This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Midea Group H Share Listing (300 HK): Trading Debut
- Midea Group Co Ltd A (000333 CH) priced its H Share at HK$54.80 to raise HK$31,014 million (US$4.0 billion) in gross proceeds. The H Share will be listed tomorrow.
- The H Share listing price implies an AH discount of 21.4% at the A Share price of RMB63.51. This compares to Haier Smart Home (6690 HK)‘s AH discount of 13.8%.
- Futu grey market data shows that the H Shares closed 5.1% higher at HK$57.60. Our valuation analysis suggests that the H Share listing price is attractive.
2. Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis
- Midea Group(000333 CH) has increased the shares on offer in Hong Kong by 15% to 565.9 million shares, priced at the top end of the range at HKD54.8 per share.
- With strong investor interest, the company may exercise an over allotment option that could take the deal size to USD 4.6 billion.
- Midea’s Hong Kong pricing reflects a nearly 21% discount to its A-share closing price, compared to the average 33% discount for dual-listed companies between Hong Kong and Shanghai or Shenzhen.
3. Pre-IPO Midea Group H Share – Here Are the Risks Behind
- For the reasons why Midea is eager to IPO in HK, investors shouldn’t just look at the surface of its glory, but delve into the “real motives” behind capital operations.
- The policy of subsidizing the trade-in of home appliances belongs to “early overdraft of demand” and is unsustainable. Valuation logic for the performance increment brought by such policy is P/B.
- If Midea cannot achieve the expected breakthroughs in To B business or internationalization in 2025-2026 to hedge against the weak domestic business, Midea’s performance/valuation in following years would inevitable decline.
4. Auckland Airport Placement – Large NZ$1.4bn Raising, with ACC’s Overhang to Contend With
- Auckland Intl Airport (AIA NZ) is looking to raise NZ$1.4bn (US$863m) in its primary follow-on offering. The offering includes a NZ$1.2bn underwritten placement, together with a NZ$200m non-underwritten retail offer.
- The underwritten placement alone is a large one for the stock to digest at 168 days of three month ADV.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
5. Kuaishou Placement – US$480m Secondary Block Deal a Small One to Digest
- DCM Investments is looking to raise US$484m via selling its remaining stake in Kuaishou Technology (1024 HK).
- While the current block deal isn’t entirely well flagged per se, it appears that DCM has since been trimming its stake on the open market.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
6. Bajaj Housing Finance IPO – Valuation Might Get Stretched from Demand Overflow
- Bajaj Housing Finance (BHF IN) raised around US$800m in its India IPO.
- BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
- In our previous notes, we looked at the company’s past performance and valuation. In this note, we will talk about the trading dynamics.
7. K Bank IPO – The Positives – Fast Growth
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In this note, we talk about the positive aspects of the deal.
8. K Bank IPO Valuation Analysis
- Our base case valuation of K Bank is target price of 9,151 won per share, which is 4% lower than the low end of the IPO price range.
- Given the lack of upside in our target price relative to the IPO price range, we would avoid in subscribing to the IPO.
- Our base case valuation is based on 1.6x P/B multiple using the company’s equity post IPO (2.35 trillion won).
9. ECM Weekly (16th Sep 2024) – Midea, Bajaj Housing, 99 Speed, P N Gadgil, Hozon, Trial, NextDC, Via
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, Midea Group Co Ltd A (000333 CH) hogged much of the limelight this week, although Bajaj Housing Finance (BHF IN) created some history as well.
- We covered the Nextdc Ltd (NXT AU) and Terumo Corp (4543 JP) placements and looked at the possible deals in Trial Holdings (5882 JP) and Via Technologies (2388 TT).
10. K Bank IPO: The Bull Case
- K Bank (279570 KS) is a Korean internet bank. It has launched an IPO to raise up to US$734 million.
- K Bank began operations in April 2017 as the first internet-only bank in Korea. KT Corp (030200 KS) and Woori Bank (000030 KS) are the two largest shareholders.
- The bull case rests on rising market share, solid deposit growth, robust loan book growth, stable NIM, rising margins and a low NPL ratio.
