Daily BriefsIPOs and Placements

Equity Capital Markets: Zhaoke Ophthalmology Pharmaceutical, Monde Nissin Corp, Kioxia, Waterdrop Inc, Hello Inc and more

In today’s briefing:

  • Zhaoke Ophthalmic (兆科眼科) IPO Trading: Strong Cornerstone Doesn’t Save the Deal
  • Monde Nissin Pre-IPO – Thoughts on Valuation
  • SK Hynix Conference Call Today: Kioxia IPO in 2H & Plan to Sell 31% After IPO
  • Waterdrop IPO: Valuation First Look
  • Hello Inc (哈罗出行) Pre-IPO – Nowhere near Being Sustainable

Zhaoke Ophthalmic (兆科眼科) IPO Trading: Strong Cornerstone Doesn’t Save the Deal

By Ke Yan, CFA, FRM

Zhaoke Ophtalmic raised HKD 1,942 million (USD 250m) from its global offering and will list on the Hong Kong Stock Exchange on Thursday, April 28th.

In our previous note, we looked at the company’s two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top-selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001 which will be indicated for CED, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter’s product which uses the same technology but on a different indication did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We think the company provides aggressive guidance that lacks evidence to support the forecast and valuation. We think the IPO valuation is rich at the high end and the cornerstone investors’ commitment left a large portion of the deal to be sold on debut. 

In this note, we look at the updates since our last note. We were bearish with the deal and would be taking profit if there’s pop on debut.

Our previous coverage on Zhaoke Ophthalmic

Monde Nissin Pre-IPO – Thoughts on Valuation

By Sumeet Singh

Monde Nissin (MNC), a food manufacturer in the Philippines, aims to raise around US$1bn in its Philippines IPO.

It has two main businesses: Asia-Pacific Branded Food and Beverage Business (BFB), which sells instant noodles, biscuits and other products, and meat alternative (MA) business which includes Quorn and Cauldron meat alternatives brands.

MNC has a high market share in the Philippines in the instant noodles and biscuits segment along with a few other categories as well. Quorn as well has a strong lead over its next largest peers in the Chicken alternative meat segment in the grocery channel. 

In this note, we’ll talk about earnings forecast and valuations.

SK Hynix Conference Call Today: Kioxia IPO in 2H & Plan to Sell 31% After IPO

By Sanghyun Park

In today’s conference call, SK Hynix said an interesting thing about Kioxia.

  • Hynix confirmed that Kioxia would give another shot to an IPO in the second half of this year instead of taking the Micron/WD offer.
  • Hynix said that was what it was told by the Bain Capital Consortium and the Kioxia management lately.

Waterdrop IPO: Valuation First Look

By Arun George

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).

Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. In this note, we present our forecasts and take the first look at Waterdrop’s potential valuation range. 

Hello Inc (哈罗出行) Pre-IPO – Nowhere near Being Sustainable

By Zhen Zhou, Toh

Hello Inc. is looking to raise up to US$1bn in its upcoming U.S. IPO.

Hello Inc (HI) is a local services platform in China. The company operates a mobile app called Hello,  which provides a range of local services that include shared two-wheeler services, carpooling market place, and emerging local services and products that includes e-scooters and in-store services marketplace, ride-hailing, hotel reservations, mobile grocery stores and online advertising services.

In this note, we will look at the company’s business model, operating data, financials, and share our thoughts on the IPO.

Before it’s here, it’s on Smartkarma