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IPO Watch

Info Edge reduces the size of the OFS in the Zomato IPO by half, to Rs 375 crore.

The cut in size indicates that Info Edge is confidence in the future of the company and wants to keep more of the company it bought for a low price. Many analysts and foreign investors are likewise optimistic about the situation. Zomato’s much-anticipated initial public offering is set to take place later this month. The date, on the other hand, remains unclear.

The stock is trading at Rs 80 a share in the grey market, or the unofficial market for unlisted shares, about 15% more than the projected IPO price of Rs 70. Zomato’s shares were sold at Rs 55-60 in the most recent round of investment.

If traders’ predictions are correct and Zomato offers its shares for Rs 70, Info Edge will profit 60 times its initial stake. According to the DRHP, the business led by Sanjeev Bikhchandani purchased around 18.55 % at an average cost of Rs 1.16 per share.

Source: economic times

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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IPO Watch

India Pesticides is listed at a 22% premium to the issue price

Subscription

Rs 800 crore IPO was subscribed 29.04 times between June 23 and 25. The shares reserved for non-institutional investors (NIIs) were subscribed 51.88 times, while the quota reserved for qualified institutional buyers (QIBs) was subscribed 42.95 times. The retail quota was subscribed to 11.3 times.

According to a corporate news release, India Pesticides is the only Indian manufacturer of five technicals and is among the world’s leading producers of captan, folpet, and thiocarbamate herbicides in terms of manufacturing capacity.

The agrochemical stock had a P/E of 24.5 times and an EV/Ebitda of 18.2 times at the time of issuance. From a long-term perspective, Motilal Oswal Securities, Prabhudas Lilladher, Antique Stock Broking, Anand Rathi, Angel Broking, and ICICI Direct all gave the issue “subscribe” ratings.

Analysts View

The corporation has a 34 percent return on equity (ROE) and a 45 percent return on capital employed (ROCE), respectively. Angel Broking had predicted a 15-25 percent increase in listing gains. Short-term investors were urged to book profits at Rs 350.

Registrations and Licences

India Pesticides now has two manufacturing plants in Uttar Pradesh, one in Lucknow and the other in Hardoi. The combined capacity of the two plants is 19,500 mt for technicals and 6,500 mt for formulations verticals. For sale in India, the company has registrations and licences for 22 agrochemical technicals and 125 formulations, as well as 27 agrochemical technicals and 35 formulations for export.

Source: Economic times

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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IPO Watch

Two IPOs will be launched next week, raising about Rs 2,500 crore in total.

This follows the initial public offerings (IPOs) of five companies last month: Shyam Metalics and Energy, Sona BLW Precision Forgings (Sona Comstar), Krishna Institute of Medical Sciences, Dodla Dairy, and Indian Pesticides. These companies raised a total of Rs 9,923 crore through public offerings.

Clean Science and Technology and GR Infraprojects’ three-day initial public offerings (IPOs) will begin on July 7 and end on July 9. The bidding for key investors will begin on July 6, according to data from exchanges.

Through IPOs, the two companies would raise a total of Rs 2,510 crore. The firms’ shares will be traded on the BSE and the NSE.The Rs 1,546.62-crore IPO of Clean Science and Technology is wholly an offer for sale (OFS) by current owners and other shareholders.

For its initial public offering, a speciality chemical producer has set a price range of Rs 880-900 per share. Functionally essential speciality chemicals, such as performance chemicals, pharmaceutical intermediates, and FMCG chemicals, are manufactured by Clean Science Technology. Customers employ its goods as crucial starting materials, inhibitors, or additives in their products.

The public offering of GR Infraprojects will be a full OFS of 1,15,08,704 equity shares by promoters and investor selling stockholders. Employee reservations are also included in the package. The IPO of GR Infraprojects, which has set a price range of Rs 828-837 per share, is expected to raise Rs 963.28 crore at the top end of the pricing range.

