Brief Growth Ideas: Smartkarma’s Week that Was in 🇯🇵/🇰🇷 : Korea’s NPS, Samsung, Toshiba, Hitachi Hi-Tech, Payments and more

In this briefing:

  1. Smartkarma’s Week that Was in 🇯🇵/🇰🇷 : Korea’s NPS, Samsung, Toshiba, Hitachi Hi-Tech, Payments
  2. ECM Weekly (16 March 2019) – Embassy Office REIT, Tiger Brokers, Dongzheng Auto, Koolearn, CanSino
  3. Bits and Bytes : Facebook Feels the WeChat Burn + Why Does Lyft Want to List ?
  4. Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending
  5. Yahoo Japan Company Visit: Profit Erosion Has Bottomed and Mobile Payments (PayPay) Starts Strong

1. Smartkarma’s Week that Was in 🇯🇵/🇰🇷 : Korea’s NPS, Samsung, Toshiba, Hitachi Hi-Tech, Payments

Something of a slower week on Smartkarma this week (I contributed to that slowness by being away and under the weather when back) with about 120 insights published. A list of the insights to do with Japan and Korea this week are listed below.

There will be a couple more shortly. 


3/10Travis LundyOmron into the Nikkei 225, Pioneer Out
3/11David RubensteinHitachi High Tech’s Ace in the Hole
3/11Oshadhi KumarasiriJapan Tobacco: No Dire Consequences Despite Late Entry to Heated Tobacco
3/12Nicholas TannerNsk (6471) Conditions Have Deteriorated Significantly but Given Valuations, This Is Now in the Price
3/12Mio Kato, CFAToshiba: King Street Round Two
3/12Mio Kato, CFAChiyoda: Minor Updates About the Major Capital Infusion, Cost Overruns and Upcoming Orders
3/13Travis LundyShinetsu Buyback – Maybe More Than It Appears
3/13Supun WalpolaCyberAgent (4751 JP): Key Takeaways from Our Discussion with the IR Team
3/13Mio Kato, CFAZozo: Looks Like There’s a Dead Cat in This Bouncy Zozosuit
3/13Pelham SmithersESport Prize Money in 2019 Running at 2x 2018 Levels
3/13Michael CaustonLoyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments
3/13Michael CaustonWho Will Win the Cashless Wars in Japan?
3/14Scott FosterYokogawa Electric (6841 JP): A Less Risky Investment in LNG Engineering
3/14Shifara Samsudeen, ACMA, CGMAAdvantest (6857 JP): Memory Downturn Yet to Impact Advantest
3/14Michael CaustonDonki (7532 JP) Becomes Japan’s 4th Biggest Retailer
3/15Kirk BoodryYahoo Japan Company Visit: Profit Erosion Has Bottomed and Mobile Payments (PayPay) Starts Strong
3/15Kirk BoodryDoCoMo Company Visit: Brief Comments on Mobile Competition and Payment Efforts
3/15Michael CaustonIsetan-Mitsukoshi Unveils Digital Strategy
3/16Jim HandyMoore’s Law May Not Be Dead, After All


3/10Sanghyun ParkHHI – DSME Acquisition: Current Situation & Trade Approach
3/11Thomas SchroederLG Corp Daily Cycle Pivot and Re Test of Base Line Support
3/11Douglas KimHomeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
3/12Sanghyun ParkNongshim Stub Trade: Sub Moving Up on New Hit Product, Now at Near -2σ
3/12Douglas KimKorean Stubs Spotlight: A Pair Trade Between Hyosung Corp and Hyosung TNC
3/13Douglas KimKorea National Pension Fund Announces a List of 11 Companies They Oppose in Upcoming AGMs
3/14Sanghyun ParkReason Why Amazon Canceled DRAM Order from Samsung: Short-Term Impact on Samsung

For more detail, read on below the fold…

For me, the MUST READS of this weak are the cashless payment-related pieces by Kirk Boodry and Michael Causton shown at the bottom. 

2. ECM Weekly (16 March 2019) – Embassy Office REIT, Tiger Brokers, Dongzheng Auto, Koolearn, CanSino

2019 total deals 2019 accuracy rate  chartbuilder

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Starting with bad news in Korea, Homeplus REIT (HREIT KS)‘s IPO was pulled on the 14th of March which when it was supposed to price. The reason cited was weak demand which stemmed from growth concerns and difficulty in valuing this business. 

On the other hand, Hong Kong’s IPO market is getting busier. This week alone, we had Dongzheng Automotive Finance (2718 HK) and Koolearn (1797 HK) that have already opened for bookbuilding and will price next week. We also heard that Sun Car Insurance is already started pre-marketing and it will likely open its books next week. The company had only just re-filed their draft prospectus last week.

Another upcoming Hong Kong IPOs would be Tianjin CanSino Biotechnology Inc (1337013D HK) which we heard had already started pre-marketing. Ke Yan, CFA, FRM updated his assumptions and valuation of the company in his insight, CanSino Biologics (康希诺) IPO: Valuation Update (Part 3)

In India, the focus is on Embassy Office Parks REIT (EOP IN) as this is the country’s first ever REIT IPO. It is also the first time there is a strategic tranche in an Indian IPO which has been taken up by Capital Group. Sumeet Singh has pointed out in his insight that with cost of debt of the REIT being at 9 – 9.25%, it is hard to fathom buying equity at a FY2020E dividend yield of 8.25%. This yield had already been inflated by the lack of interest payments. For detailed explanation, read his insight, Embassy Office Parks REIT IPO – FY19 Revised Down, Yield Propped up by Zero Coupon Bond.

