Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<ul>
<li>IQiyi announced a follow-on equity offering of 76.5m ADS priced at $5.90 per ADS (at a 11% discount to previous close) and will raise approx. $442.3m through the issuance.</li>
<li>Each ADS represents seven Class A ordinary shares and the new equity offering of 76.5m ADS will account for approx. 8.5% of iQiyi’s extended share capital post offering.</li>
<li>Following the announcement, the company’s shares fell 16.4% and we think the upside is limited here.</li>
</ul>


IQiyi announced a follow-on equity offering of 76.5m ADS priced at $5.90 per ADS (at a 11% discount to previous close) and will raise approx. $442.3m through the issuance.
Each ADS represents seven Class A ordinary shares and the new equity offering of 76.5m ADS will account for approx. 8.5% of iQiyi’s extended share capital post offering.
Following the announcement, the company’s shares fell 16.4% and we think the upside is limited here.


IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable

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.

<ul>
<li>IQIYI aims to raise around US$500m via a follow-on ADS offering.</li>
<li>While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes</li>
<li>In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.</li>
</ul>


IQIYI aims to raise around US$500m via a follow-on ADS offering.
While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes
In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.


IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We forecast iQIYI 4Q22 top line would be in line, while bottom line would beat cons by 6.4%, largely due to the strong content pipeline and continued cost-saving measures.  </li>
<li>Although IQ conducted a series of cost saving measures, we expect these measures are not sustainable. Our top and bottom lines in 2023 are (3.4%)/3.4% vs cons.</li>
<li>Reiterate with SELL and TP US$ 4.15, implying 14.9X PE in 2023.</li>
</ul>


We forecast iQIYI 4Q22 top line would be in line, while bottom line would beat cons by 6.4%, largely due to the strong content pipeline and continued cost-saving measures.  
Although IQ conducted a series of cost saving measures, we expect these measures are not sustainable. Our top and bottom lines in 2023 are (3.4%)/3.4% vs cons.
Reiterate with SELL and TP US$ 4.15, implying 14.9X PE in 2023.


IQiyi(IQ.US) 4Q22 Preview: Strong Content Only Secures Temporal Performance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>  aims to raise around US$400m via a follow-on ADS offering.</li>
<li>The company plans to use most of the proceeds to redeem its 2026 notes.</li>
<li>In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.</li>
</ul>



Bilibili Inc (BILI US)  aims to raise around US$400m via a follow-on ADS offering.
The company plans to use most of the proceeds to redeem its 2026 notes.
In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.


Bilibili Follow-On Offering - Seems Opportunistic

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Since we highlighted the compelling asymmetrical risk-return payoff of IQ last November, the stock has surged 200%, compared to 45% gain for KWEB which tracks China ADRs.</li>
<li>We believe the outperformance was driven by more concrete progress in fundamental turnaround including multiple blockbuster drama released, increase in subscription fee and removal of debt overhang.</li>
<li>With $7 billion market cap (on diluted basis), IQ already trades at 35 times 2023 earnings, pricing in fair degree of positive prospects. We advise investors to lock in profits.</li>
</ul>


Since we highlighted the compelling asymmetrical risk-return payoff of IQ last November, the stock has surged 200%, compared to 45% gain for KWEB which tracks China ADRs.
We believe the outperformance was driven by more concrete progress in fundamental turnaround including multiple blockbuster drama released, increase in subscription fee and removal of debt overhang.
With $7 billion market cap (on diluted basis), IQ already trades at 35 times 2023 earnings, pricing in fair degree of positive prospects. We advise investors to lock in profits.


China

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable

iQiyi announced a follow-on offer to raise $442.3m. Recent shift in focus on profits from growth was short-lived. Recent convertible notes to PAG...

Shifara Samsudeen, ACMA, CGMA

IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

iQIYI aims to raise around US$500m via a follow-on ADS offering. While the deal might be expected, the stock's longer term track record doesn't...

Sumeet Singh

IQiyi(IQ.US) 4Q22 Preview: Strong Content Only Secures Temporal Performance

Although IQ conducted a series of cost saving measures, we expect these measures are not sustainable. Reiterate with SELL and TP US$ 4.15, implying...

Blue Lotus Research Institute

Bilibili Follow-On Offering - Seems Opportunistic

Bilibili Inc (BILI US) aims to raise around US$400m via a follow-on ADS offering. In this note, we will run the deal through our ECM framework.

Sumeet Singh

IQIYI (IQ US): Taking a Break

200% surge in share price baked in much of positive outlook we envisage on IQIYI, which now trades at 35x our estimated earnings for 2023. We...

Eric Chen

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