Daily BriefsIPOs and Placements

Equity Capital Markets: Sea Ltd, Orient Overseas International, Helen’s International Holding, AirPower Technologies, Simplex Holdings, Novotech Holdings, EDDA Healthcare and Technology, Beijing Airdoc Technology, Kakao Pay and more

In today’s briefing:

  • SEA Ltd Placement -Momentum Is Very Strong but Last Deal Didn’t Do Well and It Doesn’t Need the Cash
  • Sea Ltd Follow-On Offering: Asking Permission From Investors to Burn $4.0bn Per Year
  • Orient Overseas Placement – Fourth Deal This Year. Is the Largest and at the Tightest Discount.
  • Helens Intl (海伦司国际) IPO Trading – Decent Demand but Still Some Way to Go to Our Preferred Buy Level
  • Airpower Technologies Pre-IPO Tearsheet
  • Simplex Holdings IPO – Simply Mediocre
  • Novotech Pre-IPO: PHIP and Valuation Update
  • EDDA Healthcare IPO: Surgical Robots Show Strong Growth Prospects
  • Beijing Airdoc (北京鹰瞳科技) Pre-IPO – A Niche Field with Merits but Can It Sell?
  • Kakao Pay – One Third of Revenues in Jeopardy or Reach a Compromise with the Regulators?

SEA Ltd Placement -Momentum Is Very Strong but Last Deal Didn’t Do Well and It Doesn’t Need the Cash

By Sumeet Singh

Sea Ltd (SE US) plans to raise around US$3.5bn via an equity offering, along with another US$2.5bn via a convertible offering. The company last raised US$2.5bn in Dec 2020, which we covered in SEA Ltd Placement – New Business Needs New Money.

While the stock’s momentum and earnings growth is very strong, the last deal didn’t do particularly well in the near term.

In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Links to our prior SEA coverage:


Sea Ltd Follow-On Offering: Asking Permission From Investors to Burn $4.0bn Per Year

By Oshadhi Kumarasiri

  • Singapore-based Internet company Sea Ltd (SE US), announced today that the company would offer 11.0m new ADSs (1.65m overallotment option) and convertible notes for a principal sum of $2.5bn ($375.0m overallotment option) via an underwritten public offering in New York.
  • Sea’s unprofitable businesses are growing at breakneck speeds. This puts immense pressure on the Gaming business to generate sufficient cash flows to facilitate the geographic expansion of Shopee and fintech growth in South East Asia.
  • Even though the Gaming business cash flows were somewhat enough to support Shopee’s growth in South East Asia, it is insufficient to maintain Sea’s unprofitable business growth in multiple businesses and multiple geographies.
  • This is Sea’s second follow-on equity offering in just 10 months and we think this is unlikely to be the last of such offers.

Orient Overseas Placement – Fourth Deal This Year. Is the Largest and at the Tightest Discount.

By Sumeet Singh

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. 

The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.


Helens Intl (海伦司国际) IPO Trading – Decent Demand but Still Some Way to Go to Our Preferred Buy Level

By Zhen Zhou, Toh

Helen’s International Holding (9869 HK) (HIH) raised about US$393m at HK$19.77 per share, the midpoint of its IPO price range.

Helens International Holdings (HIH) is the operator of a bar chain called “Helen’s”. The company was the largest bar chain in China in 2018 –  March 2021, in terms of the number of bars, according to Frost and Sullivan (F&S).

In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.

Our previous coverage of the IPO:


Airpower Technologies Pre-IPO Tearsheet

By Clarence Chu

AirPower Technologies (1679085D HK) is looking to raise US$1bn in its upcoming Hong Kong IPO.

Airpower Technologies is an industrial gases solution provider with a nationwide footprint in China. Together with Baosteel Group, it leads China’s overall industrial gases market with 12.6% market share and the independent industrial gases market with 22.3% market share in 2020 by revenue as per Frost & Sullivan (F&S). As of Jun 21, the group owns an extensive network of 135 facilities in operation that covers 24 provincial regions in China.


Simplex Holdings IPO – Simply Mediocre

By Mio Kato

Simplex aims to relist on TSE1 this month after being taken private by Carlyle Group in 2013 following a period of consistent margin deterioration. While the deal does not appear to be priced particularly egregiously, we feel there are several red flags worth noting.


Novotech Pre-IPO: PHIP and Valuation Update

By Ke Yan, CFA, FRM

Novotech is a leading biotech focused contract research organization in Asia Pacific. The company is looking to raise up to USD 1.5bn via a Hong Kong listing.

In our previous note, we have discussed that the company has a long history of operation since 1997 and was formed by a merger of two companies. It has a customer focus on biotech companies with its flexible services, particularly services in the clinical research stage. We like the company’s leading market position in Australia/New Zealand and South Korea. The company is run by a decent team and has obtained investments from a strong line-up of investors. It has been growing at a rate above the industry average but it only turned profitable in 2020. 

In this note, we look at the latest update of the company’s operation and provide a more detailed forecast and valuation.


EDDA Healthcare IPO: Surgical Robots Show Strong Growth Prospects

By Shifara Samsudeen, ACMA, CGMA

EDDA Healthcare and Technology (EDD HK) is a provider of intelligent solutions (involving surgical robots and precision surgery planning) to perform precision surgery. The company’s core products are its surgical robot series: IQQA-Guide and a precision surgery planning software: IQQA-3D.

EDDA Healthcare has filed for an IPO in the Hong Kong Stock Exchange and according to Bloomberg, the company plans to raise around US$300m through the IPO. The company is backed by SoftBank Group.

EDDA Healthcare has over 15 years of experience in providing precision surgery solutions. The precision surgery planning market shows strong growth prospects which would allow the company to continue generating strong revenues. Moreover, the company’s latest introduction of a surgical robot is likely to become a stronger revenue driver in future given that China’s surgical robot industry is still in a nascent stage and is rapidly expanding.


Beijing Airdoc (北京鹰瞳科技) Pre-IPO – A Niche Field with Merits but Can It Sell?

By Zhen Zhou, Toh

Beijing Airdoc Technology (BAT HK) is looking to raise up to US$500m in its upcoming Hong Kong IPO.

BAT is an AI-based medical device company with a focus on AI-empowered retina-based early detection, diagnosis and health risk assessment solutions.

The company’s AI-based Software as a Medical Device (SaMD), Airdoc-AIFUNDUS (1.0), was approved for auxiliary diagnosis of diabetic retinopathy. It was the first of its kind to obtain the Class III medical device certificate from the NMPA, enabling it to be used in hospitals in China to assist physicians with medical diagnoses.

In this note, we will take a look at the company’s products and share our thoughts on the IPO.


Kakao Pay – One Third of Revenues in Jeopardy or Reach a Compromise with the Regulators?

By Douglas Kim

In this insight, we provide a scenarios analysis of the current situation between Kakao Pay and the financial regulators in Korea. The timing of this uncertainty is awful as the company is getting ready to complete its IPO next month. 

  • In our view, Kakao Pay is most likely to find some kind of a compromise with the regulators in order to continue to operate its financial services. 
  • The higher probability scenario is for Kakao Pay make changes to how its current app operates (including having separate buttons that guide the users to separate subsidiaries windows) so that it is very clear from the consumers’ point of view what subsidiaries/companies that are purchasing various financial services from. 
  • Our guess is that it is likely to add one or two extra steps/layers for the consumers that use Kakao Pay to access the various financial services under the new system, as compared to the current system. In that sense, it would remove one of the key advantages that Kakao Pay has had in making the system more convenient to use as compared to its leading competitor Toss. 

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