HK IPO: T.S. Lines IPO analysis and subscription plan
T.S. Lines Limited is a Hong Kong-registered limited company established in 2001, specializing in container shipping services. The company was founded by Mr. Chen Desheng (Chairman and CEO) and Ms. Zhuang Zhuangli (Executive Director and controlling shareholder), operating over 40 trade routes across intra-Asian and other markets.
1. Major Shareholders:
Mr. Chen Desheng: 43.55%
Sharafuddin Co: 40.32%
Mr. Wu: 16.13%
2. Business Scope:
Provides container shipping services covering intra-Asian and other markets.
Primarily operates via owned and chartered vessels using liner routes.
Contracts with freight forwarders for container cargo transportation.
3. Industry Position:
Ranked 21st globally in container shipping (0.3% market share).
6th among Asia-Pacific-focused container shipping firms (2.3% market share).
4. Milestones:
2001: Founded with Hong Kong-Taiwan-Japan routes.
2002: Expanded to South Korea, Singapore, Malaysia, Indonesia.
2003: Launched Hong Kong-Ho Chi Minh City express service.
2006: Established Middle East-China-Japan routes and Japan subsidiary.
2010: Entered Australia and trans-Pacific market.
2011: Expanded to Haiphong and set up China subsidiary.
2016: Established Vietnam subsidiary.
2021: Reached New Zealand and Canada.
2022: Extended to UK, Netherlands, Germany, Belgium, US East Coast.
2023: Fleet upgraded with 12 new vessels.
2024: Opened Singapore subsidiary.
5. Fund Utilization
Net proceeds: ~HKD 896.0M (assuming no overallotment and mid-point IPO price of HKD 4.0/share).
Allocation:
50.0% (HKD 448.0M): Two new 7,000 TEU vessels ordered April 2024.
25.0% (HKD 224.0M): Vessel charter contracts.
75.0% (HKD 672.0M): Combined vessel orders & charters.
15.0% (HKD 134.4M): Container leases.
10.0% (HKD 89.6M): Working capital.
IPO Details:
Cornerstone Investors:
6 cornerstone investors committed, covering 56.51%/49.45%/43.95% at lower/mid/upper price range with 6-month lock-up.
Sponsors:
Jointly sponsored by JP Morgan and China Merchants Securities, with JP Morgan as stabilizing agent. JP Morgan has limited recent IPO track record; China Merchants Securities inactive in past year (see below).
Financials:
Revenue:2021: RMB 1.837B, 2022: RMB 2.443B, 2023: RMB 874M.
Gross Profit/(Loss):2021: RMB 931M, 2022: RMB 1.091B, 2023: RMB -33.8M;
Net Profit/(Loss):2021: RMB 1.077B, 2022: RMB 1.074B, 2023: RMB 20.4M;
Lot-Winning Probability:
Global offering: 250.94M shares (1,000 shares/lot). Current oversubscription 0.3x, no clawback expected. Estimated 5K-9K applicants, 100% allocation rate.
Analysis:
91.7% of 2023 revenue (USD 801M) from container shipping, 8.3% (USD 73M) from related services. Financials show cliff-like declines - fundamentally unattractive. HKD 878M-1.129B IPO with 43.95%-56.51% cornerstone lock-up implies float of HKD 496M-632M (large scale).
Logistics sector IPOs underperformed recently. Sponsors' weak track record. Valuation appears reasonable if historical earnings recover, but 2024 revenue continues declining - potential further downside. Large float reduces appeal.
Subscription Plan:
I'll pass.
$TS LINES(02510.HK)
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