Daily BriefsIPOs and Placements

Equity Capital Markets: Softbank Corp, Xiaomi Corp, Ming Yuan Cloud Group, Ant Financial, ZTO Express, Zai Lab Ltd, Snowflake Inc, Yukiguni Maitake and more

By September 15, 2020 No Comments

In today’s briefing:

  • Softbank Corp (9434) – Time To Cover
  • Xiaomi Placement – Run-Up in Share Price, Co-Founder Selling
  • Ming Yuan Cloud (明源云) IPO – Better Disclosure and a Leader in the Industry
  • AliPay’s Advantage over WeChat Pay in Physical Stores
  • ZTO Express Secondary Listing: Home Delivery
  • Zai Lab HK Secondary Listing – Large Deal to Digest but past Deals Have Done Well
  • Snowflake – Extremely Pretty, but Liable to Melt in Amazon’s Sun
  • Yukiguni Maitake IPO: Bain’s Remaining 6.65% Ownership Is an Overhang
  • ZTO Express Secondary Listing – Fast Growth but It Hasn’t Been Flowing Down to Earnings
  • Ming Yuan Cloud IPO Initiation: New Wiring

Softbank Corp (9434) – Time To Cover

By Travis Lundy

When the Softbank Corp (9434 JP) block was announced on 28 August after the close, it was one of the larger secondary blocks ever placed in Japan, and it was underwritten.

It was always going to get sold rather than bought, and it appears that it has been sold. For some reason I could not figure out, the shares only fell 3-4% or so on the first day and then stayed stable for a few days. I thought it needed more of a wallop to see pricing come out right. 

It has, in the interim, been walloped. 

Now is the time to cover that sale in the market if you shorted, and to buy back if you sold long. 

The implied dividend yield on the offering is now (as I write) above 7%. Suganomics may not favor telcos but I expect the telcos probably have enough leverage to push back from time to time. 

More below the fold.


Xiaomi Placement – Run-Up in Share Price, Co-Founder Selling

By Sumeet Singh

Xiaomi Corp (1810 HK)‘s co-founder Lin Bin aims to raise around US$1bn via selling some of his stake in the firm.

While he has provided a long lock-up to allay any concerns of an overhang, the shares have run-up a lot going into the index inclusion. 


Ming Yuan Cloud (明源云) IPO – Better Disclosure and a Leader in the Industry

By Zhen Zhou, Toh

Ming Yuan Cloud Group (MYCG HK) (MYCG) is looking to raise up to US$796m in its upcoming Hong Kong IPO.

MYCG is a software solution provider in China with a focus on real estate. The company provides enterprise resource planning (ERP) solutions and SaaS products to property developers and other industry participants in the real estate value chain in China. As per Frost & Sullivan (F&S), the company is ranked first among software providers for property developers in China and has a dominant 24.6% market share in terms of contract value in 2019.

In this note, we will look at updates in the new PHIP filing, do a brief peer comparison, and share our assumptions, and thoughts on valuation.

Our previous coverage of the IPO:


AliPay’s Advantage over WeChat Pay in Physical Stores

By Ming Lu

  • We believe customers prefer AliPay to Tencent (700 HK)’s WeChat Pay when both are available in physical stores.
  • Customers need only 2 steps to pay with AliPay compared to 3~4 steps with WeChat Pay.
  • We believe AliPay has advantage in physical stores before WeChat provides WeChat Pay an access in its homepage.

ZTO Express Secondary Listing: Home Delivery

By Arun George

ZTO Express (ZTO US) is the leading express delivery company in China with a 19.1% market share of China’s express delivery service market as measured by total parcel volume, according to iResearch. ZTO Express passed its Hong Kong listing committee hearing last week and could raise up to $2 billion through a secondary listing, according to press reports. 

