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

Alibaba Health Information Tec / Equity Bottom-Up

<ul>
<li>The National Radio and Television Administration forbids juveniles from paying broadcasters.</li>
<li>It was widely rumored that both Alibaba (BABA) and Tencent (700 HK) stopped negotiating the acquisition of iQiyi (IQ).</li>
<li>The National Medical Products Administration formally allow prescription drug to be sold online.</li>
</ul>


The National Radio and Television Administration forbids juveniles from paying broadcasters.
It was widely rumored that both Alibaba (BABA) and Tencent (700 HK) stopped negotiating the acquisition of iQiyi (IQ).
The National Medical Products Administration formally allow prescription drug to be sold online.


China Internet Weekly (30Nov2020): Approve Online Rx Drug, Ban Juveniles from Paying Broadcasters

<ul class="">
<li>Huya (HUYA)’s security guard carried an employee out of the office by force.</li>
<li>Shenzhen Municipal Anti-Pornography Office suspended Tencent Music (TME)’s karaoke platform for 30 days.</li>
<li>Alibaba (BABA) is facing class action for the investment in Ant Group.</li>
<li>Baidu (BAIDU) acquired Joyy (YY)’s business in China, which is a short target.</li>
</ul>


Huya (HUYA)’s security guard carried an employee out of the office by force.
Shenzhen Municipal Anti-Pornography Office suspended Tencent Music (TME)’s karaoke platform for 30 days.
Alibaba (BABA) is facing class action for the investment in Ant Group.
Baidu (BAIDU) acquired Joyy (YY)’s business in China, which is a short target.


China Internet Weekly (23Nov2020): HUYA’s Violence, TME’s Porn, and BIDU Acquired a Short Target

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.

Event-Driven

<ul>
<li>On 16<sup>th</sup> November, <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  announced that it has entered into a definitive agreement with <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a>  to acquire its domestic video-based entertainment live streaming business in China (known as YY Live). JOYY will retain its overseas business.</li>
<li>The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6bn in cash and the transaction is expected to occur in 1H2021 subject to certain conditions.</li>
<li>According to Baidu, YY Live stands to benefit from the company’s large traffic and thriving mobile ecosystem while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as a creator network that will further strengthen Baidu's massive content provider network.</li>
<li>Baidu has been a late entrant to the thriving short video app market in China which is currently dominated by Douyin and Kuaishou. Baidu has been attempting to reduce its dependence on core advertising revenues, however, these efforts are yet to make any meaningful impact on the company’s top line and margins.</li>
</ul>


On 16th November, Baidu (BIDU US)  announced that it has entered into a definitive agreement with JOYY (YY US)  to acquire its domestic video-based entertainment live streaming business in China (known as YY Live). JOYY will retain its overseas business.
The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6bn in cash and the transaction is expected to occur in 1H2021 subject to certain conditions.
According to Baidu, YY Live stands to benefit from the company’s large traffic and thriving mobile ecosystem while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as a creator network that will further strengthen Baidu's massive content provider network.
Baidu has been a late entrant to the thriving short video app market in China which is currently dominated by Douyin and Kuaishou. Baidu has been attempting to reduce its dependence on core advertising revenues, however, these efforts are yet to make any meaningful impact on the company’s top line and margins.


Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu

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.

<p><a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a> shares dropped 15% yesterday post the release of its 3Q20 results which showed sales growth turning negative in the quarter despite an easy comp. On top of this, Iqiyi's balance sheet remains stretched amidst a tough competitive environment. Our thoughts are below</p>

iQIYI Inc (IQ US) shares dropped 15% yesterday post the release of its 3Q20 results which showed sales growth turning negative in the quarter despite an easy comp. On top of this, Iqiyi's balance sheet remains stretched amidst a tough competitive environment. Our thoughts are below

<ul>
<li>Revenue increased by 28% YoY in 3Q20.</li>
<li>The worst business lines stopped declining.</li>
<li>The growth rate of financial revenue accelerated.</li>
<li>Video competitor, iQiyi, ceased the price war.</li>
<li>The draft of online antitrust law does not target Tencent.</li>
<li>The 5-year P/E band suggests an upside of 15%. Upgrade to Buy.</li>
</ul>


Revenue increased by 28% YoY in 3Q20.
The worst business lines stopped declining.
The growth rate of financial revenue accelerated.
Video competitor, iQiyi, ceased the price war.
The draft of online antitrust law does not target Tencent.
The 5-year P/E band suggests an upside of 15%. Upgrade to Buy.


Tencent (700 HK): Every Business Line Looks Great in 3Q20, Upgrade to Buy

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 Internet Weekly (30Nov2020): Approve Online Rx Drug, Ban Juveniles from Paying Broadcasters

The authorities forbid juveniles from paying broadcasters. The Medical Administration allows prescription drug to be sold online.

Ming Lu

China Internet Weekly (23Nov2020): HUYA’s Violence, TME’s Porn, and BIDU Acquired a Short Target

Huya security guard carried an employee out of office by force. Shenzhen Authorities suspended Tencent Music ’s karaoke for 30 days. Baidu acquired...

Ming Lu

Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu

Baidu announced that it has entered into a definitive agreement with JOYY to acquire its domestic video-based entertainment live streaming business...

Shifara Samsudeen, ACMA, CGMA

Iqiyi: Another Tough Quarter

iQIYI Inc (IQ US) shares dropped 15% yesterday post the release of its 3Q20 results which showed sales growth turning negative in the quarter...

Rickin Thakrar

Tencent (700 HK): Every Business Line Looks Great in 3Q20, Upgrade to Buy

The worst business lines stopped declining. The growth rate of financial revenue accelerated. Video competitor, iQiyi, ceased the price war. The...

Ming Lu

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