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

Zhihu Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC.</p></div><div><p>Zhihu has priced its IPO at $9.50 per ADS which at the low-end of the IPO price range of $9.50-11.50 per ADS, according to press reports. At the final IPO price of $9.50 per share, Zhihu will have a market cap of $5.7 billion. Zhihu will also raise an additional $250 million in a concurrent private placement to <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>, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>, <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> and Lilith Games.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/zhihu-ipo-initiation-question-time" target="_blank" data-smartkarma-citation="insights:48928" rel="noopener">Zhihu IPO Initiation: Question Time</a>, we opined that as the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from favourable industry trends. We concluded that Zhihu’s fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/zhihu-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49410" rel="noopener">Zhihu IPO: Valuation Insights,</a> we noted that the IPO price range is attractive. </p></div><div><div><div class="content-highlight"><p>However, since the launch of the IPO, a brutal sell-off on Chinese ADRs was triggered by SEC adopting measures that would kick foreign companies off US stock exchanges if they do not comply with US auditing standards. Despite the subsequent de-rating of peers, Zhihu remains attractive at the IPO price. Updating for the final IPO net raise, our base-case DCF derived price target of $12.35 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. </p></div></div></div>

Zhihu Technology (ZH US) is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC.Zhihu has priced its IPO at $9.50 per ADS which at the low-end of the IPO price range of $9.50-11.50 per ADS, according to press reports. At the final IPO price of $9.50 per share, Zhihu will have a market cap of $5.7 billion. Zhihu will also raise an additional $250 million in a concurrent private placement to Alibaba Group (BABA US), JD.com Inc (ADR) (JD US), Tencent Holdings (700 HK) and Lilith Games.In Zhihu IPO Initiation: Question Time, we opined that as the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from favourable industry trends. We concluded that Zhihu’s fundamentals are attractive. In Zhihu IPO: Valuation Insights, we noted that the IPO price range is attractive. However, since the launch of the IPO, a brutal sell-off on Chinese ADRs was triggered by SEC adopting measures that would kick foreign companies off US stock exchanges if they do not comply with US auditing standards. Despite the subsequent de-rating of peers, Zhihu remains attractive at the IPO price. Updating for the final IPO net raise, our base-case DCF derived price target of $12.35 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. 

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

<p>We have for some time been saying that Huya’s financial metrics looked noticeably superior to those of Douyu and that there were signs that Douyu had been window-dressing results to obtain better acquisition terms in the long-rumoured merger. We believe these latest quarterly results lend significant credence to our beliefs and that Huya is emerging as the clearly superior company.</p>

We have for some time been saying that Huya’s financial metrics looked noticeably superior to those of Douyu and that there were signs that Douyu had been window-dressing results to obtain better acquisition terms in the long-rumoured merger. We believe these latest quarterly results lend significant credence to our beliefs and that Huya is emerging as the clearly superior company.

Huya – Deal With Douyu Needs Renegotiated Terms

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

<p>The Chinese mobile games and video platform <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>  has set the terms for its secondary listing in Hong Kong Exchange. Bilibili plans to offer 25m shares at a maximum offer price of HK$988 per share and will raise net proceeds of HK$24.3bn (approx. US$3.13bn) at the above pricing.</p><p>Bilibili’s shares closed at US$108.87 per ADS at the end of trading on Friday (19<sup>th</sup> March), and each ADS represents one ordinary share of the company. The maximum HK offer price of HK$988 per share implies approx. US$127.2 per ADS, a 17% premium to Bilibili’s last close price of US$108.87 per ADS.</p><p>The company plans to use approx. 50% of the net IPO proceeds on enhancing and broadening its content offerings to expand its user base. Bilibili plans to use 20% of net proceeds on enhancing its R&amp;D capabilities to improve user experience and another 20% on sales and marketing expenses.</p><p>In our previous insight on the company’s secondary listing, we discussed Bilibili’s valuation against its peers.</p>

The Chinese mobile games and video platform Bilibili Inc (BILI US)  has set the terms for its secondary listing in Hong Kong Exchange. Bilibili plans to offer 25m shares at a maximum offer price of HK$988 per share and will raise net proceeds of HK$24.3bn (approx. US$3.13bn) at the above pricing.Bilibili’s shares closed at US$108.87 per ADS at the end of trading on Friday (19th March), and each ADS represents one ordinary share of the company. The maximum HK offer price of HK$988 per share implies approx. US$127.2 per ADS, a 17% premium to Bilibili’s last close price of US$108.87 per ADS.The company plans to use approx. 50% of the net IPO proceeds on enhancing and broadening its content offerings to expand its user base. Bilibili plans to use 20% of net proceeds on enhancing its R&amp;D capabilities to improve user experience and another 20% on sales and marketing expenses.In our previous insight on the company’s secondary listing, we discussed Bilibili’s valuation against its peers.

