IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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.

Equity Capital Markets

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<div><p><a href="https://www.smartkarma.com/entities/hello-inc" target="_blank" data-smartkarma-citation="entities:33031:1" rel="noopener">Hello Inc (1883864D US)</a>, which is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a>, is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as <em>Hello Bike</em> and <em>Hello e-Bike</em>. It also has a carpooling marketplace known as <em>Hello Carpooling</em>. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports.   </p></div>
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<p>In <a href="https://www.smartkarma.com/insights/hello-ipo-initiation-goodbye" target="_blank" data-smartkarma-citation="insights:50795" rel="noopener">Hello IPO Initiation: Goodbye</a> we stated that Hello’s investor pitch is that its various businesses create a flywheel that drives user spending growth with limited user acquisition costs. However, Hello remains saddled with a core business (shared two-wheeler services) that has challenging prospects due to declining growth, low profitability and high cash burn.</p>
<div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hello-ipo-1q21-update-does-not-change-the-avoid-tag" target="_blank" data-smartkarma-citation="insights:51119" rel="noopener">Hello IPO: 1Q21 Update Does Not Change the Avoid Tag</a>, we noted that at first glance, the 1Q21 update looks stunning due to accelerating growth and margin progression. However, a closer look, suggests that business continues to face daunting challenges. In this note, we present our forecasts and take the first look at Hello's potential valuation range. </p></div>
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Hello Inc (1883864D US), which is backed by Ant Financial Services Group (6688 HK), is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as Hello Bike and Hello e-Bike. It also has a carpooling marketplace known as Hello Carpooling. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports.   

In Hello IPO Initiation: Goodbye we stated that Hello’s investor pitch is that its various businesses create a flywheel that drives user spending growth with limited user acquisition costs. However, Hello remains saddled with a core business (shared two-wheeler services) that has challenging prospects due to declining growth, low profitability and high cash burn.
In Hello IPO: 1Q21 Update Does Not Change the Avoid Tag, we noted that at first glance, the 1Q21 update looks stunning due to accelerating growth and margin progression. However, a closer look, suggests that business continues to face daunting challenges. In this note, we present our forecasts and take the first look at Hello's potential valuation range. 



Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

<p>This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  </p><p><strong><em>Companies mentioned this week:</em></strong></p><p><a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a>, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a></p>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  Companies mentioned this week:Meituan (3690 HK), Xiaomi Corp (1810 HK), Naspers (NPN SJ), Prosus (PRX NA), Tencent (700 HK), Samsung Electronics (005930 KS), SK Hynix (000660 KS)

Global Emerging Markets Weekly: 14 May 2021

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>A mere 1.41178 billion</li>
<li>Hush now. Central bank calms inflation fears</li>
<li>When a poem, slashes share price</li>
<li>Kerry: China is an adversary</li>
<li>Don’t wait to recharge your batteries</li>
</ul><div class="content-remarks"><p>In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</p></div>

China News That Matters
A mere 1.41178 billion
Hush now. Central bank calms inflation fears
When a poem, slashes share price
Kerry: China is an adversary
Don’t wait to recharge your batteries
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Population/ Commodities/ Meituan/ US-China/ EVs

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Event-Driven

Smoore International Holdings / Event-Driven

<p>For our next Webinar, we 're excited to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> , who will discuss the upcoming rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.</p><h3>The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=87998710285" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div><p>Brian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.</p>