Source: Economic times

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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ipo IPO Watch

IPO Stocks to Keep an Eye on in June

Squarespace(ticker: SQSP), a website builder, was the most high-profile listing in May. . Although the corporation’s initial public offering (IPO) was technically a direct listing rather than a typical IPO, the shares began trading on May 19. Squarespace’s price has risen approximately 17% so far.

The IPO boom is anticipated to remain in June and beyond, according to investors. Here are five initial public offerings to keep an eye on:

  • dLocal (DLO)
  • Krispy Kreme (DNUT)
  • Authentic Brands
  • Couchbase
  • Robinhood

dLocal (DLO)

dLocal, a payments startup, is part of a wave of digital payments companies that are going public. In late May, Paymentus Holdings (PAY) and Flywire Corp. (FLYW) completed their first public offerings. In addition, Marqeta (MQ) has filed to go public next week.

dLocal reported $104.1 million in revenue in 2020 in its IPO filings, up 89 percent over 2019. It also made a profit of $28.2 million last year, in stark contrast to many IPO growth stocks, which are losing money.On June 3, shares began trading on the Nasdaq. The payment startup raised $617.7 million in its initial public offering, which opened at $31 per share.

Krispy Kreme (DNUT)

Krispy Kreme, a doughnut company, said on May 4 that it has filed secret documents to execute an IPO. Krispy Kreme is aiming to re-enter the public market after its initial public offering (IPO) in 2000 ended in a Chapter 11 bankruptcy barely five years later.

Investors are hoping that the value of Krispy Kreme has increased since 2016. Dunkin’ Brands, a competitor, was taken private in 2020 for $8.76 billion.

Authentic Brands

Authentic Brands filed for an IPO in secret on May 26 and is aiming for a $10 billion valuation, according to Women’s Wear Daily. The data appears to back up an earlier Bloomberg report claiming that Authentic Brands is considering an IPO.

According to CNBC, Authentic Brands was estimated at between $4 billion and $5 billion in its most recent fundraising round in 2019.

Couchbase

According to insiders acquainted with the situation, Couchbase might be worth up to $3 billion. Cisco Systems (CSCO), Intuit (INTU), and PayPal Holdings are among the company’s high-profile customers, generating more than $100 million in annual revenue (PYPL).

Couchbase has been planning an initial public offering (IPO) since 2016. The company has been quiet about its anticipated IPO in recent months, but the March filing indicates that a formal announcement might happen at any time.

Robinhood

The past few years have been tremendously profitable for Robinhood, but they have also been marred by controversy. After the Reddit WallStreetBets community staged targeted short squeezes, Robinhood briefly suspended trading in GameStop Corp. (GME) and other so-called “meme” stocks, CEO Vlad Tenev was called to testify before Congress.

Tenev stated in his statement that Robinhood has over 13 million consumers. In 2020 and early 2021, a retail stock trading boom fueled Robinhood’s exponential growth. According to TechCrunch, the company’s payment for order flow revenue climbed from around $90 million in the first quarter of 2020 to around $220 million in the fourth quarter.

Source: money.usnews.com

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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IPO Watch

OZZ Resources launches $5m gold IPO with five WA Projects, Pledges tight register

Money bag with the word IPO (Initial public offering; stock market launch) and a calculator. The first public sale of shares of a joint stock company. Business and finance concept

Chairman Alan Lockett, formerly of Olympia Resources and credited with the discovery of the now-mined Hart Range garnet deposit in the Northern Territory, and managing director Jonathon Lea, formerly of Polaris Metals and who has also been involved in the development of several gold projects in Western Australia, are at the helm of the company.

Following the offering, Mr. Lea believes shareholders may expect a highly busy exploration agenda. “Shareholders may expect a thorough, targeted, and systematic exploration effort across our core properties, as well as frequent news flow,” says the company. He went on to say that the corporation would retain strict financial discipline and expense management. A total of 25 million shares are being offered at a price of $0.20 per share, with the offer set to end on May 28.

