ECM Weekly (29 September 2018) - China Renaissance's First-Day Return Is the Worst in 2018

473 Views29 Sep 2018 10:58

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 approach the end of the quarter with a handful of disappointing IPOs from Hong Kong to the US.

Starting off with Viomi Technology Co Ltd (VIOT US) on Monday, the company opened on a good footing, at US$9.50 per share after pricing at the low-end of US$9 per share. The hype didn't last long. The share price rallied intra-day but closed at US$9.08 just above IPO price. LAIX Inc (LAIX US) went through a similar cycle. It opened at US$16.50, 32% above its IPO price of US$12.50 (mid-range), before getting sold off progressively throughout the day to close just 1.2% above its IPO price. For some reason, this has been a common trend for a handful of first-day IPOs in the US such as X Financial (XYF US) and Qutoutiao Inc (QTT US).

Moving on to Hong Kong, this week's performance continues to remind us that Hong Kong IPOs have been a train wreck this year. Just a quick look across our tracker on HK IPOs above US$100m shows that none of the IPOs are giving positive returns with the exception of the two tightly-held property developers. Meituan Dianping (3690 HK) and Haidilao (6862 HK) tried to hold their ground on the first two days but fell through its IPO price midweek. Both companies managed to claw back lost ground on Friday, probably due to bookrunner support in late afternoon trading.

However, the biggest surprise for most would be the disastrous debut performance of China Renaissance Holdings (1911 HK), closing 22% below IPO price. We weren't sure if there was bookrunner support judging by the late afternoon trading because, based on our experience, HK IPOs tend to get propped up in the late afternoon if they fell through their IPO price. The IPO is the worst first-day return we have seen so far in 2018, shown in the bar chart below. Last year, we had Bestway Global Holding (3358 HK) falling by 24% on the first day.

Next week, Midea Real Estate (3990 HK) will be closing its books. For IPOs in the pipeline, we heard that Innovent Biologics Inc (1641475D HK) will be pre-marketing for its IPO next week and Futu Securities, a Tencent-backed brokerage is starting preparations for its US IPO.

Accuracy Rate:

Our overall accuracy rate is 71.5% for IPOs and 64.2% for Placements

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

New IPO filings this week

  • Bitmain (Hong Kong, ~US$3bn)
  • Embassy REIT (India, ~US$500m)
  • Metropolis Health (India, ~US$330m)
  • Niu Technologies (US, ~US$150m)

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
BitmainBitmain IPO Preview: The Last Hurrah Before Reality Bites
BitmainBitmain IPO Preview (Part 2) - King of Cryptocurrency Mining Rigs but Its Moat Is Shrinking
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
Entertnmt PlusEntertainment Plus (猫眼娱乐) IPO: The Engineered Movie Ticketing Leader Running Out of Steam (Part 1)
Entertnmt PlusEntertainment Plus (猫眼娱乐) IPO: The Coming Regulatory Bang Isn't That Bad (Part 2)
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

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


Upwork IPO Preview (Part 1) - The Largest Global Online Platform for Freelancing Services

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

Niu Technologies – Another EV Upstart From China; This One Has Zest

NiuNIU IPO Preview: More Substance than Hype Compared to NIO
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