In other countries, we heard that Leong Hup International (LEHUP MK) is aiming to pre-market next month whereas, in Australia, there had been chatter that Prospa Advance Pty (PGL AU) may be back for an IPO again after it had beaten its own estimates from the IPO prospectus.

Accuracy Rate:

Our overall accuracy rate is 72.4% for IPOs and 63.7% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

  • FriendTimes Inc. (Hong Kong, >US$100m)
  • Frontage (Hong Kong, re-filed)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

Source: Aequitas Research, Smartkarma

News on Upcoming IPOs

This week Analysis on Upcoming IPO

Hong Kong
AB InbevAb InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China
AscentageAscentage Pharma (亚盛医药) IPO: Too Early for an IPO
Ant FinancialAnt Financial IPO Early Thought: Understand Fintech Empire, Growth & Risk Factors
BitmainBitmain (比特大陆) IPO: Running Out of Steam on Mining Rigs (Part 1)
BitmainBitmain (比特大陆) IPO: Value At Risk of Founder’s Belief (Part 2)
BitmainBitmain (比特大陆) IPO: Take-Aways from Founder’s Recent Speech at Tsinghua University (Part 3)
BitmainBitmain (比特大陆) IPO: Intense Competition in the 7nm Mining ASIC Market (Part 4)

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)


ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

China East EduChina East Education (中国东方教育) Pre-IPO – The Company Known for Its Culinary School
China TobacChina Tobacco International (IPO): The Monopolist Will Not Recover
China TobacChina Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
ESRESR Cayman Pre-IPO – A Giant in the Making

Frontage Holding (方达控股) IPO: More Disclosure Needed to Understand Moat and Growth Prospect

Hujiang Edu

Hujiang Education (沪江教育) Pre-IPO – Spending More than It Earns

MicuRxMicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
SH Henlius

Shanghai Henlius (复宏汉霖) IPO: Not an Impressive Biosimilar Portfolio 

TubatuTubatu Group Pre-IPO – Performing Better than Qeeka but Growing Much Slower, US$1bn a Stretch
TubatuTubatu Group Pre-IPO – Online -> Online + Offline -> Online -> ?
ShenwanShenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
Viva BioViva Biotech (维亚生物) IPO: When CRO Becomes Early Stage Biotech Investor
South Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 1) – Highly Profitable Operator of Public Golf Courses in Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 2) – Valuation Analysis

Plakor IPO Preview (Part 1)

ZinusZinus IPO Preview (Part 1) – An Amazing Comeback Story (#1 Mattress Brand on Amazon)
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotels

Bharat Hotels Pre-IPO – Catching up with Peers 

CMS InfoCMS Info Systems Pre-IPO Review – When a PE Sells to Another PE… Only One Gets the Timing Right
Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some
Mazagon DockMazagon Dock IPO Preview: A Monopoly Submarine Yard in India with Captive Navy Spending
Mrs. BectorMrs. Bectors Food Specialities Pre-IPO Quick Take – Sales for Its Main Segment Have Been Sta


Lodha Developers Pre-IPO – Second Time Lucky but Not Really that Much Affordable
LodhaLodha Developers IPO: Large Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt
IndiaMartIndiaMART Pre-IPO – Getting and Retaining Subscribers Seems to Be Difficult
PolycabPolycab India Pre-IPO – Market Leader with Steady Growth but with a Few Unanswered Question
PolycabPolycab IPO: Largest Cables Player, Asset-Heavy Low ROE = Vulnerable to Govt Capex Slowdown
QSRQSR Brands Pre-IPO – As Healthy as Fast Food

3. Bits and Bytes : Facebook Feels the WeChat Burn + Why Does Lyft Want to List ?

India remittances

Facebook Inc A (FB US) : Mark Zuckerberg sees the light or is facing the WeChat burn? It seems like the whole tilt towards ensuring a more safe, secure environment lies in its play to emulate WeChat…eventually. But first, it needs to address specific issues of data protection, security and privacy that plague the company and possibly think around altering its current revenues via the advertisement model.

The company certainly seems to be moving towards making a token/coin and is even hiring blockchain specialists. Could it look to make a Stablecoin? Work on a M-Pesa model ? Target remittances in countries like India? It seems a long road and arduous road ahead- but it has been dropping directional hints along the way.

Lyft Inc (0812823D US) : Why does Lyft Inc (0812823D US) want to list exactly aside locking in money before the number one player swamps the market ? Could it be regulatory changes on the anvil ? And would those be food for thought for Asia plays – Grabtaxi Holdings Pte (0967655D SP)DiDi Chuxing (1284375D CH)  and Olacabs ?

4. Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending

Conversion rate has been falling entry course enrolments 000 conversion rate  chartbuilder

Koolearn (1797 HK) is looking to raise up to US$S234m in its upcoming IPO.  We have previously covered the company in:

In this insight, we will look at the updates on financials and operating metrics, compare it to other listed online education companies, and run the deal through our framework.

The increase in spending on marketing has not yielded the intended results as the growth rates of student enrollment and gross billings slowing down. Furthermore, aggressive spending behavior is similar to that of STG and LAIX and both companies did not perform well post listing.

5. Yahoo Japan Company Visit: Profit Erosion Has Bottomed and Mobile Payments (PayPay) Starts Strong


We recently met with Yahoo Japan (4689 JP)  for an update on the company after Q3 results. We thought the financial announcement was positive with encouraging forecasts for profitability, both this year and going forward, and revenue growth potential. In addition, Yahoo Japan reported solid customer growth for mobile payments joint venture PayPay, driven by strong marketing support and an attractive proposition for offline merchants.  We think the latter is very important for the development of mobile payments in Japan and PayPay has had a robust start.

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