By mid-June, OZZ hopes to be listed on the ASX. For the second half of 2021, a multi-pronged exploration campaign is planned, with drilling approvals already in place for Maguires Reward, where 5,000 metres of reverse circulation drilling will begin next month. In the meanwhile, at the Rabbit Bore and Petewangy projects, OZZ will conduct an airborne electromagnetic survey. Rabbit Bore has a 5km strike length of promising shear zones under cover, with anomalous copper, nickel, and cobalt found in soil sampling.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

PetroChina and Sinopec Guides Significant Improvement in 1H Earnings; Positive Readthrough for CNOOC

Overall, the sector is still undervalued but our preferred pick is CNOOC, given its upstream focus and cost efficiency with all-in cost of below USD 30 per barrel. Higher oil prices should be positive for oil producers, this could be negative for PetroChina’s and Sinopec’s downstream operations, especially if the government decides to delay price hikes for refined products to prevent inflation. The better earnings are widely expected by the market, given that the weak results in 2020 were due to lower oil prices and COVID-19 disruptions. PetroChina and Sinopec attributed the improvement to recovery in prices and demand for oil and gas products, as well as stringent cost controls.

Oil prices are likely to remain elevated (above midcycle price of USD 60 per barrel for Brent) for at least another 6-12 months, in our view, as supply/demand dynamics support current price levels. All is going according to plan with a continued vaccine rollout, decline in infections, and recovery in demand. On the supply side, an accelerated return of Iran volumes continues to pose a risk, but we still see the situation as manageable.

Company Profile

China Petroleum & Chemical, or Sinopec, is one of China’s national oil companies and one of Asian’s largest integrated oil companies in terms of revenue. Its income is derived primarily from refining and marketing of oil products and petrochemical production. Sinopec has China’s largest petrol station network with over 30,000 stations and enjoys significant market share in petrochemicals. Established in 2000 by China Petrochemical Corporation, a state-owned enterprise and majority shareholder, the company also owns oil and gas assets in Shandong and Sichuan provinces. It has a smaller global upstream presence than peers PetroChina and CNOOC.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Technology Stocks

The Semiconductor Shortage Is Holding Back Ford’s June Sales

The semiconductor shortage ravaging the auto industry should bottom out in mid-2021, so gradual inventory improvement throughout the year, though a full recovery to take until 2022 or even 2023. The good news is that demand is excellent, with many consumers ready to spend money after holding back vehicle spending last year due to the pandemic.

Ford reported June sales on July 2 that showed the semiconductor shortage is hurting it notably worse than the rest of the industry. Management has repeatedly cited the impact of the Renesas plant fire in Japan as a major problem for Ford. June sales fell year over year by 26.9%, which far underperformed the industry’s 17.8% growth. We don’t see Ford having poor demand. The problem is low supply caused by the semiconductor shortage. With time Ford’s sales to be stronger in the second half of 2021 than the first half. First-half sales rose by 4.9% versus first-half 2020 (which is an easy comparable due to the pandemic), with about equal growth at the Ford and Lincoln brands. The 4.9% lags GM’s first-half 2021 growth of 19.8%. Ford’s first-half volume is down by about 20% from the first half of 2019. The best bright spot in Ford’s June sales is the Lincoln Navigator SUV, which grew volume by 15.5%. Lincoln’s SUVs had a first half of the year sales record, with retail channel sales up 23.3% year over year. June F-Series sales fell by 29.9%, and the company now has over 100,000 reservations for the all-electric F-150 Lightning due next year.

Company Profile

Ford Motor Co. manufactures automobiles under its Ford and Lincoln brands. The company has about 14% market share in the United States and about, 7% share in Europe. Sales in North America and Europe made up 69% and 19.5% of 2020 auto revenue, respectively. Ford has about 186,000 employees, including about 58,000 UAW employees, and is based in Dearborn, Michigan.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Shares Small Cap

Bega Cheese’s Strength isn’t Strong Enough to Justify a Financial Moat

Competitive pressures from branded peers, niche operators, and private label products and a reliance on powerful supermarket customers will weigh on Bega’s ability to increase prices, leading to potential market share and margin deterioration. Despite the firm’s strategic shift toward a more diverse product offering, we expect dairy products to continue to represent the majority of Bega’s sales over the next decade, exposing the firm to commodity pricing and volatile input costs.

