Equity Capital Markets

Weekly Top Ten Equity Capital Markets – Jun 23, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Hyundai Motor India IPO Preview

By Douglas Kim, Douglas Research Advisory

  • Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors. 
  • Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
  • If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.  

2. Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

By Travis Lundy, Quiddity Advisors

  • In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
  • At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
  • Friday they announced the Offering. Today shares fell 8+%. This is now cheap. 

3. Hyundai Motor India IPO: Key Facts and Financials at a Glance

By Devi Subhakesan, Investory

  • Hyundai Motor India’s proposed IPO is an offer for sale by its parent, Hyundai Motor Company, Korea, and reported to raise USD3 billion, potentially making it India’s largest IPO ever.  
  • Hyundai Motor India’s sales growth has been driven by strong domestic and export sales, both in volume and unit realisation.
  • With SUVs now making up 62% of Hyundai Motor India’s domestic volumes, up from 45% in FY2021, the shift towards premium models has boosted profit margins.

4. Webtoon Entertainment (WBTN US) IPO: Valuation Insights

By Arun George, Global Equity Research Ltd

5. Webtoon Entertainment (WBTN US) IPO: The Bear Case

By Arun George, Global Equity Research Ltd

  • Webtoon Entertainment (WBTN US), a global storytelling platform, seeks to raise up to US$500 million through a Nasdaq IPO.
  • In Webtoon Entertainment IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on declining organic revenue, declining Korean paying ratio, a peaking Japan growth driver, optimistic market sizing, and unsustainable low marketing spending.

6. Kagome Placement – Very Well Flagged Deal but Liquidity Might Be a Concern

By Sumeet Singh, Aequitas Research

  • Kagome Co Ltd (2811 JP) aims to raise around US$140m to repay debt used to fund the acquisition of Ingomar in Jan 2024.
  • At the time of the acquisition, the company has stated its intention to part finance the acquisition via issuance of treasury shares
  • In this note, we will talk about the placement and run the deal through our ECM framework.

7. Webtoon Entertainment IPO – Further Thoughts on Valuation – Acquisitions, Buyouts

By Ethan Aw, Aequitas Research

  • Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
  • Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
  • In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we share additional thoughts on valuation.

8. Sensetime Placement – Seems Highly Opportunistic

By Sumeet Singh, Aequitas Research

  • SenseTime Group (20 HK)  aims to raise up to US$263m via selling around 4.5% stake.
  • Sensetime hasn’t had the best of times since listing, however, the shares have rebounded recently on generative AI buzz around the stock.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

9. ECM Weekly (17th June 2024)-Shift Up, Webtoon, Quantum, Guzman, MaoGeping, Johor Plant, Telix, Atour

By Sumeet Singh, Aequitas Research

10. Guzman Y Gomez IPO Trading – Strong Demand, Not All Shares in Escrow

By Sumeet Singh, Aequitas Research

  • Guzman Y Gomez  raised around US$221m in its upsized Australian IPO. 
  • GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
  • We have looked at the company’s performance  and valuation in our past notes. In this note, we talk about the trading dynamics.