Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul class="">
<li>The growth rate of China game market fell back to 15% YoY in 2Q20 and 3Q20 from 30% in 1Q20, but the growth rate was still higher than before the pandemic.</li>
<li>E-sports and overseas market are more promising.</li>
<li>Foreign game revenue from China stopped shrinking.</li>
</ul>


The growth rate of China game market fell back to 15% YoY in 2Q20 and 3Q20 from 30% in 1Q20, but the growth rate was still higher than before the pandemic.
E-sports and overseas market are more promising.
Foreign game revenue from China stopped shrinking.


Tencent (700 HK): Strong China Game Market in 3Q20

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<p><strong><em>*Strong APT FY 1Q21 Results:</em></strong> Afterpay released a strong quarterly update with momentum across the entire business with further integrations with large retailer contracts ahead of the holiday shopping season. GMV of AUD 4.1 bn during the quarter; active customers are 11.2 mn, up from 9.9m at end of June – ahead of our expectations; and Australia in-store sales are recovering, representing close to 20% of total sales;</p><p><strong><em>*Earning Their Stripe: </em></strong>Afterpay had also announced that it had entered into a strategic partnership with Stripe Payments,  a major global payments company with over 100,000 SMBs, to allow its users to offer Afterpay their customers which should allow it to expand its reach among online shoppers; and  </p><p><strong><em>*Sprinkling More Fairy Dust:</em></strong> Tencent Holdings (700.HK) [Tencent] continues to hit it out of the park with its Afterpay Touch (APT.AU) [Afterpay] stake. In addition to a superb return on investment of 358% over the past five months since the stake announcement, this alliance with Australia’s premier financial technology buy-now, pay later (BNPL) company is paying dividends to Tencent in numerous other ways.</p>

*Strong APT FY 1Q21 Results: Afterpay released a strong quarterly update with momentum across the entire business with further integrations with large retailer contracts ahead of the holiday shopping season. GMV of AUD 4.1 bn during the quarter; active customers are 11.2 mn, up from 9.9m at end of June – ahead of our expectations; and Australia in-store sales are recovering, representing close to 20% of total sales;*Earning Their Stripe: Afterpay had also announced that it had entered into a strategic partnership with Stripe Payments,  a major global payments company with over 100,000 SMBs, to allow its users to offer Afterpay their customers which should allow it to expand its reach among online shoppers; and  *Sprinkling More Fairy Dust: Tencent Holdings (700.HK) [Tencent] continues to hit it out of the park with its Afterpay Touch (APT.AU) [Afterpay] stake. In addition to a superb return on investment of 358% over the past five months since the stake announcement, this alliance with Australia’s premier financial technology buy-now, pay later (BNPL) company is paying dividends to Tencent in numerous other ways.

Tencent Holdings - It Keeps Getting Better

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

Shimao Property Holdings / Equity Capital Markets

<p>The IPO price for <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a> (SSH), the latest in a long line of property management service companies to be listed, will be announced tomorrow. Shares will commence trading this Friday.</p>
<p>SSH is the spin-off of <a href="https://www.smartkarma.com/entities/shimao-property-holdings-limited" target="_blank" data-smartkarma-citation="entities:8375:1" rel="noopener">Shimao Property Holdings (813 HK)</a>, who will own 66.5% in SSH after the IPO, down from 90% currently.</p>
<p>Similar to <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>, SSH's implied PER is in keeping with its generous growth the last two years, and arguably can be justified, to some degree, when comparing PER/Growth to peer comps.</p>
<p>However, Shimao Property looks expensive when de-consolidating out the implied market cap of SSH.</p>
<p>As always, more below the fold. </p>

The IPO price for Shimao Services Holdings (873 HK) (SSH), the latest in a long line of property management service companies to be listed, will be announced tomorrow. Shares will commence trading this Friday.
SSH is the spin-off of Shimao Property Holdings (813 HK), who will own 66.5% in SSH after the IPO, down from 90% currently.
Similar to KWG Living Group (3913 HK), SSH's implied PER is in keeping with its generous growth the last two years, and arguably can be justified, to some degree, when comparing PER/Growth to peer comps.
However, Shimao Property looks expensive when de-consolidating out the implied market cap of SSH.
As always, more below the fold. 

Shimao Services: KWG Living-Like Valuation; Parent Trading Rich

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> has priced above the initial market capitalisation range of USD200 to USD300bn, at USD317bn including its over-allotment option of shares</li>
<li>Ant’s IPO valuation reflects the assumptions in our ambitious scenario SOTP valuation</li>
<li>Based on earnings and EBITDA multiples, Ant Group looks attractive relative to payments companies and fast growth investment and wealth managers</li>
<li>Ant is at a slight discount to the China MegaTech comparables, and we believe that it warrants a premium valuation to its China peers</li>
<li>Ant’s premium growth potential in digital finance, leveraging off its leading digital payments footprint, indicates further upside potential to the shares post IPO, in our view</li>
<li>Risks to our positive view on Ant Group include increased regulatory restrictions in China, heightened geopolitical tensions impacting demand for the shares at IPO and weaker than expected GDP growth limiting growth potential, especially in China</li>
</ul>



