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

Alibaba Group Holding  / Equity Capital Markets

<div>
<p>On 24th Mar 2021, Securities Exchange Commission (SEC) issued Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act. On the back of this, large China ADRs fell by 7.5% on average. </p>
<p>We have covered various aspects of this topic before in our prior note, links to which are below. In this note, I'll talk about the SEC updates.</p>
</div>
<div>
<p>In our previous notes:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move</a>, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. </li>
</ul>
</div>


On 24th Mar 2021, Securities Exchange Commission (SEC) issued Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act. On the back of this, large China ADRs fell by 7.5% on average. 
We have covered various aspects of this topic before in our prior note, links to which are below. In this note, I'll talk about the SEC updates.


In our previous notes:




China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. 



China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>We suggested buying Tencent on December 7, 2020, when the stock price closed at K$583. When the stock surged to HK$775, we recommended selling. Now the stock price has plunged to HK$623.</li>
<li>Again, Tencent released a good result in 4Q20. Almost all business lines are promising. We set an upside of 20%. Upgrade to Buy.</li>
</ul>


We suggested buying Tencent on December 7, 2020, when the stock price closed at K$583. When the stock surged to HK$775, we recommended selling. Now the stock price has plunged to HK$623.
Again, Tencent released a good result in 4Q20. Almost all business lines are promising. We set an upside of 20%. Upgrade to Buy.


Tencent (700 HK): Q4, Promising in All Businesses, Price Down, Upgrade to Buy Again

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.

Zhihu Technology / Equity Capital Markets

<p>The Chinese Q&amp;A inspired online community platform <a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a>  has set the terms for its IPO. The company plans to sell 55m ADS’ (two ADS’ represent one ordinary share of the company) at an indicative price range of US$9.5-11.5 per ADS. Concurrent with the company’s IPO, Zhihu also has entered into agreements with Alibaba, JD.com, Image Frame Investment (an affiliate of Tencent Holdings) and Lilith Games to sell approx. US$250m worth of ordinary shares of the company.</p><p>At the midpoint of the above IPO pricing, Zhihu will raise approx. US$884.7m (assuming underwriters exercise their option) from the IPO as well as from the concurrent private placement. At the above IPO price range, Zhihu will have a market capitalisation of US$5.4-6.5bn and an enterprise value of US$4-5.2bn (after adjusting for net cash and net IPO proceeds assuming underwriters exercise their option).</p><p>Zhihu plans to use the above net proceeds on developing its products and services, marketing and user growth, R&amp;D and other general corporate purposes.</p>

The Chinese Q&amp;A inspired online community platform Zhihu Technology (ZH US)  has set the terms for its IPO. The company plans to sell 55m ADS’ (two ADS’ represent one ordinary share of the company) at an indicative price range of US$9.5-11.5 per ADS. Concurrent with the company’s IPO, Zhihu also has entered into agreements with Alibaba, JD.com, Image Frame Investment (an affiliate of Tencent Holdings) and Lilith Games to sell approx. US$250m worth of ordinary shares of the company.At the midpoint of the above IPO pricing, Zhihu will raise approx. US$884.7m (assuming underwriters exercise their option) from the IPO as well as from the concurrent private placement. At the above IPO price range, Zhihu will have a market capitalisation of US$5.4-6.5bn and an enterprise value of US$4-5.2bn (after adjusting for net cash and net IPO proceeds assuming underwriters exercise their option).Zhihu plans to use the above net proceeds on developing its products and services, marketing and user growth, R&amp;D and other general corporate purposes.

Zhihu IPO Valuation: Attractive at the Lower End of the IPO Pricing

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p><a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> announced its IPO terms. It plans to raise up to $632.5 million offering 55 million ADSs. The IPO price range is from $9.50 to $11.5 per share. At the mid point of the IPO price range, the company would be valued at $6.2 billion. At the high end of the IPO price range ($11.5 per share), it would be valued at $6.8 billion. Along with the IPO, Zhihu also plans to raise $250 million in a private placement to Alibaba, JD.com, Tencent, and Lilith Games.</p><div class="content-highlight"><p>Our base case and high case implied market caps of the company are $7.1 billion ($12 per share) and $9.0 billion ($15.2 per share), respectively. We do believe that there will be a first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis (market cap of $9.0 billion or $15.2 per share). In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to $15.2 per share). We have a positive view of the Zhihu IPO. </p></div>

