ECM Weekly (21 September 2018) - UK IPO, Volatile Price Movements, and Six Placements

764 Views22 Sep 2018 06:36

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

We start this week in the UK first because Aston Martin Holdings (8444762Z LN)'s IPO is set to be the first listing under UK's new IPO disclosure rules. It is exciting and significant to us and everyone Smartkarma because the new rules allow independent analysts to have equal access to management and other company information. Almost a year ago, we were one of the proponents of such a change to the process. You can read our earlier insights on this topic here: Breaking the Bank: Time to End the IPO Rort; and Breaking the Bank: Time to End the IPO Rort - Our Official Response. Thus, we felt like we needed to lend our independent voice for the first IPO under the new rules in Aston Martin Lagonda Pre-IPO Under the New IPO Process - Lots to like Apart from R&D Capitalisation.

Back in the US, the IPO momentum continues as expected with X Financial (XYF US) rallying to a day high of US$20.30 which is about 113% above its IPO price before coming down to earth and closing just 26% above IPO price on the first day. Since then, its share price has been pulling back significantly, down another 8% on Friday morning session. Other non-Asia US IPOs such as Eventbrite Inc (EB US) has also been on a roll, closing some 50+% above IPO price on debut.

In Hong Kong, Meituan Dianping (3690 HK) 's quiet debut was a little bit of surprise. As mentioned in Ke Yan, CFA, FRM 's post-IPO note, Meituan Dianping (美团点评) Post-IPO Lunch-Bite: Near Term Upside and The Liquidity Angle, the adjusted free float is small, representing just 3.5% of the total shares outstanding or 37% of the deal. Perhaps the market is being a little more cautious because the company is trading at about 4.6x FY19E EV/Sales which is on par with Baidu and Ctrip but still significantly lower than its leading China TMT peers such as BABA, and Tencent.

As the US indices rallied past their all-time high and Asia seems to be getting some relief rally in the past week (especially in China and Hong Kong), we are seeing an uptick of activity in the placement space. Just this week alone, we had 6 placements, three in Korea, two in Australia, and one in Singapore.

Notably, most of the placements have been holding up well especially Samsung C&T (028260 KS) . The two shareholders (Samsung affiliates) of Samsung C&T (028260 KS) sold down their entire shareholding in the company, removing part of the overhang that has been weighing down on C&T's share price despite recent earnings momentum. Since the placement was completed, C&T's share price has been on a tear, pricing at 5% discount to Thursday's close and rallying above that to close almost 3% above the previous day close.

Even for Coway's Placement, which we were negative due to the overhang from MBK's remaining stake and the impending ownership by Woongjin Group, managed to claw back its lost grounds to close above its placement price on Friday despite collapsing below it on Thursday's close.

For next week, we are hearing that Midea Real Estate (MRE HK), the property development arm of Midea Group Co Ltd A (000333 CH), and Jiangxi Ganfeng Lithium (002460 CH) will be opening its book next week. Osotspa Co Ltd (0227009Z TB) has also started its bookbuild and we will be covering the IPO next week.

Accuracy Rate:

Our overall accuracy rate is 71.1% for IPOs and 64% for Placements

(Performance measurement criteria is explained at the end of the note)

New IPO filings this week

  • Wuxi AppTec (Hong Kong, ~US$1bn)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

Source: Smartkarma IPO Analyzer

News on Upcoming IPOs

Smartkarma Community's this week Analysis on Upcoming IPO

List of pre-IPO Coverage on Smartkarma

Hong Kong
Ant FinancialAnt Financial IPO Early Thought: Understand Fintech Empire, Growth & Risk Factors
BabyTreeBabytree Group Pre-IPO - Young Moms Need It but Almost All Seem to Have It, Might Be at Peak MAU
Canaan Inc.Canaan Inc. IPO Preview (Part 1) - The Biggest Blockchain Related IPO Globally in 2018
Canaan Inc.Canaan Inc. IPO Preview (Part 2) - A Closer Look at ASIC Developments and Competition
Canaan Inc.Canaan Inc. IPO Preview (Part 3): Earnings Forecast & Valuation Analysis
Canaan Inc.Canaan (嘉楠耘智) IPO Quick Take: Beware that ASIC Is a Different Ball Game
CenmintangCenmintang IPO Preview: A Beverage and Snack Play Whose Growth Is Hard to Grasp
China FeiheChina Feihe IPO Preview: Goat Bless Infant Formula Milk?
Entertnmt PlusEntertainment Plus – 60% Market Share, Margin Not a Concern
Entertnmt PlusMaoyan IPO Preview: Running Out of Growth Drivers
Fosun TourismFosun Tourism IPO, Part 1: Back to the Beach With Club Med! | But Is This a 'China' Play?
China KepeiChina Kepei Edu (科培教育) Pre-IPO Review - A Well Run Private Higher Education Company
Ganfeng LithiumGanfeng Lithium IPO: Present Perfect, Future Tense
Innovent BioInnovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1)
MicuRxMicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
Sinochem EnergySinochem Energy (中化能源) IPO First Impression: Trophy Asset Mixed with Volatile Trading Business
STX STX IPO Preview– a One-Hit Wonder
STX STX Entertainment (胜图娱乐) IPO: Legendary Founder but Results Matter
TongchengTongcheng-ELong (同程艺龙) Pre-IPO Review - A Force to Be Reckoned With
Qilu ExpressQilu Expressway IPO Preview: Concentration Risk and Recent News May Mean Discount to Peers
WeLabWeLab Pre-IPO - Stuck in a Regulatory Quagmire; Not the Right Time to List
South Korea
DaeyuDaeyu Co. IPO Preview (Part 1)
EbangEbang IPO Preview (Part 1): Lower Sales but Higher Operating Profit Versus Canaan Inc.
FoodnamooFoodnamoo Inc IPO Preview (Part 1) - A Leader in Home Meal Replacement Products in Korea
Icure PharmIcure Pharm (175250 KS): Post IPO Short Selling Opportunity Checkup
Icure PharmIcure Pharm IPO Summary - Front Runner of Dementia Patch Development Race

Livent IPO Preview (Part 1): A Profitable Company that Produces Lithium


Plakor IPO Preview (Part 1)


Robotis IPO Preview (Part 1) - An Innovative Provider of Robotic Solutions in Korea

S-Fuel Cell

S-Fuelcell Co IPO Preview (Part 1) - A Leading Provider of Fuel Cell Systems in Korea

S-Fuel Cell

S-Fuelcell Co IPO Preview (Part 2) - Valuation Analysis & Korean Fuel Cell Industry Dynamics

ZinusZinus IPO Preview (Part 1) - An Amazing Comeback Story (#1 Mattress Brand on Amazon)
CMS InfoCMS Info Systems Pre-IPO Review - When a PE Sells to Another PE... Only One Gets the Timing Right
Crystal CropCrystal Crop Protection Pre-IPO - DRHP Raises More Questions than in Answers
Flemingo Flemingo Travel Retail Pre-IPO - Its a Different Business in Every Country
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review - Bigger, Better, Stronger but a Little Too Fast for Some
Mazagon DockMazagon Dock IPO Preview: A Monopoly Submarine Yard in India with Captive Navy Spending


Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable
LodhaLodha Developers IPO: Large Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt
The U.S.
CNFinanceCNFinance (泛华金融) IPO First Impression: Beware Rising Credit Risk and Slowing Loan Origination
CNFinanceCNFinance IPO Preview: A Renaissance that May Not Come
Latitude financialLatitude Financial Group Pre-IPO Review - Credit Prospectus Throw up Some Interesting Data Points
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