Ant Group (6688 HK) has priced above the initial market capitalisation range of USD200 to USD300bn, at USD317bn including its over-allotment option of shares
Ant’s IPO valuation reflects the assumptions in our ambitious scenario SOTP valuation
Based on earnings and EBITDA multiples, Ant Group looks attractive relative to payments companies and fast growth investment and wealth managers
Ant is at a slight discount to the China MegaTech comparables, and we believe that it warrants a premium valuation to its China peers
Ant’s premium growth potential in digital finance, leveraging off its leading digital payments footprint, indicates further upside potential to the shares post IPO, in our view
Risks to our positive view on Ant Group include increased regulatory restrictions in China, heightened geopolitical tensions impacting demand for the shares at IPO and weaker than expected GDP growth limiting growth potential, especially in China


Ant Group (6688 HK): IPO Pricing Warrants a Re-Rating

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<div><p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> aims to raise around USD35bn via a dual listing on both Hong Kong Exchange and Shanghai STAR board. </p></div><div><p>We have covered various aspects of the deal in our earlier notes, link to which are below.</p></div><div><p>In this insight, I'll talk about the deal structure, valuations and look at the early inclusion timelines for the FTSE and MSCI indices.</p></div><div><div><h3>Our previous coverage on Ant Group</h3></div></div><div><ul style="list-style-type: disc;">
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-what-s-new-about-the-listing-news" target="_blank" rel="noopener">Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors</a></p></li>
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-understand-the-fintech-empire-growth-and-risk-factors" target="_blank" rel="noopener">Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News</a></p></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-first-take-no-1-fintech-from-all-angles" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-numbers-suggest-it-s-more-tech-than-financials" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-things-to-clarify-questions-to-ask-falling-fees-margins-cash-flow" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-dual-listing-makes-early-index-inclusion-tricky" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky</a></li>
<li><a href="https://www.smartkarma.com/insights/alipay-s-advantage-over-wechat-pay-in-physical-stores" target="_blank" rel="noopener">AliPay’s Advantage over WeChat Pay in Physical Stores</a></li>
</ul></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/ant-group-running-neck-and-neck-with-tencent-in-direct-financial-services" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-impact-assessment-of-the-new-rule-for-financial-holding-companies" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-peer-comparison-payments-baffling-scale-small-tweaks-for-large-profits" target="_blank" rel="noopener">Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-peer-comparison-credittech-larger-scale-similar-growth-lower-credit-risk" target="_blank" rel="noopener">Ant Group Pre-IPO: Peer Comparison - CreditTech - Larger Scale, Similar Growth, Lower Credit Risk</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-first-stab-at-valuation" target="_blank" rel="noopener">Ant Group Pre-IPO: First Stab at Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-quick-take-on-ftse-and-msci-s-clearer-guidelines" target="_blank" rel="noopener">Ant Group Pre-IPO: Quick Take on FTSE and MSCI’s Clearer Guidelines</a></li>
</ul></div><div><ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-deal-structure-phip-updates-short-term-trades" target="_blank" rel="noopener">Ant Group Pre-IPO: Deal Structure, PHIP Updates, Short-Term Trades</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-updated-valuation-it-s-going-higher" target="_blank" rel="noopener">Ant Group Pre-IPO: Updated Valuation. It’s Going Higher.</a></li></ul>

Ant Financial (1051260D CH) aims to raise around USD35bn via a dual listing on both Hong Kong Exchange and Shanghai STAR board. We have covered various aspects of the deal in our earlier notes, link to which are below.In this insight, I'll talk about the deal structure, valuations and look at the early inclusion timelines for the FTSE and MSCI indices.Our previous coverage on Ant Group
Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors
Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News
Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles
Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials
Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow
Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky
AliPay’s Advantage over WeChat Pay in Physical Stores

Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services
Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies
Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits
Ant Group Pre-IPO: Peer Comparison - CreditTech - Larger Scale, Similar Growth, Lower Credit Risk
Ant Group Pre-IPO: First Stab at Valuation
Ant Group Pre-IPO: Quick Take on FTSE and MSCI’s Clearer Guidelines
Ant Group Pre-IPO: Deal Structure, PHIP Updates, Short-Term TradesAnt Group Pre-IPO: Updated Valuation. It’s Going Higher.

Ant Group IPO: Final Say. Strategics, Index Impact

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)

Tencent (700 HK): Strong China Game Market in 3Q20

The growth rate of China game market in 3Q20 was still higher than before the pandemic. E-sports and overseas market are more promising. Foreign...

Ming Lu

Tencent Holdings - It Keeps Getting Better

TENCENT HOLDINGS: Tencent Keeps hitting The Ball Out of The Park With Afterpay, Who Reported Solid FY 1Q21 Results and Another Partnership

Thomas J. Monaco

Shimao Services: KWG Living-Like Valuation; Parent Trading Rich

Shimao Property's trades at a significant premium to the implied P/B for property developers, net of their management services investment holding.

David Blennerhassett

Ant Group (6688 HK): IPO Pricing Warrants a Re-Rating

Ant Group's share price at IPO is above the original expected range; still, we expect solid share re-rating potential given its growth prospects...

Victor Galliano

Ant Group IPO: Final Say. Strategics, Index Impact

Ant Group will raise USD35bn via an IPO in HK and Shanghai. We have covered various aspects of the deal in our earlier notes. In this note, I'll...

Sumeet Singh

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