Equity Capital Markets

Weekly Top Ten Equity Capital Markets – Mar 17, 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. ITC $2bn Placement – Very Well Flagged but Still Won’t Be an Easy One to Digest, Won’t Do an Indigo

By Sumeet Singh, Aequitas Research

  • In Feb 2024,  BAT’s management stated that they were reviewing their stake in ITC Ltd (ITC IN).  The news of a possible selldown by BAT was leaked again earlier today.
  • BAT has owned its stake in ITC for over a century and remains its largest shareholder.
  • In this note, we talk about the deal dynamics and run the deal through our ECM framework.

2. Ola Electric Pre-IPO – Initial Thoughts on Valuation

By Sumeet Singh, Aequitas Research

  • Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
  • Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
  • In our previous note we looked at the company’s past performance and undertook a peer comparison. In this note, we will talk about valuations.

3. ECM Weekly (11th Mar 2024) – Oriental Land, ARM, Tuhu, Wiwynn, Macrotech, Zomato, Trial Holding

By Sumeet Singh, Aequitas Research

  • 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, Trial Holdings (5882 JP) was hoping for better luck with its listing this time around.
  • For placements, it was a very busy week for a change with most regions, apart from Hong Kong, chipping in.

4. Astera Labs IPO Preview

By Douglas Kim

  • Astera Labs (ALAB US) is scheduled to debut its IPO on 20 March. The company is offering 17.8 million shares at a price of $27 to $30 per share. 
  • Founded in 2017, Astera Labs is a fabless semiconductor company headquartered in Silicon Valley. The company designs and sells semiconductor technology, but the production is outsourced.
  • Astera Labs’ major competitors include Montage Technology (688008 CH), Parade Technologies (4966 TT), Broadcom (AVGO US), Credo Technology Group Holding (CRDO US), and Marvell Technology (MRVL US).

5. Gopal Snacks Ltd IPO- Forensic Analysis

By Nitin Mangal, India Independent Insight

  • Gopal Snacks (1592789D IN) IPO worth INR 6.5 bn is live on the bourses. 
  • The company is a prominent snacks manufacturer in India, especially in the state of Gujarat. It boasts one of the highest fixed asset turnover ratio and high ROCEs. 
  • On the flipside, caution must remain on its dull revenue growth post F22 and on its related party transactions, especially with promoter companies.

6. Belle Fashion Pre-IPO – Refiling Updates

By Sumeet Singh, Aequitas Research

  • Belle Fashion (BF) aims to raise up to US$1bn in its Hong Kong listing. The company recently refiled its application proof after a gap of two years.
  • As per F&S, it was the largest player in China’s fashion footwear market with a 12.3% market share, based on 2022 retail sales.
  • We have looked at the company’s past performance based on its earlier filings in 2022. In this note, we talk about the updates from its recent filings.

7. Astera Labs IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation is market cap of US$5.4 billion or target price of US$35.9 per share, which is 20% higher than high end of the IPO price range (US$30).
  • We estimate Astera Labs (ALAB US) to generate revenue of $221.3 million (up 91.1% YoY) in 2024 and $304.5 million (up 37.5% YoY) in 2025.
  • Many investors are willing to take extra risk to invest in companies such as Astera Labs that could generate strong sales growth amid rush to aggressively expand AI capabilities.

8. Angel Robotics: IPO Bookbuilding Results Analysis

By Douglas Kim

  • Angel Robotics reported exceptional IPO bookbuilding results. Angel Robotics’ IPO price has been determined at 20,000 won, which is 33% higher than the high end of the IPO price range. 
  • A total of 2,067 institutional investors participated in this IPO book building. The demand ratio was 1,157 to 1. Angel Robotics will start trading on 26 March 2024. 
  • We remain positive on Angel Robotics. There is likely to be a sharp overshooting of its share price relative to its intrinsic value on the first day of trading. 

9. Pre-IPO PegBio Co., Ltd. – This GLP-1 Biotech Has Gloomy Outlook

By Xinyao (Criss) Wang

  • PB-119 (T2DM) has the fastest R&D progress, but this is a highly competitive market.China’s diabetes drug market is dominated by traditional drugs. It’s not easy for PegBio to break through. 
  • Since the future competitive landscape of GLP-1s (obesity) would present a very different situation.If PB-119 fails to have better weight loss effect, it would be eliminated due to fierce competition.
  • PegBio’s IPO on SSE STAR Market was rejected. We’re not optimistic about its future commercialization performance. Together with cash-flow issues, we doubt whether PegBio would bring expected returns to investors.

10. Samhyun IPO Bookbuilding Results Analysis

By Douglas Kim

  • Samhyun reported excellent IPO bookbuilding results. Samhyun’s IPO price has been determined at 30,000 won per share, which is 20% higher than the high end of the IPO price range.
  • A total of 2,168 institutional investors participated in this IPO book building. The demand ratio was 649 to 1. Samhyun will start trading on 21 March 2024. 
  • Our base case valuation of Samhyun is implied market cap of 396 billion won or target price of 37,402 won, which is 25% higher than the IPO price.