Bilibili: Secondary Listing in HK Offers a Good Alternative to Kuaishou

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p><a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> announced its IPO terms. It plans to raise up to $632.5 million offering 55 million ADSs. The IPO price range is from $9.50 to $11.5 per share. At the mid point of the IPO price range, the company would be valued at $6.2 billion. At the high end of the IPO price range ($11.5 per share), it would be valued at $6.8 billion. Along with the IPO, Zhihu also plans to raise $250 million in a private placement to Alibaba, JD.com, Tencent, and Lilith Games.</p><div class="content-highlight"><p>Our base case and high case implied market caps of the company are $7.1 billion ($12 per share) and $9.0 billion ($15.2 per share), respectively. We do believe that there will be a first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis (market cap of $9.0 billion or $15.2 per share). In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to $15.2 per share). We have a positive view of the Zhihu IPO. </p></div>

Zhihu Technology (ZH US) announced its IPO terms. It plans to raise up to $632.5 million offering 55 million ADSs. The IPO price range is from $9.50 to $11.5 per share. At the mid point of the IPO price range, the company would be valued at $6.2 billion. At the high end of the IPO price range ($11.5 per share), it would be valued at $6.8 billion. Along with the IPO, Zhihu also plans to raise $250 million in a private placement to Alibaba, JD.com, Tencent, and Lilith Games.Our base case and high case implied market caps of the company are $7.1 billion ($12 per share) and $9.0 billion ($15.2 per share), respectively. We do believe that there will be a first day pop for this IPO and expect its market cap could reach the high end of the valuation sensitivity analysis (market cap of $9.0 billion or $15.2 per share). In the first few days of trading post IPO, we expect the company's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to $15.2 per share). We have a positive view of the Zhihu IPO. 

<p>As anticipated, the Chinese mobile games and video platform <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>  has received the approval for a secondary listing on the Hong Kong Stock Exchange. According to Bloomberg, Bilibili could raise about US$3bn through its secondary listing.</p><p>We discussed Bilibili’s business model, its segments, financials and also compared the company’s business model and financials with its closest competitor Huya. This insight will focus on Bilibili’s current valuation.</p><p>Read our previous insights:</p><p><a href="https://www.smartkarma.com/insights/bilibili-4q-earnings-value-added-services-surpass-mobile-games-e-commerce-gains-momentum" target="_blank" data-smartkarma-citation="insights:48569" rel="noopener">Bilibili 4Q Earnings: Value-Added Services Surpass Mobile Games; E-Commerce Gains Momentum</a> </p><p><a href="https://www.smartkarma.com/insights/bilibili-vs-huya-strong-top-line-growth-outspending-huya-on-marketing-reason-for-absence-of-profits" target="_blank" data-smartkarma-citation="insights:47309" rel="noopener">Bilibili Vs Huya:Strong Top Line Growth; Outspending Huya on Marketing-Reason for Absence of Profits</a> </p><p><a href="https://www.smartkarma.com/insights/bilibili-secondary-listing-diversifying-revenue-mix-should-make-profits-possible-in-the-medium-term" target="_blank" data-smartkarma-citation="insights:47049" rel="noopener">Bilibili Secondary Listing: Diversifying Revenue Mix Should Make Profits Possible in the Medium Term</a> </p>

As anticipated, the Chinese mobile games and video platform Bilibili Inc (BILI US)  has received the approval for a secondary listing on the Hong Kong Stock Exchange. According to Bloomberg, Bilibili could raise about US$3bn through its secondary listing.We discussed Bilibili’s business model, its segments, financials and also compared the company’s business model and financials with its closest competitor Huya. This insight will focus on Bilibili’s current valuation.Read our previous insights:Bilibili 4Q Earnings: Value-Added Services Surpass Mobile Games; E-Commerce Gains Momentum Bilibili Vs Huya:Strong Top Line Growth; Outspending Huya on Marketing-Reason for Absence of Profits Bilibili Secondary Listing: Diversifying Revenue Mix Should Make Profits Possible in the Medium Term 

Bilibili: Diversified Revenue Streams and Impressive Top Line Growth Justify Current Multiples

United States

DouYu International Holdings Limited operates as a holding company. The Company, through its subsidiaries, focuses on development of live game streaming. DouYu International Holdings serves customers in China.

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Douyu International Holdings (DOYU US)

Zhihu IPO: Trading Debut

Zhihu has priced its IPO at $9.50 per ADS which at the low-end of the IPO price range, according to press reports. Despite the recent de-rating of...

Arun George

Huya – Deal With Douyu Needs Renegotiated Terms

We believe that recent quarterly results lend credence to our suspicions that Douyu had been window-dressing results prior to merger terms being set.

Mio Kato

Bilibili: Secondary Listing in HK Offers a Good Alternative to Kuaishou

Bilibili’s HK listing offers an alternative to Kuaishou which is currently trading at exorbitant multiples. Both companies have strong desire to...

Shifara Samsudeen, ACMA, CGMA

Zhihu IPO Valuation Analysis

In the first few days of trading post IPO, we expect Zhihu's market cap to be trading in the mid-to-high end of our valuation analysis ($12 to...

Douglas Kim

Bilibili: Diversified Revenue Streams and Impressive Top Line Growth Justify Current Multiples

we believe Bilibili should be considered as a comprehensive internet stock rather than a streaming platform given its growing exposure into other...

Shifara Samsudeen, ACMA, CGMA

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