Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Bullish sentiments doubled BABA share price post 20th Party congress, as investors look beyond a soft December quarter and focus on re-opening prospects and flashing regulatory green lights.</li>
<li>Expect single-Digit GMV growth, more disciplined OPEX and hence margin recovery to generate RMB180 billion non-GAAP net profit for BABA by FY25. Materializing fundamental recovery will support continued re-rating.</li>
<li>That said, we also see headwinds to multiple expansion and expect 18-20x PER (among lowest in sector) for FY25, implying 21%/28% compounded annual return over FY23-25.</li>
</ul>


Bullish sentiments doubled BABA share price post 20th Party congress, as investors look beyond a soft December quarter and focus on re-opening prospects and flashing regulatory green lights.
Expect single-Digit GMV growth, more disciplined OPEX and hence margin recovery to generate RMB180 billion non-GAAP net profit for BABA by FY25. Materializing fundamental recovery will support continued re-rating.
That said, we also see headwinds to multiple expansion and expect 18-20x PER (among lowest in sector) for FY25, implying 21%/28% compounded annual return over FY23-25.


Alibaba (BABA US): What Is Next After Strong Rally?

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

LG Energy Solution / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>Things are starting to pickup on the IPO front with the first somewhat sizeable US ADR filing done this week.</li>
<li>Placements deal flow continued to stay strong this week, even as the performance didn't.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Things are starting to pickup on the IPO front with the first somewhat sizeable US ADR filing done this week.
Placements deal flow continued to stay strong this week, even as the performance didn't.


ECM Weekly (20th Jan 23) - HK Brokers, Wuxi, IQIYI, Anycol, Adani, WM Mot, LG Ene, AIn, Oasis, Perta

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>NBS released (17 January) Dec and full year 2022 online retail sales data.</li><li>YoY growth of online physical goods GMV reaccelerated to 4.4% YoY in Dec 2022 (1.2% YoY in Nov), which in our view could be attributed to recovery in logistics and fulfilment capability in late Dec and frontloaded sales generated from the Spring Festival shopping festival due to the early Spring Festival in 2023.</li><li>But solid recovery in YoY growth trajectory likely takes time, in our view, echoed by the 4.7% YoY online retail sales growth during the first five days of the shopping festival (30 Dec 2022-3 Jan 2023; per Ministry of Commerce). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

NBS released (17 January) Dec and full year 2022 online retail sales data.YoY growth of online physical goods GMV reaccelerated to 4.4% YoY in Dec 2022 (1.2% YoY in Nov), which in our view could be attributed to recovery in logistics and fulfilment capability in late Dec and frontloaded sales generated from the Spring Festival shopping festival due to the early Spring Festival in 2023.But solid recovery in YoY growth trajectory likely takes time, in our view, echoed by the 4.7% YoY online retail sales growth during the first five days of the shopping festival (30 Dec 2022-3 Jan 2023; per Ministry of Commerce). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – December online retail sales recap

<ul>
<li>IQIYI aims to raise around US$500m via a follow-on ADS offering.</li>
<li>While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes</li>
<li>In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.</li>
</ul>


IQIYI aims to raise around US$500m via a follow-on ADS offering.
While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes
In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.


IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

Qingdao Ainnovation Technology Group / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/qingdao-ainnovation-technology-group-co-ltd" target="_blank" data-smartkarma-citation="entities:35405:1" rel="noopener">Qingdao Ainnovation Technology Group (2121 HK)</a> was listed on 27th Jan 2022, with its one-year lockup expiring on 27th January 2023.</li>
<li>Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.</li>
<li>Coming up for one-year lockup expiry are the pre-IPO shareholders. Bulk of them are in the money as some have invested as early as 2018.</li>
</ul>



Qingdao Ainnovation Technology Group (2121 HK) was listed on 27th Jan 2022, with its one-year lockup expiring on 27th January 2023.
Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.
Coming up for one-year lockup expiry are the pre-IPO shareholders. Bulk of them are in the money as some have invested as early as 2018.


AInnovation Technology Lock-Up - US$670m Worth of Pre-IPO Investment Is Still Well in the Money

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)

Alibaba (BABA US): What Is Next After Strong Rally?

We believe that materializing fundamental recovery to support continued re-rating of BABA after sentiment-driven rally. We expect over 20% CAGR...

Eric Chen

ECM Weekly (20th Jan 23) - HK Brokers, Wuxi, IQIYI, Anycol, Adani, WM Mot, LG Ene, AIn, Oasis, Perta

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

China Internet – December online retail sales recap

YoY growth of online physical goods GMV reaccelerated to 4.4% YoY in Dec 2022 (1.2% YoY in Nov), which in our view could be attributed to recovery...

CMB International

IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

iQIYI aims to raise around US$500m via a follow-on ADS offering. While the deal might be expected, the stock's longer term track record doesn't...

Sumeet Singh

AInnovation Technology Lock-Up - US$670m Worth of Pre-IPO Investment Is Still Well in the Money

Qingdao Ainnovation Technology Group (2121 HK) was listed on 27th Jan 2023, with its one-year lockup expiring on 27th January 2023. Coming up for...

Clarence Chu

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