For our next Webinar, we 're excited to welcome back Insight Provider Brian Freitas , who will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX). Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.Register for the Webinar hereBrian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<p>After <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> reported FY2021 results, the stock took a 6% slide in a market that was already skittish and looking for an excuse to jump off the global tech names and even more so for the Chinese platforms because of the continuing regulatory concerns. </p><p>In this environment, it is easy to lose conviction on a stock.  However, I offer three reasons why investors should not be discouraged about BABA and its perceived weak results:</p><ol>
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<strong>Operating profit did NOT decline.</strong>  Excluding the AML penalty of CNY18.2 bn, operating profit in the March quarter would have grown 48% YoY, and 18% on a full-year basis.</li>
<li>
<strong>Revenue growths remain brisk</strong> at 64% for the quarter and 41% for the full year, beating consensus expectations.  Excluding Sun Art consolidation, it would still be a robust 39% and 32%, respectively.  Customer management revenue growth of 40% YoY in the March quarter was promising. </li>
<li>
<strong>Cloud profitability on the rise. </strong> After breaking even in the Dec quarter, the segment EBITA margin rose to 1.8% -- still small but fast improving.       </li>
</ol><p>Keep in mind that Alibaba is out of the crosshair of regulators, while its competitors are only beginning to feel the heat. I believe the company is in a good position to leverage its gigantic free cash flow and the uncertainty facing its competitors to gain market share.   I estimate Alibaba’s operating profit to grow 61% in FY2022.   </p><p><strong>Key risk:</strong> Management stated that it would reallocate incremental profits into generating incremental revenue growth. Alibaba management always states that it does not manage by margins.  However, the company has always maintained its marketplace EBITA margins above 70% (of marketplace revenues, not total revenues).  I believe margins will continue to trend down,  largely because of the faster than expected revenue growth, but its profit growth will remain robust.    </p><p>Previous related reports: </p><p><a href="https://www.smartkarma.com/insights/china-e-commerce-robust-consumption-data-hints-at-online-spending-spree" target="_blank" data-smartkarma-citation="insights:50798" rel="noopener">China E-Commerce: Robust Consumption Data Hints at Online Spending Spree</a></p><p><a href="https://www.smartkarma.com/insights/alibaba-baba-us-record-fine-grin-and-bear-it-as-better-days-are-ahead" target="_blank" data-smartkarma-citation="insights:50219" rel="noopener">Alibaba (BABA US): Record Fine - Grin and Bear It as Better Days Are Ahead</a> </p><p><a href="https://www.smartkarma.com/insights/alibaba-baba-us-ant-group-woes-overly-priced-in" target="_blank" data-smartkarma-citation="insights:48648" rel="noopener">Alibaba (BABA US): Ant Group Woes Overly Priced-In</a> </p>

After Alibaba Group (BABA US) reported FY2021 results, the stock took a 6% slide in a market that was already skittish and looking for an excuse to jump off the global tech names and even more so for the Chinese platforms because of the continuing regulatory concerns. In this environment, it is easy to lose conviction on a stock.  However, I offer three reasons why investors should not be discouraged about BABA and its perceived weak results:

Operating profit did NOT decline.  Excluding the AML penalty of CNY18.2 bn, operating profit in the March quarter would have grown 48% YoY, and 18% on a full-year basis.

Revenue growths remain brisk at 64% for the quarter and 41% for the full year, beating consensus expectations.  Excluding Sun Art consolidation, it would still be a robust 39% and 32%, respectively.  Customer management revenue growth of 40% YoY in the March quarter was promising. 

Cloud profitability on the rise.  After breaking even in the Dec quarter, the segment EBITA margin rose to 1.8% -- still small but fast improving.       
Keep in mind that Alibaba is out of the crosshair of regulators, while its competitors are only beginning to feel the heat. I believe the company is in a good position to leverage its gigantic free cash flow and the uncertainty facing its competitors to gain market share.   I estimate Alibaba’s operating profit to grow 61% in FY2022.   Key risk: Management stated that it would reallocate incremental profits into generating incremental revenue growth. Alibaba management always states that it does not manage by margins.  However, the company has always maintained its marketplace EBITA margins above 70% (of marketplace revenues, not total revenues).  I believe margins will continue to trend down,  largely because of the faster than expected revenue growth, but its profit growth will remain robust.    Previous related reports: China E-Commerce: Robust Consumption Data Hints at Online Spending SpreeAlibaba (BABA US): Record Fine - Grin and Bear It as Better Days Are Ahead Alibaba (BABA US): Ant Group Woes Overly Priced-In 

Alibaba (BABA US): Three Reasons Why Investors Should Not Fret

China

Meituan operates as a web based shopping platform for locally found consumer products and retail services. The Company offers deals of the day by selling vouchers on local services and entertainment, dining, delivery, and other services. Meituan provides its services throughout China.

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Meituan (3690 HK)

Hello IPO: Valuation First Look

Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports. In this note, we present our forecasts and take the...

Arun George

Global Emerging Markets Weekly: 14 May 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Population/ Commodities/ Meituan/ US-China/ EVs

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

On 19 May, 5PM SGT, join our webinar with Brian Freitas, where we will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX)...

Smartkarma Research

Alibaba (BABA US): Three Reasons Why Investors Should Not Fret

Alibaba's shares took a hit in a tough market as the media characterized the company's earnings as disappointing. On the contrary, I offer three...

Mitchell Kim

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