ZTO joins the wave of Hong Kong secondary listings set to hit the screens in the coming months. We think that ZTO is an attractive equity story as it is a best-in-class logistics player which can capitalize on the opportunities presented by China’s relatively fragmented logistics industry, in our view. 


Zai Lab HK Secondary Listing – Large Deal to Digest but past Deals Have Done Well

By Sumeet Singh

Zai Lab Ltd (ZLAB US) plans to raise around US$1bn in its secondary listing in Hong Kong.

The company filed its PHIP on Friday, 11th Sep 2020, although it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I’ll talk about the deal dynamics.

Links to my previous notes on the topic on Secondary listings:


Snowflake – Extremely Pretty, but Liable to Melt in Amazon’s Sun

By Mio Kato

The Snowflake IPO has attracted significant investor interest including some pretty impressive names such as Warren Buffett and Salesforce. Indeed, the company’s business is impressive, and its sales growth should help drive a successful IPO in our opinion. However, that does not mean the company is without issues and while we suspect this could be a good trade, we are sceptical about its merits as an investment, and not just because of demanding valuations but also because it is unclear how the company will defend its currently attractive position against Amazon and other large players.


Yukiguni Maitake IPO: Bain’s Remaining 6.65% Ownership Is an Overhang

By Oshadhi Kumarasiri

Yukiguni Maitake (1378 JP), the market leader in Maitake mushrooms, has priced its shares at ¥2,200 per share, at the mid-point of the IPO price range (¥2,000-2,400). The book-building period ended on Tuesday, and the final offer price was announced on Wednesday 9th September.

Furthermore, it was also decided that the shares will be listed on the 1st section of the Tokyo Stock Exchange from 17th September 2020 under the Fishery, Agriculture and Forestry sector.

The selling shareholder (Bain Capital) will generate ¥38.8 billion ($366m) by selling 17.7m Yukiguni Maitake (1378 JP) shares- an overallotment option, if exercised, could increase the IPO by ¥5.8 billion.

Before the IPO price range was announced, we expressed our desire to subscribe to the IPO at a reasonable valuation despite an unconvincing growth story, due to stable revenue and operating cash flows alongside attractive operating margins (13.2% in FY2020), even amidst COVID-19.

Yukiguni Maitake: Stable Maitake Mushroom Business With Limited Growth Opportunities

As the price range was announced at ¥2,000-2,400 per share, we expressed that the company is generously valued and there could be little upside potential for IPO investors.

Yukiguni Maitake IPO Valuation: Bain Capital Is Out and Leaving Little Upside for IPO Investors

In this insight, we take a look at the company’s valuation against the Fishery, Agriculture and Forestry sector peer basket, and discuss implications of Topix inclusion and possible overhang from Bain Capital’s remaining 6.65% ownership share.


ZTO Express Secondary Listing – Fast Growth but It Hasn’t Been Flowing Down to Earnings

By Sumeet Singh

ZTO Express (ZTO US) plans to raise around US$2bn in its secondary listing in Hong Kong.

While the company filed its PHIP on Friday, 11th Sep 2020, it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I’ll talk about the deal dynamics and what to do with the ADR while waiting for the completion of the Hong Kong listing.


Ming Yuan Cloud IPO Initiation: New Wiring

By Arun George

Ming Yuan Cloud Group (MYCG HK) provides enterprise-grade ERP solutions and SaaS products to property developers and other industry participants along the real estate value chain in China. It is the leading software solution provider for property developers in China with a market share of 18.5% as measured by revenue in 2019, according to Frost & Sullivan. Ming Yuan has launched a Hong Kong IPO to raise as much as HK$6.17 billion ($798 million), according to press reports.

The software solutions market for the real estate industry is growing due to expanding business operations of property developers which increases complexity and the intensifying competition which drives the need for property developers to use technology to lower costs. The key barrier to entry for software developers is deep industry know-how, which Ming Yuan has in spades. Overall, we believe that Ming Yuan is an attractive play on these market dynamics.


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