In this briefing:
- Guotai Junan Placement: A Reasonable Price for Reasonable Performance
- China’s New Semiconductor Thrust – Part 2: Commodities as a Quick Path to Success
- NTT DoCoMo: Sale of HTHK Mobile Stake Is the End of an Era (Thankfully)
- Guotai Junan Securities Placement Quick Take – Might Be Too Big to Sail
- Studio City – Thoughts on Lock-Up Expiry
1. Guotai Junan Placement: A Reasonable Price for Reasonable Performance
Guotai Junan Securities (H) (2611 HK), a Chinese securities firm, has launched a primary placement to raise HK$2.7 billion ($345 million) at a placing price of HK$16.34. The placing price is a 7% discount to the last close price of HK$17.64.
In 2019, the share prices of Chinese securities firms have markedly risen YTD due to the strong index performance and rising trading volumes. We believe Guotai Junan’s fundamentals are reasonable due to its mid-tier revenue growth and top-quartile margins. Overall, we would participate in the placing.
2. China’s New Semiconductor Thrust – Part 2: Commodities as a Quick Path to Success
China’s current efforts to gain prominence in the semiconductor market targets memory chips – large commodities. This three-part series of insights examines how China determined its strategy and explains which companies are the most threatened by it.
This second part of the series explains how China chose commodity semiconductors (DRAM and NAND flash memory chips) as the best technology to pursue.
3. NTT DoCoMo: Sale of HTHK Mobile Stake Is the End of an Era (Thankfully)
NTT Docomo Inc (9437 JP) recently announced it would sell its 25% stake in Hutchinson Telecom Hong Kong’s ( Hutchison Telecommunications Hk Hld (215 HK) mobile unit for US$60mn with closing expected at the end of May. This ends a 20-year association with Hutchinson forged in the initial excitement over 3G in 1999 but it hasn’t been a good ride for DoCoMo which lost close to 90% on its Hutchison investments and its other international forays were not much better. On a related note, the HK mobile sale follows soon after DoCoMo’s exit from its credit card joint venture with Sumitomo Mitsui but we would not read anything into this beyond a rationalization of its non-core investments.
4. Guotai Junan Securities Placement Quick Take – Might Be Too Big to Sail
Guotai Junan Securities (H) (2611 HK) plans to raise around US$350m via placing new H-Shares. We had earlier covered the IPO, you can find our coverage below:
- Guotai Junan Securities IPO: Second, if Not the Largest, China Security Broker, A-H Premium Examined
- Guotai Junan IPO: A Big Player but Relatively Less Liquid, How A-H Premium Plays
This is a large deal to digest and the shares seem to be trading at a relatively tighter A-H spread versus peers.
5. Studio City – Thoughts on Lock-Up Expiry
Studio City, a spin-off by MLCO US, was listed on October 18th, 2018 and its lock-up will expire next week on April 16th. The company raised USD 359 million in its IPO with the majority of the shares taken up by its shareholders.
In this insight, we will review the company’s operation, shares subject to lock-up expiry and its valuation vs peers.
Our previous insights on Studio City
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