Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/so-young-international-inc" target="_blank" data-smartkarma-citation="entities:28025:1" rel="noopener">So-Young (SY US)</a> has announced a preliminary non-binding proposal from its chairman, Xing Jin, of $5.30/ADS - a 22.7% premium to last close. </li>
<li>Xing Jin controls 83.9% of the voting power. If a firm Offer unfolds, which should involve a long-form merger, this is effectively done. </li>
<li>The pressure on Chinese stocks in the US to go private or change listing venue by 2024 is still on.</li>
</ul>



So-Young (SY US) has announced a preliminary non-binding proposal from its chairman, Xing Jin, of $5.30/ADS - a 22.7% premium to last close. 
Xing Jin controls 83.9% of the voting power. If a firm Offer unfolds, which should involve a long-form merger, this is effectively done. 
The pressure on Chinese stocks in the US to go private or change listing venue by 2024 is still on.


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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cloud-village-inc" target="_blank" data-smartkarma-citation="entities:33412:1" rel="noopener">Cloud Village (CLV HK)</a> is the second-largest online music platform after <a href="https://www.smartkarma.com/entities/tencent-music-entertainment" target="_blank" data-smartkarma-citation="entities:27255:1" rel="noopener">Tencent Music (TME US)</a> in China. It has launched its IPO to raise $400 million at the IPO mid-point.</li>
<li>In <a href="https://www.smartkarma.com/insights/cloud-village-netease-music-ipo-not-yet-a-sound-investment" target="_blank" data-smartkarma-citation="insights:61441" rel="noopener">Cloud Village (NetEase Music) IPO: Not yet a Sound Investment</a>, we stated that the 9M21 update is underwhelming with slowing growth and a marginal decline in losses. </li>
<li>Our valuation analysis suggests that the IPO price is unattractive. We would give the IPO a pass. </li>
</ul>



Cloud Village (CLV HK) is the second-largest online music platform after Tencent Music (TME US) in China. It has launched its IPO to raise $400 million at the IPO mid-point.
In Cloud Village (NetEase Music) IPO: Not yet a Sound Investment, we stated that the 9M21 update is underwhelming with slowing growth and a marginal decline in losses. 
Our valuation analysis suggests that the IPO price is unattractive. We would give the IPO a pass. 


Cloud Village (NetEase Music) IPO: Valuation Insights

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 Bottom-Up

<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> reported 3Q2021 results which saw revenues increase 61.4% YoY to RMB5.2bn while operating losses for the quarter increased to 36.1% of revenues vs 33.6% in 3Q2020. </li>
<li>Mobile games revenue declined YoY for the first time in 2Q2021, however, the segment has resumed growth with a 9.1% YoY increase in third quarter.</li>
<li>Except for mobile games, the other three segments saw strong growth in top line with advertising revenues growing more than 100% during the quarter</li>
</ul>



Bilibili Inc (BILI US) reported 3Q2021 results which saw revenues increase 61.4% YoY to RMB5.2bn while operating losses for the quarter increased to 36.1% of revenues vs 33.6% in 3Q2020. 
Mobile games revenue declined YoY for the first time in 2Q2021, however, the segment has resumed growth with a 9.1% YoY increase in third quarter.
Except for mobile games, the other three segments saw strong growth in top line with advertising revenues growing more than 100% during the quarter


Bilibili: Mobile Games Resumes Growth; Losses Widening in 3Q Is in Line with Peers

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<ul>
<li>The Huya/Douyu ratio leapt to its highest level since Aug 25th at 2.79 following Douyu’s earnings.</li>
<li>This was despite Douyu’s margins being noticeably better than we expected as MAU and paying user growth were weak.</li>
<li>We still believe there is a lot of value in Huya while shorting Douyu is increasingly less attractive.</li>
</ul>


The Huya/Douyu ratio leapt to its highest level since Aug 25th at 2.79 following Douyu’s earnings.
This was despite Douyu’s margins being noticeably better than we expected as MAU and paying user growth were weak.
We still believe there is a lot of value in Huya while shorting Douyu is increasingly less attractive.


Huya Vs. Douyu – Douyu Results Not Too Bad but We Still Prefer Huya

iClick Interactive Asia Group / Event-Driven

In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the <a href="https://en.wikipedia.org/wiki/Holding_Foreign_Companies_Accountable_Act" target="_blank" rel="noopener">Holding Foreign Companies Accountable Act</a> last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.
More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for <a href="https://www.smartkarma.com/entities/iclick-interactive-asia-group-limited" target="_blank" data-smartkarma-citation="entities:27314:1" rel="noopener">iClick Interactive Asia Group (ICLK US)</a> a little unusual.
iClick <a href="https://ir.i-click.com/2021-09-24-iClick-Interactive-Asia-Group-Limited-Announces-Receipt-of-a-Preliminary-Non-Binding-Indicative-Proposal-to-Acquire-the-Company" target="_blank" rel="noopener">announced</a> on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.
That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.
Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.
Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.
In addition, <a href="https://www.smartkarma.com/entities/baozun" target="_blank" data-smartkarma-citation="entities:29712:1" rel="noopener">Baozun (9991 HK)</a> controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. 
But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, to make a counteroffer.
More below the fold.

In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the Holding Foreign Companies Accountable Act last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.
More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for iClick Interactive Asia Group (ICLK US) a little unusual.
iClick announced on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.
That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.
Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.
Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.
In addition, Baozun (9991 HK) controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. 
But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as Tencent (700 HK), to make a counteroffer.
More below the fold.

IClick(ICLK US): PAG & Oasis Shake The Trees

United States

HUYA Inc. operates as a game live streaming platform. The Company offers interactive video broadcast services including e-sports, music, reality show, entertainment genres, talent shows, and anime and outdoor activities. HUYA serves customers in China.

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HUYA (HUYA US)

So-Young's Low-Balled Proposal

How the regulator assesses such a deal, and the timing thereon, is indeterminate. But So-Young is very beaten up. Buying around here is probably...

David Blennerhassett

Cloud Village (NetEase Music) IPO: Valuation Insights

Cloud Village has launched its IPO to raise $400 million at the IPO mid-point. Our valuation analysis suggests that the IPO price is unattractive....

Arun George

Bilibili: Mobile Games Resumes Growth; Losses Widening in 3Q Is in Line with Peers

Bilibili's operating losses widened during 3Q2021. We have observed that Huya's profit margins declined during the quarter while Douyu's paying...

Shifara Samsudeen, ACMA, CGMA

Huya Vs. Douyu – Douyu Results Not Too Bad but We Still Prefer Huya

The Huya/Douyu ratio leapt to its highest level since Aug 25th following Douyu’s earnings and while we still believe there is a lot of value in...

Mio Kato

IClick(ICLK US): PAG & Oasis Shake The Trees

Buying around here is probably going to have limited downside. I think PAG/Oasis' intent is to shake out potential suitors - including the co...

David Blennerhassett

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