Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Kerry Express Thailand / Equity Capital Markets

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and also counts VGI as a major shareholder.Kerry Express Thailand is Thailand's largest private express delivery company. As of FY19, it had over 16,000 service locations in all provinces in Thailand, with its next-day delivery service covering 99.9% of Thai population. It also offers same-day delivery service within the Bangkok Metropolitan, Greater Bangkok areas and certain upcountry areas. It delivers more than 1.1m parcels everyday.Revenue tripled over FY17-19, while gross profit was up 2.22x, EBITDA was up 2.36x, and PATMI was up 10.2x. Although, 9M20 operations weren’t anything to write home about with revenue merely being flat YoY.Apart from being a well known brand in Thailand, it presents one of the only ways to get exposure to the e-commerce market. If that wasn’t enough, its cornerstone book is one of the best that I’ve seen, of late.

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and also counts VGI as a major shareholder.Kerry Express Thailand is Thailand's largest private express delivery company. As of FY19, it had over 16,000 service locations in all provinces in Thailand, with its next-day delivery service covering 99.9% of Thai population. It also offers same-day delivery service within the Bangkok Metropolitan, Greater Bangkok areas and certain upcountry areas. It delivers more than 1.1m parcels everyday.Revenue tripled over FY17-19, while gross profit was up 2.22x, EBITDA was up 2.36x, and PATMI was up 10.2x. Although, 9M20 operations weren’t anything to write home about with revenue merely being flat YoY.Apart from being a well known brand in Thailand, it presents one of the only ways to get exposure to the e-commerce market. If that wasn’t enough, its cornerstone book is one of the best that I’ve seen, of late.

Kerry Express Thailand IPO - Time for Delivery

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/980/original/BANNER-LOGISTICS.png?1605971640" class="editor-image img-responsive" data-smartkarma-image-id="172980"></figure></section>In October, Chinese express parcel volume growth remained strong. However, pricing was weak, and we see no signs of price improvement in the near-term. Margins remain under pressure. A slew of Q3 earnings results show some companies losing money, with margins at almost all of the companies under intense pressure. <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>'s recent decision to exit non-core businesses supports our thesis that pressure to consolidate is increasing. We retain our view that SF Holding is the sector's leading company, but in the medium-term, we believe Best is an attractive way to play expected sector M&amp;A in 2021.

In October, Chinese express parcel volume growth remained strong. However, pricing was weak, and we see no signs of price improvement in the near-term. Margins remain under pressure. A slew of Q3 earnings results show some companies losing money, with margins at almost all of the companies under intense pressure. BEST Inc (BEST US)'s recent decision to exit non-core businesses supports our thesis that pressure to consolidate is increasing. We retain our view that SF Holding is the sector's leading company, but in the medium-term, we believe Best is an attractive way to play expected sector M&amp;A in 2021. 

TRACKING TRAFFIC/Chinese Express: Weak Q3 Results from ZTO & Best | Consolidation Pressures Gaining

After the US market close on Thursday, <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> reported a weak set of Q3 results, as expected. But the company also announced a bold new strategic initiative that should result in a leaner, more focused company.  In addition to winding down its Store+ business (disclosed earlier, please see <a href="https://www.smartkarma.com/insights/best-inc-is-closing-its-money-losing-store-business-a-small-but-positive-step-forward" target="_blank" data-smartkarma-citation="insights:45395" rel="noopener">Best Inc. Is Closing Its Money-Losing 'Store+' Business, a Small but Positive Step Forward</a>), Best announced it was considering "strategic options" for its Global, UCargo, and Capital divisions. Going forward, the company will focus on Express, Freight, and Supply Chain Management. We do not believe this strategic decision will lead to a quick turnaround in profitability, but we do believe it makes Best more attractive to an acquirer. Best's decision to exit non-core businesses shows financial pressures are intensifying in China's express sector. This tells us the forces behind consolidation are quickly gaining momentum. We retain our BUY rating on Best, a potential acquisition target.

After the US market close on Thursday, BEST Inc (BEST US) reported a weak set of Q3 results, as expected. But the company also announced a bold new strategic initiative that should result in a leaner, more focused company.  In addition to winding down its Store+ business (disclosed earlier, please see Best Inc. Is Closing Its Money-Losing 'Store+' Business, a Small but Positive Step Forward), Best announced it was considering "strategic options" for its Global, UCargo, and Capital divisions. Going forward, the company will focus on Express, Freight, and Supply Chain Management. We do not believe this strategic decision will lead to a quick turnaround in profitability, but we do believe it makes Best more attractive to an acquirer. Best's decision to exit non-core businesses shows financial pressures are intensifying in China's express sector. This tells us the forces behind consolidation are quickly gaining momentum. We retain our BUY rating on Best, a potential acquisition target. 

