In today’s briefing:
- ECM Weekly (10 January 2021) – RLX Technology, Roiserv, Yidu Tech, and Placements
- Aequitas 2021 Asia IPO Pipeline – More Mega IPOs to Come
- RLX Technology Pre-IPO – The Negatives – Limited Track Record, and Missing International Ops
- New Horizon Health IPO Initiation: Screening for Cancer
ECM Weekly (10 January 2021) – RLX Technology, Roiserv, Yidu Tech, and Placements
Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.
To kickstart the new year, we shared Aequitas 2020 IPOs and Placements results. 2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). Even though ECM started off on a precarious note, it ended with very strong momentum.
Hong Kong ECM kicked off the year on a strong note with Yidu Tech Inc (2158 HK) closing its bookbuild a day earlier than stipulated. The deal was launched on the last day of 2020. Roiserv Lifestyle Services (2146 HK), the property management arm of Risesun Real Estate Devel A (002146 CH), also launched its bookbuild on the same day.
- Yidu Tech (医渡云) IPO – Expensive but It’s Still Justifiable
- Roiserv Lifestyle (荣万家) IPO – Small, Expensive, and Parent Dependent
There are a few IPOs looking to launch their IPOs soon such as Beijing Kuaishou Technology Co Ltd (1496219D CH), MicroPort CardioFlow (1844972D HK), and New Horizon Health (NHH HK). There is also another wave of secondary listings. We heard that Baidu (BIDU US), Autohome Inc (Adr) (ATHM US), and Bilibili Inc (BILI US) will likely come to market soon.
Other than IPOs, Hong Kong companies/shareholders were eager to sell to lock in some cash. Shareholders of Wuxi Biologics (2269 HK) was back on the market, ahead of lock-up to sell again whereas Haidilao (6862 HK)‘s cofounders, Shi Yonghong and Li Haiyan, sold about 1.4% stake in the company and locked in US$600m in cash on Friday.
- Wuxi Biologics Placement – Well Ahead of Lock-Up, Again
- Haidilao (海底捞) Placement – Founders Back to Sell More
- Akeso (康方生物) Placement – Prepping for Commercialization
- Jinxin Fertility (锦欣生殖) Placement – Only Warburg Selling This Time
There was also a big block in Korea, sold by the ten shareholders of Doosan Fuel Cell Co Ltd (336260 KS) who had earlier failed to sell their entire shareholding last year. Hence, this was likely an expected selldown.
In the US, despite the uncertainty surrounding China ADRs as evidenced from the deletion of the three Chinese telcos from MSCI and FTSE, RLX Technology Inc (RLX US) is looking to raise about US$1bn from its IPO. The company was said to be premarketing its IPO.
- RLX Technology Pre-IPO – The Positives – Fast Growth, Low Penetration
- RLX Technology Pre-IPO – The Negatives – Limited Track Record, and Missing International Ops
In Thailand, market will likely see more deals coming their way after Kerry Express Thailand (KEX TB) strong debut towards the end of 2020. We are hearing that PTT Oil and Retail (PTTOR TB) will likely launch its bookbuild early next week.
Accuracy Rate:
Our overall accuracy rate is 73.5% for IPOs and 66.9% for Placements
(Performance measurement criteria is explained at the end of the note)
New IPO filings this week
- Chaoju Eye Care (Hong Kong, ~US$200m)
- Linklogic Inc. (Hong Kong, >US$100m)
- Toplist (Hong Kong, re-filed)
News on Upcoming IPOs
Analysis on Upcoming IPOs
Aequitas 2021 Asia IPO Pipeline – More Mega IPOs to Come
In this note, we aim to highlight the Asia Pacific IPO pipeline for 2021. This list has been compiled on a best effort basis from tracking the company filings and through various media and other sources.
For readers who are not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea and A-shares), including China ADRs. Hence, our pipeline will only include companies that fit these criterion.
Feel free to drop us a message for additional information (bookrunners and coverage) on these IPOs
RLX Technology Pre-IPO – The Negatives – Limited Track Record, and Missing International Ops
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 my earlier insight, RLX Technology Pre-IPO – The Positives – Fast Growth, Low Penetration, I spoke about the positive aspects of the company. In this insight, I’ll highlight some of the not so flattering aspects.
New Horizon Health IPO Initiation: Screening for Cancer
New Horizon Health (NHH HK) is a leading player in China’s colorectal cancer screening market. It has two self-developed cancer screening tests – Pupu Tube and ColoClear. It will have a listing hearing for a $300 million Hong Kong IPO this week, according to press reports.
New Horizon is a play on the rapid growth of the cancer screening market in China, particularly the colorectal cancer screening market. Colorectal cancer is one of the deadliest cancer types in China, both by incidence and mortality rates. The colorectal cancer screening market in China is expected to grow significantly to be worth RMB19.8 billion in 2030 (18.7% CAGR between 2019 to 2030) due to the availability of more effective screening solutions and increased awareness of cancer screening, according to Frost & Sullivan. We believe that New Horizon has the right ingredients to capitalise on this market opportunity.
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