Comparison and Valuation

By Sumeet Singh

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. 

RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.

Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.

However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.

In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, I’ll undertake a peer comparison and talk about valuation.

Links to our previous notes:


MicroPort Cardioflow (微创心通) Pre-IPO: Strong Sales Ramp-Up Despite Being Late in Market

By Ke Yan, CFA, FRM

MicroPort Cardioflow is a transcatheter valve therapeutic medical device company incubated from the MicroPort Group. The company aims to raise up to USD 300m via a Hong Kong listing.

We look at the company’s first-generation TAVR product, VitaFlow. We think it has decent clinical data in terms of efficacy and safety. It was launched two years behind the main competitor, VenusMedtech’s VenusA-Valve. Having said that, its sales ramp is strong since its launch in 2H2019. 

The company’s management team has been working within the MicroPort Group for more than a decade. We believe that the company can leverage on the sales network of MicroPort Group. In terms of pre-IPO investors, we note that they are mainly domestic funds but the quality is decent. 


Linklogis IPO Initiation: ISupply

By Arun George

Linklogis (LINK HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis was the leading technology solution providers in China with a 20.5% market share of supply chain finance transactions processed in 9M20, according to CIC. Linklogis is backed by Tencent Holdings (700 HK), CITIC Capital, GIC and Standard Chartered (STAN LN). Linklogis has filed for a Hong Kong IPO to raise as much as $500 million, according to press reports.

Linklogis is a play on China’s supply chain finance market. SMEs in China had an average of 92 days of accounts receivable outstanding in 2019, higher than 51 days on average in the US. It could also take up to 6 to 12 months for SMEs to receive final payments. The Chinese government has introduced a series of supportive policies to direct funding towards small businesses, including imposing SME lending growth targets for banks. Supply chain finance has proven to be a useful way to bridge the financing gap of SMEs, as it allows SMEs to get quick access to payment and funding at low costs. In 9M20, Linklogis’ customers helped their SME suppliers obtain low-cost financing at an average financing cost of 5.4%, significantly lower than the cost of financing extended to SMEs relying on their own creditworthiness that ranges from 10% to 20%, according to CIC.

Linklogis is an attractive play on these market dynamics by combining an attractive monetisation model, high customer retention rate (strong revenue visibility) and good operating leverage.


PTT Oil and Retail IPO – Updated Financials and Competitive Landscape

By Zhen Zhou, Toh

PTT Oil and Retail (PTTOR TB) is looking to raise up to US$2bn in its IPO.

As per the exchange announcement, PTTOR will offer up to 2.7bn primary shares in the IPO, of which 300m will be sold to existing shareholders of PTT. There will be a greenshoe option of 300m shares. PTT will retain 75% stake in PTTOR after the IPO.

PTTOR is a market leader in the oil business as well as F&B business. It has leveraged its service station network to build out its brand, Amazon Cafe, which has a strong presence even beyond service stations. 

In this note, we will take a closer look at PTTOR’s business segments and 9M20 performance and the competitive landscape of the industries it operates in.

We have previously covered the IPO in:


PTT Oil and Retail IPO – Thoughts on Valuation

By Zhen Zhou, Toh

PTT Oil and Retail (PTTOR TB) is looking to raise up to US$2bn in its IPO.

As per the exchange announcement, PTTOR will offer up to 2.7bn primary shares in the IPO, of which 300m will be sold to existing shareholders of PTT. There will be a greenshoe option of 300m shares. PTT will retain 75% stake in PTTOR after the IPO.

PTTOR is a market leader in the oil business as well as F&B business. It has leveraged its service station network to build out its brand, Amazon Cafe, which has a strong presence even beyond service stations. 

In this note, we will take a closer look at PTTOR’s business segments and 9M20 performance and the competitive landscape of the industries it operates in.


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