In November 2020, Bega entered an agreement to acquire Lion Dairy and Drinks from Kirin Group for AUD 534 million with the deal expected to be finalized in January 2021. Revenue from the branded segment, which includes spreads and grocery products and Lion’s Dairy and Drinks portfolio, to expand at a CAGR of 7.4% to fiscal 2025, underpinned by new product innovation and bolt-on acquisitions. Historically, Bega Cheese has made limited investment in its brands, particularly in Australia where Fonterra is the licensee of the Bega brand, however since acquiring the spreads and grocery business in 2018, marketing spend as proportion of revenue has increased to 3% from 1% and it to remain the higher level.

Bega Cheese’s Supply Chain and Manufacturing

At least 70% of Bega’s energy consumption is from fossil fuel generation. But these risks are immaterial to our unchanged AUD 5.00 per share fair value estimate and high uncertainty rating. Bega Cheese already operates in a highly competitive market, with a largely commoditized product offering and high private label penetration in key categories. Bega Cheese’s supply chain and manufacturing is heavily reliant on water, exposing the company to increased water costs and community backlash from inefficient water use.As pressure mounts to reduce global carbon emissions, there is the potential for a reintroduction of regulated carbon pricing in Australia, however, this is not factored into our base case. Extreme weather events such as droughts and bushfires may result in higher input costs, margin deterioration from reduced production volumes, disruptions to the supply chain and increased scrutiny on resource use. Climate change risk may lead to extreme weather in the short term or changing climate patterns longer-term impacting its supply chain and input costs. Management is certainly diversifying Bega Cheese’s product offering and building out the branded business through acquisitive growth in recent years

Financial Strength

Bega’s balance sheet will be stretched following the acquisition of Lion Dairy and Drinks, with pro forma net debt/EBITDA on a post AASB 16 basis deteriorating to 3.3 (from 2.3 pre-acquisition). Bega funded the acquisition through a AUD 401 million equity raising and AUD 267 million of new and extended debt facilities. The balance sheet to gradually deleverage as synergies are delivered, earnings improve and noncore assets are divested, with net debt/EBITDA falling to below the firm’s target of 2 by fiscal 2024. Bega will continue to explore potential bolt on acquisitions and partake in industry rationalisation. While the timing and scale of further acquisitions is uncertain, Bega has the capacity to pursue smaller acquisitions while maintaining a dividend payout ratio of 50% normalised EPS.

Changing Consumer Trends

  • Bega is shifting investment to the spreads and grocery business, which we view as less commoditised and higher margin than dairy, with strong niche positions in Vegemite and peanut butter
  • External factors outside of Bega’s control, such as the weather, can adversely impact supply and demand dynamics. This can impact commodity prices, inputs costs and the firm’s supply chain and lead to volatile earnings
  • Changing consumer trends toward dairy-free and vegan diets could lead to declines in per-capita dairy and cheese consumption, weighing on the majority of Bega’s earnings

Company Profile

Bega Cheese is an Australian based dairy processor and food manufacturer of well-known brands including Bega Cheese and Vegemite. On a pre-acquisition of Lion’s Dairy and Drink’s basis, the firm generated approximately 70% of sales from its domestic market, with the remainder from exports to over 40 countries, predominately in Asia. Bega Cheese operates two segments: the branded segment which produces consumer packaged goods primarily sold through the supermarket and foodservice channels and the bulk segment which produces commodity dairy ingredients primarily sold through the business-to-business channel.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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ipo IPO Watch

Following Over Subscribed IPO, Resource Base to Acquire Black Range Metal Project

Black Range Acquisition

Following the completion of an initial public offering (IPO) and planned relisting on the Australian Securities Exchange, junior minerals company Resource Base will pursue an aggressive exploration campaign at the potential Black Range base metals property in northwest Victoria.

In February, Resource Base obtained a conditional right to purchase Black Range from its present owner, Navarre Minerals (ASX: NML). The firms reached a definitive agreement under which Navarre will dispose the non-core asset in exchange for $1.52 million in Resource Base shares upon listing.

