In this briefing:
- Smartkarma’s Week that Was in 🇯🇵/🇰🇷 : Korea’s NPS, Samsung, Toshiba, Hitachi Hi-Tech, Payments
- ECM Weekly (16 March 2019) – Embassy Office REIT, Tiger Brokers, Dongzheng Auto, Koolearn, CanSino
- Bits and Bytes : Facebook Feels the WeChat Burn + Why Does Lyft Want to List ?
- Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending
- 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.
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
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.
News on Upcoming IPOs
- UBS and Rivals to Pay $100 Million to Settle Hong Kong IPO Cases
- Chinese Luxury Car Finance Firm Seeks $428 Million in Hong Kong IPO
- Online Educator Koolearn to Raise up to $233 Million in Hong Kong IPO
- Resurgence in Indian IPO market likely only after general elections
- Homeplus K-REIT Withdraws $1.5 Billion Korean IPO on Weak Demand
- Prospa may revive listing plan after beating prospectus forecasts
- Luckin Coffee chairman said to tap banks for $200m loan in exchange for IPO role
This week Analysis on Upcoming IPO
- Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
- Up Fintech (Tiger Brokers) IPO Quick Take – It’s Not like Futu, Won’t Perform like It Either
- Embassy Office Parks REIT IPO – FY19 Revised Down, Yield Propped up by Zero Coupon Bond
- CanSino Biologics (康希诺) IPO: Valuation Update (Part 3)
- Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent
- Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending
3. Bits and Bytes : Facebook Feels the WeChat Burn + Why Does Lyft Want to List ?
Facebook Inc A (FB US) : Mark Zuckerberg sees the light or is facing the WeChat burn? It seems like the whole tilt towards ensuring a more safe, secure environment lies in its play to emulate WeChat…eventually. But first, it needs to address specific issues of data protection, security and privacy that plague the company and possibly think around altering its current revenues via the advertisement model.
The company certainly seems to be moving towards making a token/coin and is even hiring blockchain specialists. Could it look to make a Stablecoin? Work on a M-Pesa model ? Target remittances in countries like India? It seems a long road and arduous road ahead- but it has been dropping directional hints along the way.
Lyft Inc (0812823D US) : Why does Lyft Inc (0812823D US) want to list exactly aside locking in money before the number one player swamps the market ? Could it be regulatory changes on the anvil ? And would those be food for thought for Asia plays – Grabtaxi Holdings Pte (0967655D SP)DiDi Chuxing (1284375D CH) and Olacabs ?
4. Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending
Koolearn (1797 HK) is looking to raise up to US$S234m in its upcoming IPO. We have previously covered the company in:
- Koolearn (新东方在线) Pre-IPO – Profitable Online Edu Company but Poor Sentiment Weighs
- New Regulatory Tightening on Online Education Reads Badly on Koolearn IPO
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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