Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

In this month’s "In-Focus" section, we provide an update on the liquidation regime for Chinese companies, including the current status of recent bond defaults. The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus" section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.

  In this month’s "In-Focus" section, we provide an update on the liquidation regime for Chinese companies, including the current status of recent bond defaults.   The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus" section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. 

Asia HY Monthly - Chinese Company Liquidation Regime Revisited - Lucror Analytics

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.

Event-Driven

<div>
<a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a>, the world’s largest mobility technology platform, raised around US$4.4bn in its US listing. It is backed by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, along with other investors.
While the company has been at the receiving end of regulatory oversight before, the announcements over the past few days have come at unusual velocity. In this note, we will talk about the recent updates.
</div><div>We have covered the deal background and financials overview in our previous notes<a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-one-of-asia-s-largest-ipos-this-year-tearsheet" target="_blank" rel="noopener"></a>:</div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-one-of-asia-s-largest-ipos-this-year-tearsheet" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet</a>.</li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-has-a-principal-agent-problem-rumoured-target-valuation-is-a-stretch" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-pre-ipo-competitive-in-car-hailing-uncompetitive-in-others-generally-valuable" target="_blank" rel="noopener">DIDI (滴滴) Pre-IPO: Competitive in Car Hailing, Uncompetitive In “Others”, Generally Valuable</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-peer-comparison" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Peer Comparison</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-valuation" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-bull-case-index-inclusion-uber-exit" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Bull Case, Index Inclusion, Uber Exit</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-ipo-at-fair-value-with-partial-lock-up-and-index-inclusion-pulling-it-either-way" target="_blank" rel="noopener">DiDi Chuxing IPO - At Fair Value, with Partial Lock-Up and Index Inclusion Pulling It Either Way</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-ipo-trading-upsize-will-ensures-index-inclusion-lock-up-remains-a-wildcard" target="_blank" rel="noopener">DiDi Chuxing IPO Trading - Upsize Will Ensures Index Inclusion, Lock-Up Remains a Wildcard</a></li>
</ul></div>


DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, raised around US$4.4bn in its US listing. It is backed by Softbank Group (9984 JP) and Tencent (700 HK), along with other investors.
While the company has been at the receiving end of regulatory oversight before, the announcements over the past few days have come at unusual velocity. In this note, we will talk about the recent updates.
We have covered the deal background and financials overview in our previous notes:

DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet.
DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch
DIDI (滴滴) Pre-IPO: Competitive in Car Hailing, Uncompetitive In “Others”, Generally Valuable
DiDi Chuxing Pre-IPO - Peer Comparison
DiDi Chuxing Pre-IPO - Valuation
DiDi Chuxing Pre-IPO - Bull Case, Index Inclusion, Uber Exit
DiDi Chuxing IPO - At Fair Value, with Partial Lock-Up and Index Inclusion Pulling It Either Way
DiDi Chuxing IPO Trading - Upsize Will Ensures Index Inclusion, Lock-Up Remains a Wildcard


Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>  shares are down 5% on news that the Cyberspace Admin of China has ordered app stores to pull <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> 's mobile app. The intra-day ~¥365/share decline seems overdone as Didi’s total value to SBG shareholders is c. ¥470 yen but this is Vision Fund's largest single investment and any hopes that it would build on the upside from <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , <a href="https://www.smartkarma.com/entities/doordash-inc" target="_blank" data-smartkarma-citation="entities:28881:1" rel="noopener">DoorDash Inc (DASH US)</a> and <a href="https://www.smartkarma.com/entities/ke-holdings-inc" target="_blank" data-smartkarma-citation="entities:29213:1" rel="noopener">KE Holdings Inc (BEKE US)</a> have been sidelined. Plus, the company's target to list 20+ companies this year seems less impressive if this is the kind of performance that will result.

Softbank Group (9984 JP)  shares are down 5% on news that the Cyberspace Admin of China has ordered app stores to pull DiDi Chuxing (DIDI US) 's mobile app. The intra-day ~¥365/share decline seems overdone as Didi’s total value to SBG shareholders is c. ¥470 yen but this is Vision Fund's largest single investment and any hopes that it would build on the upside from Coupang (CPNG US) , DoorDash Inc (DASH US) and KE Holdings Inc (BEKE US) have been sidelined. Plus, the company's target to list 20+ companies this year seems less impressive if this is the kind of performance that will result. 

