Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Shares of Didi Global appear to have stabilized after regulatory turmoil but whilst the stream of bad news has slowed, the lack of good news (an end to the app ban, any management comments) is also troubling. Even with a hopeful view on the end of regulatory pressure, the company appears less valuable as competition and higher pay for drivers shifts the economics and our new forecasts value the company at $9.74 versus our pre-IPO value of $15.8. We track Didi as part of our Softbank Group coverage.

Shares of Didi Global appear to have stabilized after regulatory turmoil but whilst the stream of bad news has slowed, the lack of good news (an end to the app ban, any management comments) is also troubling. Even with a hopeful view on the end of regulatory pressure, the company appears less valuable as competition and higher pay for drivers shifts the economics and our new forecasts value the company at $9.74 versus our pre-IPO value of $15.8. We track Didi as part of our Softbank Group coverage.

Didi Global - Regulatory Overhang Remains and Long-Term Value Is Falling

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

Shanghai MicroPort MedBot Group / Equity Capital Markets

Shanghai MicroPort MedBot Group (MM), a surgical robot company, aims to raise up to US$200m in its Hong Kong IPO.MicroPort MedBot (MM) is a surgical robot company which designs, develops and commercializes surgical robots to assist surgeons in performing complex surgical procedures. It is the only company with a product portfolio covering the five major and fast-growing surgical specialties of laparoscopic, orthopedic, panvascular, natural orifice and percutaneous surgical procedures, as per Frost &amp; Sullivan (F&amp;S).We have looked at the company’s background and products in our earlier notes:<ul>
<li><a href="https://www.smartkarma.com/insights/microport-medbot-pre-ipo-robodoc-pre-revenue-has-a-large-competitor-but-a-large-market-as-well" target="_blank" rel="noopener">MicroPort MedBot Pre-IPO - RoboDoc - pre-revenue, has a large competitor but a large market as well</a></li>
<li><a href="https://www.smartkarma.com/insights/microport-medbot-pre-ipo-robodoc-phip-updates-and-a-look-at-its-largest-competitor" target="_blank" rel="noopener">MicroPort MedBot Pre-IPO - RoboDoc - PHIP Updates and a Look at Its Largest Competitor, and</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/microport-medbot-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">MicroPort MedBot Pre-IPO - Thoughts on valuation</a></li>
</ul>In this note, we will run the deal through our ECM framework and comment on valuations.

Shanghai MicroPort MedBot Group (MM), a surgical robot company, aims to raise up to US$200m in its Hong Kong IPO.MicroPort MedBot (MM) is a surgical robot company which designs, develops and commercializes surgical robots to assist surgeons in performing complex surgical procedures. It is the only company with a product portfolio covering the five major and fast-growing surgical specialties of laparoscopic, orthopedic, panvascular, natural orifice and percutaneous surgical procedures, as per Frost &amp; Sullivan (F&amp;S).We have looked at the company’s background and products in our earlier notes:
MicroPort MedBot Pre-IPO - RoboDoc - pre-revenue, has a large competitor but a large market as well
MicroPort MedBot Pre-IPO - RoboDoc - PHIP Updates and a Look at Its Largest Competitor, and
MicroPort MedBot Pre-IPO - Thoughts on valuation
In this note, we will run the deal through our ECM framework and comment on valuations.

MicroPort MedBot Pre-IPO - Valuation Appears Reasonable but Sentiment Will Weigh

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

Hong Kong SFC just reported aggregate short position as of Oct 8 due to delays caused by the market closure. The aggregate short value for equities increased by $1,428m (+2.2%) WoW but decreased by $1,941m (-2.8%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,477m, +7.9% WoW), Tencent Holdings Limited/700 HK($2,073m, +42.4% WoW), Meituan/3690 HK($2,016m, +8.0% WoW), Zhongsheng Group Holdings Limited/881 HK($1,781m, -3.4% WoW), China Merchants Bank Co., Ltd./3968 HK($1,745m, -10.9% WoW).<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/585/original/Hong_Kong_Market_Short_Position_Value_%28line%29_and_1W_Changes_%28bar%29_%28%24m%292021-10-21+10_52_20.png?1634784904" class="editor-image img-responsive" data-smartkarma-image-id="236585"></figure></section>

Hong Kong SFC just reported aggregate short position as of Oct 8 due to delays caused by the market closure. The aggregate short value for equities increased by $1,428m (+2.2%) WoW but decreased by $1,941m (-2.8%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,477m, +7.9% WoW), Tencent Holdings Limited/700 HK($2,073m, +42.4% WoW), Meituan/3690 HK($2,016m, +8.0% WoW), Zhongsheng Group Holdings Limited/881 HK($1,781m, -3.4% WoW), China Merchants Bank Co., Ltd./3968 HK($1,745m, -10.9% WoW).

China Education Group / Equity Capital Markets

China Education Group (839 HK) is looking to raise up to US$154m in its top-up placement. This will be the third placement by the group over the past 15 months.We covered the previous placement in Jan 21, China Education Group Placement - Back for More, past Deal Didn’t Do Well.In this note, we will look  at the deal dynamics and run the deal through framework.

China Education Group (839 HK) is looking to raise up to US$154m in its top-up placement. This will be the third placement by the group over the past 15 months.We covered the previous placement in Jan 21, China Education Group Placement - Back for More, past Deal Didn’t Do Well.In this note, we will look  at the deal dynamics and run the deal through framework.

