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

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<p>Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong, as per media reports. The company is said to have filed confidentially in Jan 2021 and is aiming for a listing in March 2021.</p>
<p>We have covered the background of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/bilibili-secondary-listing-early-look-will-probably-be-more-like-jd-and-netease" target="_blank" rel="noopener">Bilibili Secondary Listing Early Look - Will Probably Be More like JD and NetEase</a>.</p>
<p>Bilibili reported its 4Q20 results today morning. As these are likely to be the last set of results before the company goes in for its secondary listing, in this note we take a quick look at the results. </p>
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Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong, as per media reports. The company is said to have filed confidentially in Jan 2021 and is aiming for a listing in March 2021.
We have covered the background of the deal in our earlier note, Bilibili Secondary Listing Early Look - Will Probably Be More like JD and NetEase.
Bilibili reported its 4Q20 results today morning. As these are likely to be the last set of results before the company goes in for its secondary listing, in this note we take a quick look at the results. 


Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.</p></div><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
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<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
</ul></div><div><p>In this insight, I'll talk about our earnings forecast and thoughts on valuations.</p></div>

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
In this insight, I'll talk about our earnings forecast and thoughts on valuations.

Coupang Pre-IPO - Earnings Forecast and Valuation

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

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<p><strong>Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. </strong></p>
<p>We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. </p>
<p><strong>First day pop</strong> - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's <strong>market cap rising as high as</strong><strong>$81 billion</strong>, which would be 35% higher than our base case value of $60.1 billion. </p>
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Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. 
We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. 
First day pop - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's market cap rising as high as$81 billion, which would be 35% higher than our base case value of $60.1 billion. 


Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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

<p><a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> is a Chinese e-commerce company that pioneered concepts like social e-commerce and team purchase. The company has experienced tremendous success since inception in 2015. Pinduoduo's success is driven mainly by active buyer growth as LTM active buyers rose 980% to 731m over the last 3 years. Meanwhile, the company’s share price rose 931% from the IPO price to $196.0 per ADS since listing on Nasdaq in July 2018 at $19.0 per ADS.</p>

Pinduoduo (PDD US) is a Chinese e-commerce company that pioneered concepts like social e-commerce and team purchase. The company has experienced tremendous success since inception in 2015. Pinduoduo's success is driven mainly by active buyer growth as LTM active buyers rose 980% to 731m over the last 3 years. Meanwhile, the company’s share price rose 931% from the IPO price to $196.0 per ADS since listing on Nasdaq in July 2018 at $19.0 per ADS.

Pinduoduo: Unlikely to Meet 4Q20 Consensus

Event-Driven

<p>On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> reluctantly sold US$10bn worth of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> shares. </p><p>I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. </p><p>We have covered the previous placement in our earlier note, <a href="https://www.smartkarma.com/insights/tencent-placement-huge-deal-in-size-small-in-relative-terms-succumbing-to-the-holdco-discount" target="_blank" rel="noopener">Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount</a>. </p><p>In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.</p>

On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, Naspers (NPN SJ) reluctantly sold US$10bn worth of Tencent Holdings (700 HK) shares. I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. We have covered the previous placement in our earlier note, Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount. In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

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PDD Holdings (PDD US)

Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note

Bilibili plans to raise around US$3bn in its secondary listing in HK, as per media reports. The company is said to have filed confidentially in Jan...

Sumeet Singh

Coupang Pre-IPO - Earnings Forecast and Valuation

Coupang, the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing. The company has earlier obtained...

Sumeet Singh

Coupang - Valuation Analysis

Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. We have used EV/GP as our primary method of...

Douglas Kim

Pinduoduo: Unlikely to Meet 4Q20 Consensus

During its short tenure on Nasdaq, Pinduoduo has twice failed to meet consensus quarterly revenue estimates and its share price declined by...

Oshadhi Kumarasiri

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

On 22nd March 2018, after market close, one of the largest overnight placements was launched. On that day, Naspers reluctantly sold US$10bn worth...

Sumeet Singh

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