This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
- Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
- KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
- There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.
2. Baicha Baidao (2555 HK) IPO: Valuation Insights
- Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
- We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case.
- There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.
3. Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues
- Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
- The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
- In this note, we will run the deal through our ECM framework and talk about the deal dynamics.
4. ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, the focus remained on HD Hyundai Marine Solution (443060 KS), even as Sichuan Baicha Baidao Industrial is gearing up to launch its IPO.
- On the placement front, there were deals across India, South Korea and Australia.
5. Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention
- Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
- The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
- Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.
6. Belle Fashion IPO: The Investment Case
- Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO.
- Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
- The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage.
7. Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains
- Horizon Robotics, a consumer-centric and fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, filed for an IPO and plans to raise up to $500M in Hong Kong.
- Horizon Robotics was founded in 2015 by Dr. Yu Kai, Dr. Chang Huang, Ms. Feiwen Tao, and a group of scientists and tech entrepreneurs.
- I have a positive view of an upcoming IPO and believe Horizon Robotics is in a great position to capitalize on rapidly growing smart vehicles market in China and worldwide.
8. Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers
- Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
- SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
- We have looked at the company’s performance in our past note. In this note, we talk about valuations
9. Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment
- Mobvoi, an emerging AIGC market player in China, set terms for an IPO and plans to raise ~HK$330M (~$42M) in Hong Kong. CICC and CMB International are leading the offering.
- The initial public offering is expected to be between HK$3.70 and HK$4.10. At the midpoint of the range, Mobvoi has a market value of ~HK$5.8B based on 1491.5M outstanding shares.
- In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenarios for each business segment under my base case.
10. Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?
- The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
- The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
- Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.