China Education Group Placement - Recent Momentum Is Strong but past Deal Record Isn’t Supportive

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

iClick Interactive Asia Group / Event-Driven

<a href="https://www.smartkarma.com/entities/iclick-interactive-asia-group-limited" target="_blank" data-smartkarma-citation="entities:27314:1" rel="noopener">iClick Interactive Asia Group (ICLK US)</a> is a leading enterprise and marketing cloud platform in China. It is a platinum provider to <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> in social advertising and provides one-stop solutions in user acquisition and engagement.On 18 September, iClick announced a second non-binding privatisation proposal from Infinity Equity Management. The bid of $7.50 in cash per ADS represents a premium of 32.7% to the undisturbed price of $5.65 (on 23 September prior to the first proposal from PAG and Oasis). As a reminder, on 24 September, iClick announced a non-binding privatisation proposal from PAG and Oasis Management of $6.75 in cash per ADS. Infinity’s offer represents an 11.1% bump to the offer from PAG and Oasis.  As iClick is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. Infinity has not disclosed a shareholding. iClick’s three largest shareholders are Wing Hong Sammy Hsieh (co-founder and Chairman), Jian Tang (co-founder and CEO) and <a href="https://www.smartkarma.com/entities/baozun-inc" target="_blank" data-smartkarma-citation="entities:24184:1" rel="noopener">Baozun Inc. (BZUN US)</a>. Mr Hsieh and Mr Tang together represent around 62% of voting interests. Borrowing a page from PAG and Oasis’ playbook, Infinity’s letter to the board mentions an intention to acquire all the shares other than those “other than management owned shares and those existing shareholders of the Company who elect to roll over.” The wording suggests that Infinity is vying with PAG and Oasis to get the upper hand in discussions with the co-founders and Baozun. In <a href="https://www.smartkarma.com/insights/iclick-s-privatisation-bid-from-pag-and-oasis" target="_blank" data-smartkarma-citation="insights:58109" rel="noopener">IClick’s Privatisation Bid from PAG and Oasis</a>, we stated that the PAG and Oasis offer is unattractive in comparison to historical share prices and multiples. We also noted that the PAG and Oasis offer is designed to take advantage of the sell-off in Chinese tech names by enriching insiders at the expense of minorities.<div class="content-highlight">While we did not expect a competing bid, Infinity’s offer while providing a bump to PAG and Oasis' offer still leaves minorities short-changed. Nevertheless, the emergence of two bidders suggests that there is a decent chance of another bidding round. At the last close of $6.50 per ADS, the gross spread to the Infinity offer price is 15.4%.  </div>

iClick Interactive Asia Group (ICLK US) is a leading enterprise and marketing cloud platform in China. It is a platinum provider to Tencent (700 HK) in social advertising and provides one-stop solutions in user acquisition and engagement.On 18 September, iClick announced a second non-binding privatisation proposal from Infinity Equity Management. The bid of $7.50 in cash per ADS represents a premium of 32.7% to the undisturbed price of $5.65 (on 23 September prior to the first proposal from PAG and Oasis). As a reminder, on 24 September, iClick announced a non-binding privatisation proposal from PAG and Oasis Management of $6.75 in cash per ADS. Infinity’s offer represents an 11.1% bump to the offer from PAG and Oasis.  As iClick is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. Infinity has not disclosed a shareholding. iClick’s three largest shareholders are Wing Hong Sammy Hsieh (co-founder and Chairman), Jian Tang (co-founder and CEO) and Baozun Inc. (BZUN US). Mr Hsieh and Mr Tang together represent around 62% of voting interests. Borrowing a page from PAG and Oasis’ playbook, Infinity’s letter to the board mentions an intention to acquire all the shares other than those “other than management owned shares and those existing shareholders of the Company who elect to roll over.” The wording suggests that Infinity is vying with PAG and Oasis to get the upper hand in discussions with the co-founders and Baozun. In IClick’s Privatisation Bid from PAG and Oasis, we stated that the PAG and Oasis offer is unattractive in comparison to historical share prices and multiples. We also noted that the PAG and Oasis offer is designed to take advantage of the sell-off in Chinese tech names by enriching insiders at the expense of minorities.While we did not expect a competing bid, Infinity’s offer while providing a bump to PAG and Oasis' offer still leaves minorities short-changed. Nevertheless, the emergence of two bidders suggests that there is a decent chance of another bidding round. At the last close of $6.50 per ADS, the gross spread to the Infinity offer price is 15.4%.  

IClick’s Improved Privatisation Bid from a Second Suitor

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent (700 HK)

Didi Global - Regulatory Overhang Remains and Long-Term Value Is Falling

Volatility in Didi shares appear has stabilized after regulatory turmoil but whilst the stream of bad news has slowed, a lack of good news is also...

Kirk Boodry

MicroPort MedBot Pre-IPO - Valuation Appears Reasonable but Sentiment Will Weigh

Shanghai MicroPort MedBot Group (MM), a surgical robot company, aims to raise up to US$200m in its Hong Kong IPO. Valuation appears reasonable but...

Sumeet Singh

HK Short Interest: Tencent Short Spike

We highlight in the latest SFC short aggregate position top short interest increases over the past one week are Tencent (700 HK), Ping An (2318 HK)...

Ke Yan, CFA, FRM

China Education Group Placement - Recent Momentum Is Strong but past Deal Record Isn’t Supportive

China Education Group (839 HK) is looking to raise up to US$154m in its top-up placement. This will be the third placement by the group over the...

Sumeet Singh

IClick’s Improved Privatisation Bid from a Second Suitor

iClick announced another privatisation proposal, this time from Infinity Equity at $7.50 in cash per ADS. The emergence of two bidders suggests...

Arun George

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