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

The Chinese streaming platform <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a> announced a secondary offering of convertible notes and American Depository Shares on Tuesday. The company will be issuing US$800m worth of convertible senior notes due in 2026 with an option for underwriters to buy an additional US$100m in notes. Concurrently with the offering of the notes, iQiyi will also offer 40m ADSs, with an option to purchase an additional 6m ADSs. Each ADS represents seven Class A ordinary shares of the company and the prospectus does not indicate the price of the New ADSs, nor at the rate at which the notes can be converted into ADSs.iQiyi’s shares closed at US$22.60 per ADS prior to the announcement of the Secondary offering, and at the above sale price, the company will raise approximately US$904m. If the overallotment option of additional 6m ADSs is exercised, it could increase the offer by US$135.6m to US$1.04bn. iQiyi’s shares closed at US$22.31 per ADS at the end of Tuesday’s trading from US$22.60 per ADS prior to the announcement.The company intends to use the net proceeds from the offering (offering of notes and ADSs) on expanding and enhancing its content offerings, strengthen its technologies and for working capital and other general corporate purposes.This is the First of a series of reports on iQiyi and in this insight, we examine the company’s fundamentals.

The Chinese streaming platform iQIYI Inc (IQ US) announced a secondary offering of convertible notes and American Depository Shares on Tuesday. The company will be issuing US$800m worth of convertible senior notes due in 2026 with an option for underwriters to buy an additional US$100m in notes. Concurrently with the offering of the notes, iQiyi will also offer 40m ADSs, with an option to purchase an additional 6m ADSs. Each ADS represents seven Class A ordinary shares of the company and the prospectus does not indicate the price of the New ADSs, nor at the rate at which the notes can be converted into ADSs.iQiyi’s shares closed at US$22.60 per ADS prior to the announcement of the Secondary offering, and at the above sale price, the company will raise approximately US$904m. If the overallotment option of additional 6m ADSs is exercised, it could increase the offer by US$135.6m to US$1.04bn. iQiyi’s shares closed at US$22.31 per ADS at the end of Tuesday’s trading from US$22.60 per ADS prior to the announcement.The company intends to use the net proceeds from the offering (offering of notes and ADSs) on expanding and enhancing its content offerings, strengthen its technologies and for working capital and other general corporate purposes.This is the First of a series of reports on iQiyi and in this insight, we examine the company’s fundamentals.

IQIYI Placement: Searching for Additional Revenues Amidst Deepening Losses

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

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.

We wrote a few weeks ago that Iqiyi’s short-term liquidity <a href="https://www.smartkarma.com/insights/iqiyi-another-tough-quarter" target="_blank" rel="noopener">looked ‘stretched’</a> with worrying signs in its balance sheet. Post the close yesterday, Iqiyi announced it plans to raise 1.6bn USD in a combination of notes and equity offering. We look at the current operational situation for Iqiyi below

We wrote a few weeks ago that Iqiyi’s short-term liquidity looked ‘stretched’ with worrying signs in its balance sheet. Post the close yesterday, Iqiyi announced it plans to raise 1.6bn USD in a combination of notes and equity offering. We look at the current operational situation for Iqiyi below

Iqiyi Placement – an Attempt to Shore up Short-Term Liquidity

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.

iQiyi aims to raise around US$1.7bn from a convertible bond and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the balance coming from the convertible bond offering. Its been a rough year for the stock with a short-seller targeting the company and operations lagging as well.We have covered the company's performance previously in:<ul>
<li><a href="https://www.smartkarma.com/insights/iqiyi-some-flaws-in-the-wolfpack-s-short-seller-report" target="_blank" rel="noopener">IQIYI: Some Flaws in the Wolfpack’s Short Seller Report</a></li>
<li><a href="https://www.smartkarma.com/insights/iqiyi-iq-why-chinese-netflix-dismissing-employees-during-home-staying-a-content-angle" target="_blank" rel="noopener">IQiyi (IQ): Why “Chinese Netflix” Dismissing Employees During Home Staying? A Content Angle</a></li>
<li><a href="https://www.smartkarma.com/insights/iqiyi-iq-an-empty-tv-box" target="_blank" rel="noopener">IQiyi (IQ): An Empty TV Box</a></li>
</ul>

iQiyi aims to raise around US$1.7bn from a convertible bond and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the balance coming from the convertible bond offering. Its been a rough year for the stock with a short-seller targeting the company and operations lagging as well.We have covered the company's performance previously in:
IQIYI: Some Flaws in the Wolfpack’s Short Seller Report
IQiyi (IQ): Why “Chinese Netflix” Dismissing Employees During Home Staying? A Content Angle
IQiyi (IQ): An Empty TV Box


IQiyi Placement - An Ex-Growth Netflix - Needs a Deep Deep Discount

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

Tencent is not an overheated company riding on the home quarantine. On the contrary, we believe  the competitors to all Tencent's business lines are in trouble. These provide Tencent another opportunity of upside.
The 6-year P/E Band suggests an upside of 24% for the end of 2021 and a price target. We upgraded Tencent to "buy" after the release of the 3Q20 result. Now we raise our price target from HK$660 to HK$700.

Tencent is not an overheated company riding on the home quarantine. On the contrary, we believe  the competitors to all Tencent's business lines are in trouble. These provide Tencent another opportunity of upside.
The 6-year P/E Band suggests an upside of 24% for the end of 2021 and a price target. We upgraded Tencent to "buy" after the release of the 3Q20 result. Now we raise our price target from HK$660 to HK$700.

2021 High Conviction: Long Tencent as All Competitors Are in Trouble

Alibaba Group Holding  / Equity Capital Markets

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below.

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below. 

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

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 Placement: Searching for Additional Revenues Amidst Deepening Losses

The Chinese streaming platform iQiyi announced a secondary offering of convertible notes and American Depository Shares on Tuesday. In this...

Shifara Samsudeen, ACMA, CGMA

Iqiyi Placement – an Attempt to Shore up Short-Term Liquidity

We wrote a few weeks ago that Iqiyi’s short-term liquidity looked ‘stretched’ with worrying signs in its balance sheet. Post the close yesterday,...

Rickin Thakrar

IQiyi Placement - An Ex-Growth Netflix - Needs a Deep Deep Discount

iQiyi aims to raise around US$1.7bn from a CB and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the...

Sumeet Singh

2021 High Conviction: Long Tencent as All Competitors Are in Trouble

Tencent is not an overheated company riding on the home quarantine. All the competitors to all Tencent's business lines are in trouble. These...

Ming Lu

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese...

Rickin Thakrar

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