T.S. Lines, just meeting the threshold for Stock Connect! Focused on container shipping in the Asia-Pacific region—(02510.HK) October 2024 IPO analysis
$TS LINES(02510.HK)
Sponsors: J.P. Morgan Securities (Far East) Limited & China Merchants Securities (Hong Kong) Limited
Listing Date: Friday, November 1, 2024
Offer Price: HKD 3.50 - HKD 4.50
Fundraising Amount: HKD 878 million - HKD 1.129 billion
Board Lot: 1,000 shares
Minimum Subscription: HKD 4,545.38
Subscription Period: October 24, 2024 - October 29, 2024
Total Offer Shares: 250.94 million shares
International Placement: 225.846 million shares (~90%)
Public Offering: 25.094 million shares (~10%)
Total Market Cap: HKD 5.778 billion - HKD 7.429 billion
Issue Ratio: 15.20%
P/E Ratio: 40.98
Company Profile:
Established in 2001, T.S. Lines is a container shipping company focused on the Asia-Pacific region, with a network covering 21 countries/regions and 56 major ports globally. The company operates 46 vessels (36 owned, 10 chartered) with total capacity of 111,011 TEU. By fleet size, it ranks 21st worldwide (0.3% market share) and 6th among Asia-Pacific-focused container shippers (2.3% share as of December 2023).
Key financials for past 3 years and first 4 months of 2023/2024:
Revenue: USD 1.837B, 2.443B, 875M, 318M, 318M (CAGR: -31.01%)
Gross Profit: USD 931M, 1.091B, -34M, -2M, 7M
Net Profit: USD 1.078B, 1.075B, 20M, 18M, 10M (CAGR: -86.25%)
Gross Margin: 50.69%, 44.66%, -3.86%, -0.75%, 2.19%
Net Margin: 58.65%, 43.97%, 2.33%, 5.62%, 3.09%
As of April 30, 2024, cash equivalents totaled USD 484M.
Cornerstone Investors:
6 cornerstone investors committed to 49.43% of offering.
5 underwriters involved.
Sponsor Track Record:
J.P. Morgan Securities (Far East) Limited
China Merchants Securities (Hong Kong) Limited
2. Allotment Ratio & IPO Analysis
(Source: AIPO)
Current margin financing undersubscribed.
Allotment Analysis:
Assuming 8,000 applicants, single-lot success rate should be 94% without clawback.
Group A margin requirements:
Group B requires HKD 9.1M principal. Margin breakdown:
Group B financing tiers and interest rates:
At mid-range price (HKD 4.00), total listing expenses equal ~HKD 108M (10.73% of HKD 1.004B raised), within normal range.
Should you subscribe? Key analysis:
T.S. Lines filed thrice (Oct 2022/Apr 2023/May 2024) before securing approval on Oct 14, 2024 with J.P. Morgan/CMBI as sponsors.
The HKD 1 price range allows minimum HKD 5.7B valuation - barely meeting Stock Connect's HKD 5.9B threshold. Strategic pricing could enable quick inclusion.
Conclusion: T.S. Lines shows potential but carries risks. Risk-tolerant investors familiar with shipping may consider free-riding subscriptions, while cautious investors should weigh volatility. We're opting for free subscriptions.
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