Zhihu Technology (ZH US) announced its IPO terms. It plans to raise up to $632.5 million offering 55 million ADSs. The IPO price range is from $9.50 to $11.5 per share. At the mid point of the IPO price range, the company would be valued at $6.2 billion. At the high end of the IPO price range ($11.5 per share), it would be valued at $6.8 billion. Along with the IPO, Zhihu also plans to raise $250 million in a private placement to Alibaba, JD.com, Tencent, and Lilith Games.Our base case and high case implied market caps of the company are $7.1 billion ($12 per share) and $9.0 billion ($15.2 per share), respectively. We do believe that there will be a first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis (market cap of $9.0 billion or $15.2 per share). In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to $15.2 per share). We have a positive view of the Zhihu IPO. 

<p>As anticipated, the Chinese mobile games and video platform <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>  has received the approval for a secondary listing on the Hong Kong Stock Exchange. According to Bloomberg, Bilibili could raise about US$3bn through its secondary listing.</p><p>We discussed Bilibili’s business model, its segments, financials and also compared the company’s business model and financials with its closest competitor Huya. This insight will focus on Bilibili’s current valuation.</p><p>Read our previous insights:</p><p><a href="https://www.smartkarma.com/insights/bilibili-4q-earnings-value-added-services-surpass-mobile-games-e-commerce-gains-momentum" target="_blank" data-smartkarma-citation="insights:48569" rel="noopener">Bilibili 4Q Earnings: Value-Added Services Surpass Mobile Games; E-Commerce Gains Momentum</a> </p><p><a href="https://www.smartkarma.com/insights/bilibili-vs-huya-strong-top-line-growth-outspending-huya-on-marketing-reason-for-absence-of-profits" target="_blank" data-smartkarma-citation="insights:47309" rel="noopener">Bilibili Vs Huya:Strong Top Line Growth; Outspending Huya on Marketing-Reason for Absence of Profits</a> </p><p><a href="https://www.smartkarma.com/insights/bilibili-secondary-listing-diversifying-revenue-mix-should-make-profits-possible-in-the-medium-term" target="_blank" data-smartkarma-citation="insights:47049" rel="noopener">Bilibili Secondary Listing: Diversifying Revenue Mix Should Make Profits Possible in the Medium Term</a> </p>

As anticipated, the Chinese mobile games and video platform Bilibili Inc (BILI US)  has received the approval for a secondary listing on the Hong Kong Stock Exchange. According to Bloomberg, Bilibili could raise about US$3bn through its secondary listing.We discussed Bilibili’s business model, its segments, financials and also compared the company’s business model and financials with its closest competitor Huya. This insight will focus on Bilibili’s current valuation.Read our previous insights:Bilibili 4Q Earnings: Value-Added Services Surpass Mobile Games; E-Commerce Gains Momentum Bilibili Vs Huya:Strong Top Line Growth; Outspending Huya on Marketing-Reason for Absence of Profits Bilibili Secondary Listing: Diversifying Revenue Mix Should Make Profits Possible in the Medium Term 

Bilibili: Diversified Revenue Streams and Impressive Top Line Growth Justify Current Multiples

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)

China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone

On 24th Mar 2021, SEC issued Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act. On the back of this, large China ADRs...

Sumeet Singh

Tencent (700 HK): Q4, Promising in All Businesses, Price Down, Upgrade to Buy Again

The stock price has plunged. But Tencent released a good result again in 4Q20. Almost all business lines are promising. We set an upside of 20%....

Ming Lu

Zhihu IPO Valuation: Attractive at the Lower End of the IPO Pricing

We believe Zhihu’s IPO is attractive at the lower end of the IPO price of US$9.5 per ADS. The company is still in early stages of monetising its...

Shifara Samsudeen, ACMA, CGMA

Zhihu IPO Valuation Analysis

In the first few days of trading post IPO, we expect Zhihu's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to...

Douglas Kim

Bilibili: Diversified Revenue Streams and Impressive Top Line Growth Justify Current Multiples

we believe Bilibili should be considered as a comprehensive internet stock rather than a streaming platform given its growing exposure into other...

Shifara Samsudeen, ACMA, CGMA

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