Daily BriefsIPOs and Placements

Equity Capital Markets: SUMCO Corp, Medbanks Network Technology, MicroTech Medical Hangzhou, SM Line Corp and more

In today’s briefing:

  • Sumco – Overcapacity Risks but Oversold
  • Medbanks (思派健康) Pre-IPO – Caught a Lucky Break
  • MicroTech Medical IPO: Forecasts and Valuation
  • SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis
  • MicroTech Medical IPO: Valuation Insights

Sumco – Overcapacity Risks but Oversold

By Mio Kato

Sumco’s capacity expansion plans are a worrying sign that tech could be close to rolling over as stronger for longer type narratives once again do the rounds. We are not entirely convinced of the need for capacity additions but the stock looks oversold making a placement discount look attractive.

Medbanks (思派健康) Pre-IPO – Caught a Lucky Break

By Zhen Zhou, Toh

Medbanks Network Technology (1690522D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. 

Medbanks is a healthcare service provider in China that aims to add value to stakeholders and participants of the healthcare industry with a focus on oncology. The company runs three main business segments, Physician Research Solution (PRS), Pharmacy Benefit Management (PBM), and Provider and Payer Solution (PPS), which have strong synergies with each other.

In this note, we take a look at the company’s business, its growth and share our initial thoughts on the IPO.

MicroTech Medical IPO: Forecasts and Valuation

By Shifara Samsudeen, ACMA, CGMA

MicroTech Medical Hangzhou (2235 HK) provides diabetes treatment and diabetes monitoring medical devices in China and globally. The company has announced the terms for its IPO where it plans to issue 63.5m shares (approx. 15.0% of the total outstanding shares) at an indicative price range of HK$27.70-31.15 per share. At the midpoint of the above indicative IPO price range of HK$29.43 per share, MicroTech will raise net proceeds of HK$1.75bn (US$224.7m) at market capitalisation of HK$12.5bn and a post-money enterprise value of HK$10.1bn.

MicroTech Medical IPO Details

@ Low-end HK$27.70

@ Midpoint HK$29.43

@ Upper-end HK$31.15

No. of Shares Issued (m)




Offer as a % of Outstanding Shares




Total Shares Outstanding




Net Proceeds (HK$m)




Market Capitalisation (HK$m)




Enterprise Value (HK$m)




Source: Company disclosures, LSR

The company plans to use about 31.0% and 35.0% of the net IPO proceeds on funding the ongoing and planned clinical trials, commercialisation and expansion of manufacturing facility of its core product Equil and CGMS respectively. MicroTech plans to use around 11.0% of the IPO proceeds on pre-clinical studies, clinical trials, registration and manufacturing of 2nd generation patch insulin pumps and another 8.0% on other product candidates. The remaining net IPO proceeds will be used for working capital and other general corporate purposes.

MicroTech has entered into cornerstone investment agreements with a number of investors for an aggregate of US$153.5m (HK$1,194.7m) which represents about 63.9% of the total shares offered at the IPO (at the midpoint of the indicative IPO price range) assuming that the over-allotment option is not exercised. These cornerstone investors include Invesco Advisors (US$35m), UBS AM Singapore (US$25m), LAV Star (US$12.5m), Springhill Fund (US$12.5m), Hudson Bay (US$12.5m), Tencent Mobility (US$10m), Boyu Capital (US$10m), Lake Bleu Prime (US$10m), Octagon Investments (US$10m) and US$8.0m each from OGF, ONH and WWH and Sage Partners.

SM Line IPO: Offering Terms, Valuation Details, & Risk Analysis

By Sanghyun Park

Offering terms

One of Korea’s major flag-carrying maritime transporter (only behind HMM in size), SM Line, put out the IPO prospectus. It will be listed on the KOSDAQ market around late November. The total offering is 34 million shares, representing 50% of the current number of shares outstanding. The institutional allotment is 68.5~75.0% of the offering.

Offering size
Pre-IPO SO67,688,440
– % of SO50.00%
– Institutional allotment68.50~75.00%
Source: DART

This is a split offering at a 50:50 ratio. So the capital increase rate is 25%, with a share dilution at 20%.

Primary %50.00%
Secondary %50.00%
Post-IPO shares outstanding84,610,550
Capital increase rate25.00%
Source: DART

The book opens on November 1, and the allotment will be disclosed on November 3. The subscription follows on November 4, followed by the payment on November 9. The listing date will be announced later.

Book open2021. 11. 01
Book close2021. 11. 02
Allotment2021. 11. 03
Subscription2021. 11. 04
Payment2021. 11. 09
Source: DART

The share of the largest shareholder will be 60% after listing. The stake is locked for six months. And the amount of inflow through the public offering is 40% of the post-IPO total shares.

ShareholdersSharesPost-IPO shareholding %Lockup
TK Chemicals18,646,23222.04%6 months
Samra Midas17,846,73321.09%6 months
Samra Inc14,273,36516.87%6 months
– Major shareholder total50,766,33060.00%6 months
ESOP (post-IPO)507,6630.60%1 year
Source: DART

MicroTech Medical IPO: Valuation Insights

By Arun George

MicroTech Medical Hangzhou (2235 HK) is focused on diabetes management, providing both diabetes treatment and diabetes monitoring medical devices to improve diabetes management globally. The core product is Equil which is a semi-disposable patch insulin pump that was commercially launched in 2018 in China.

At the proposed IPO price range of HK$27.70-31.15 per share, Microtech will have a market cap of HK$11,732-13,193 million ($1.5-1.7 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,750.0 million ($225 million).

Eleven cornerstone investors will purchase $153.5 million worth of the offer shares (63.9% of the offer shares at the mid-point of the IPO price range). Two out of the eleven cornerstones are existing investors. They are LAV Group and Tencent (700 HK). The remaining cornerstones which are not existing shareholders are Invesco, UBS AM, Springhill Fund, Hudson Bay, Boyu Capital, Lake Bleu Capital, Octagon Capital, OrbiMed and Sage Partners.

In MicroTech Medical IPO Initiation: Fighting Diabetes, we opined that Microtech has three categories of commercialised products which are Equil (the core product), BGMS and CGMS. Equil is the only patch insulin pump approved in China. In combination with attractive pricing, Equil has significant headroom to increase its China market share from its 3% share in 2020, in our view. Also, AiDEX G7 CGMS, which is currently in the early stage of marketing, presents a near-term growth opportunity. We concluded that Microtech is worth a closer look.

Our valuation analysis suggests that the IPO price range is full and we would remain on the sidelines awaiting a better entry opportunity. 

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