Best Inc's Weak Q3 Results Spur 'Strategic Refocusing Plan', Retain BUY

<a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a> reported Q3 earnings results after the US close on Wednesday. While parcel volume and revenue both showed strong growth -- up 51% and 26% YoY, respectively -- core margins imploded and diluted net earnings per share fell about 10% versus Q3 2019. The collapse of ZTO's core express margins shows ZTO has fallen back to the pack it used to lead convincingly.We also note sharp YoY increases in gross profit from non-express activities, 'other operating income', and tax breaks, all of which flattered the company's weak bottom line. Without these, we estimate net profit would have fallen by around a third in Q3. ZTO's growing reliance on 'other' items indicates worsening earnings quality, in our view. Despite these, ZTO continues to enjoy rich valuation multiples, which we believe is undeserved, given our expectation of continued margin pressure in 2021. We retain our SELL rating on ZTO.

ZTO Express (ZTO US) reported Q3 earnings results after the US close on Wednesday. While parcel volume and revenue both showed strong growth -- up 51% and 26% YoY, respectively -- core margins imploded and diluted net earnings per share fell about 10% versus Q3 2019. The collapse of ZTO's core express margins shows ZTO has fallen back to the pack it used to lead convincingly.We also note sharp YoY increases in gross profit from non-express activities, 'other operating income', and tax breaks, all of which flattered the company's weak bottom line. Without these, we estimate net profit would have fallen by around a third in Q3. ZTO's growing reliance on 'other' items indicates worsening earnings quality, in our view. Despite these, ZTO continues to enjoy rich valuation multiples, which we believe is undeserved, given our expectation of continued margin pressure in 2021. We retain our SELL rating on ZTO. 

ZTO Q3 Results: As Margins Implode, It's Coming 'Back To the Pack', Retain SELL

In an updated filing, <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> indicated it could sell as many as 300 mn new shares in its planned IPO. Many media reports have suggested the company hopes to raise about US$300 mn in the offering, suggesting KEX will come to market at around 30 baht per share.In this note, we try to answer the following questions regarding KEX's valuation:<ul>
<li>What are the most useful 'comps' for KEX? </li>
<li>What are some appropriate valuation multiples to use in comparing KEX to peers?</li>
<li>How does KEX's valuation at 30 baht per share compare to the peer group we've identified?</li>
<li>What factors could support either a premium or discount valuation for KEX versus peers?</li>
</ul>At 30 baht per share (which implies market capitalization of US$1.7 bn), KEX would not be overvalued relative to peers, in our view, and there are reasons KEX could eventually demand a premium valuation relative to other express companies.

In an updated filing, Kerry Express Thailand (KEX TB) indicated it could sell as many as 300 mn new shares in its planned IPO. Many media reports have suggested the company hopes to raise about US$300 mn in the offering, suggesting KEX will come to market at around 30 baht per share.In this note, we try to answer the following questions regarding KEX's valuation:
What are the most useful 'comps' for KEX? 
What are some appropriate valuation multiples to use in comparing KEX to peers?
How does KEX's valuation at 30 baht per share compare to the peer group we've identified?
What factors could support either a premium or discount valuation for KEX versus peers?
At 30 baht per share (which implies market capitalization of US$1.7 bn), KEX would not be overvalued relative to peers, in our view, and there are reasons KEX could eventually demand a premium valuation relative to other express companies.

Kerry Express Thailand (KEX) IPO: Approach to Valuation

China

BEST Inc. offers logistics and supply chain management solutions. The Company provides express and freight delivery, inventory management, warehousing, financing, cross-border supply chain, merchandise sourcing, and value-added services. BEST serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

BEST (BEST US)

Kerry Express Thailand IPO - Time for Delivery

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and...

Sumeet Singh

TRACKING TRAFFIC/Chinese Express: Weak Q3 Results from ZTO & Best | Consolidation Pressures Gaining

October express data show -- once again -- strong parcel volume growth but very weak pricing. Margin pressure seen in Q3 results is adding to...

Tracking Traffic

Best Inc's Weak Q3 Results Spur 'Strategic Refocusing Plan', Retain BUY

Best Inc posted weak Q3 results, but the bigger story is a new strategic initiative that should make the company more attractive to a potential...

Tracking Traffic

ZTO Q3 Results: As Margins Implode, It's Coming 'Back To the Pack', Retain SELL

ZTO reported weak results again in Q3, as a steep decline in margins was partially offset by increased contributions from 'other'. We expect...

Tracking Traffic

Kerry Express Thailand (KEX) IPO: Approach to Valuation

What's the right valuation approach to Kerry Express (KEX), which hopes to complete its IPO in Thailand in the coming weeks?

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)