A second tranche of 2.5 million shares will be awarded to Navarre upon the announcement of a JORC resource of 100,000 tonnes within five years, and a third 6 million share tranche will be issued upon the delivery of the project’s comprehensive feasibility study.

Eclipse Prospect

After the acquisition is completed, Resource Base will conduct exploration, pre-feasibility studies, and bankable feasibility studies on the project to show the commercial viability of a mining operation.

The Eclipse opportunity, which sits in the Stavely corridor and is considered prospective for volcanic-hosted massive sulphide mineralisation, is Resource Base’s priority objective within the project.

The first two years as a public business will also include evaluating fresh exploration and acquisition prospects, as well as completing studies for near-term copper and gold production.

“The company will also consider further merger and acquisition activity where appropriate, with a view to growing the company and creating further value for shareholders.”

Company Profile

Resource Base Limited is a mineral exploration company focused on the acquisition and development of highly prospective exploration projects with demonstrated potential for scalable discoveries.

(Source: Small Caps)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Property

Recent Acquisitions and Divestments Have transformed Charter Hall Retail REIT’s Portfolio

The group also recently announced another acquisition, spending AUD 51.2 million to buy the Butler Central Shopping Centre in Western Australia. Purchased on a 6% cap rate, which is about in line with our estimated yield on Charter Hall Retail REIT.

Recent acquisitions and divestments have transformed Charter Hall Retail REIT’s portfolio. AUD 177 million portfolio of shopping centers was sold in fiscal 2020. Then in July 2020, the REIT acquired a stake in a Coles distribution centre with 14 years remaining on the lease, with fixed annual rental uplifts of 2.75%. As at June 30, 2020, Woolworths was the largest tenant, representing 18% of income, but we expect Coles will be the largest tenant by the end of fiscal 2021. Aldi is also likely to rise in our view (currently 2% of income), via store numbers increasing in Charter Hall’s portfolio. And BP now represents about 12% of rental income, from zero a year ago. Wesfarmers will likely decline
Slightly as a result of Target stores closing or converting to Kmarts.

Rent is Charter Hall Retail REIT’s dominant revenue driver. Unlike many other Australian REITs, it does not operate any meaningful funds management business, and is unlikely to do so given funds management opportunities are housed in the head stock Charter Hall.

Financial strength
Charter Hall Retail REIT is in reasonable financial health after raising equity in April and May 2020, bolstering the balance sheet. Gearing reduced from near 40% in December 2019 to 35% in December 2020 (as measured by look-through gearing, which is net debt/assets, including debt obligations in underlying vehicles). The covenant of most concern is over an underlying fund, not the entire REIT. It specifies that gearing within that fund is limited to 55%. The fund is already geared to at 40.5%. That implies that a 25% fall in asset values would see that fund flirting with a breach. This fund represents only a small portion of the REIT’s overall assets, so we estimate leverage problems there could be solved by a modest cash injection into the fund – that should be affordable given manageable gearing at the REIT level of 35% (December 2020).

Bulls Say
• Well over half of revenue comes from tenants that we consider to have a low likelihood of missing rent payments. Combined with long leases on anchor tenants, CQR’s income is relatively resilient.
• Interest rates look set to remain lower for longer, suggesting that the market will maintain low discount rates on property assets that can generate income.
• Good anchor tenants generate foot traffic, and Charter Hall Retail charges rent well below levels in high-end discretionary focused shopping malls, suggesting less vulnerability to e-commerce.

Company profile
Charter Hall Retail REIT, or CQR, owns and manages a portfolio of convenience focused retail properties, including neighborhood and sub regional shopping centers, service stations, and some retail logistics properties. The REIT is managed by Charter Hall, a listed, diversified fund manager and developer, which owns a minority stake in CQR, and frequently partners with it on acquisitions and developments. More than half of rental income comes from major tenants Woolworths, Coles, Wesfarmers, Aldi and BP (the latter occupies service station assets). The portfolio is more seasoned than some convenience rivals, with approximately two thirds of supermarket tenants at or near thresholds for paying turnover-linked rent.

(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.