Softbank Group and Didi Chuxing - Regulatory Pressure on the Rise

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> - China's largest ride-hailing app/service which is backed by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> launched, then upsized, a mega-IPO to raise US$4.4bn. It was MUCH discussed on Smartkarma pre-IPO. Shares rose 1% on the IPO, rose 16% on Day 2, then fell 5% on Day 3 as the Cyberspace Administration of China <a href="http://www.cac.gov.cn/2021-07/02/c_1626811521011934.htm" target="_blank" rel="noopener">announced</a> (<a href="http://www.cac.gov.cn/2021-07/02/c_1626811521011934.htm" target="_blank" rel="noopener">http://www.cac.gov.cn/2021-07/02/c_1626811521011934.htm</a>) a cyber security review of the Didi Travel app. Didi said they would cooperate with regulators. But there was a background to this.On 11 June, the Cyberspace Administration of China <a href="http://www.cac.gov.cn/2021-06/11/c_1624994586637626.htm" target="_blank" rel="noopener">announced</a> (<a href="http://www.cac.gov.cn/2021-06/11/c_1624994586637626.htm" target="_blank" rel="noopener">http://www.cac.gov.cn/2021-06/11/c_1624994586637626.htm</a>) that 129 apps were being investigated for illegal collection and use of personal information. The investigation was noted in the IPO documents and Didi said then that they were working with regulators. Less well noted in public commentary because the list was long and the "work requirement" was all the way at the bottom of the page was that "the relevant App operator[s] shall complete the rectification within 15 working days from the date of this announcement, and send the rectification report with an official seal to" such-and-such an email address, and "If the rectification is not completed within the time limit, our office will deal with it in accordance with the law."Friday 2 July was the 15th working day. Today, the Cyberspace Administration of China took it one step further, <a href="http://www.cac.gov.cn/2021-07/04/c_1627016782176163.htm" target="_blank" rel="noopener">announcing</a> (<a href="http://www.cac.gov.cn/2021-07/04/c_1627016782176163.htm" target="_blank" rel="noopener">http://www.cac.gov.cn/2021-07/04/c_1627016782176163.htm</a>) it was instructing all platforms to remove the app from distribution. The stock was down 11% on Friday at one point before closing -5%. Monday is a holiday on the NYSE but a lot of attention will be paid to this news. Didi now has pride of place at the top of the league table for Who Has The Most Mentions On The Front Page of Regulator Websites.That's not necessarily a good thing for the stock. A brief review follows.

DiDi Chuxing (DIDI US) - China's largest ride-hailing app/service which is backed by Softbank Group (9984 JP) and Tencent (700 HK) launched, then upsized, a mega-IPO to raise US$4.4bn. It was MUCH discussed on Smartkarma pre-IPO. Shares rose 1% on the IPO, rose 16% on Day 2, then fell 5% on Day 3 as the Cyberspace Administration of China announced (http://www.cac.gov.cn/2021-07/02/c_1626811521011934.htm) a cyber security review of the Didi Travel app. Didi said they would cooperate with regulators. But there was a background to this.On 11 June, the Cyberspace Administration of China announced (http://www.cac.gov.cn/2021-06/11/c_1624994586637626.htm) that 129 apps were being investigated for illegal collection and use of personal information. The investigation was noted in the IPO documents and Didi said then that they were working with regulators. Less well noted in public commentary because the list was long and the "work requirement" was all the way at the bottom of the page was that "the relevant App operator[s] shall complete the rectification within 15 working days from the date of this announcement, and send the rectification report with an official seal to" such-and-such an email address, and "If the rectification is not completed within the time limit, our office will deal with it in accordance with the law."Friday 2 July was the 15th working day. Today, the Cyberspace Administration of China took it one step further, announcing (http://www.cac.gov.cn/2021-07/04/c_1627016782176163.htm) it was instructing all platforms to remove the app from distribution. The stock was down 11% on Friday at one point before closing -5%. Monday is a holiday on the NYSE but a lot of attention will be paid to this news. Didi now has pride of place at the top of the league table for Who Has The Most Mentions On The Front Page of Regulator Websites.That's not necessarily a good thing for the stock. A brief review follows.

Didi Chuxing - Slammed by Regulators, Again. A Review of the Regulatory Timeline

Softbank will be able to report a positive Q1 contribution from public companies in the Vision Fund portfolio thanks to five new listings and some amazing quarter-end moves for Dingdong Maicai, Full Truck Alliance and Coupang. All in, we estimate public VF companies ended the quarter up $1.1bn after mid-quarter losses that had been as high as $12bn. New listings were a big help surfacing almost $6bn in value, enough to offset c. $5bn in valuation losses for the existing portfolio. It is worth noting that the underlying value of Softbank shares is at all-time highs as VF liquidity offsets recent Alibaba weakness. That is less apparent in the share price as the discount has expanded to 45% from &lt;30% when the company announced its full-year results in May.

Softbank will be able to report a positive Q1 contribution from public companies in the Vision Fund portfolio thanks to five new listings and some amazing quarter-end moves for Dingdong Maicai, Full Truck Alliance and Coupang. All in, we estimate public VF companies ended the quarter up $1.1bn after mid-quarter losses that had been as high as $12bn. New listings were a big help surfacing almost $6bn in value, enough to offset c. $5bn in valuation losses for the existing portfolio. It is worth noting that the underlying value of Softbank shares is at all-time highs as VF liquidity offsets recent Alibaba weakness. That is less apparent in the share price as the discount has expanded to 45% from &lt;30% when the company announced its full-year results in May.

Softbank Group - Vision Fund’s Public Companies on Wild Ride to End Quarter in the Black

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (9984 JP)

Asia HY Monthly - Chinese Company Liquidation Regime Revisited - Lucror Analytics

In this month’s "In-Focus" section, we provide an update on the liquidation regime for Chinese companies, including the current status of recent...

Lucror Analytics

DiDi Chuxing - Double Regulatory Whammy

DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, raised around US$4.4bn in its US listing. The company has been at the...

Sumeet Singh

Softbank Group and Didi Chuxing - Regulatory Pressure on the Rise

Softbank is down 5% and the holdco discount is over 45% on Didi weakness. We think our forecasts cover regulatory pressure but the VF IPO flywheel...

Kirk Boodry

Didi Chuxing - Slammed by Regulators, Again. A Review of the Regulatory Timeline

Didi is slammed by regulators. Again. March, then April, then June by the CAC, then June by SAMR, then Friday by CAC, now Sunday. A message is...

Travis Lundy

Softbank Group - Vision Fund’s Public Companies on Wild Ride to End Quarter in the Black

Vision Fund's portfolio moved into the black for Q1 thanks to IPOs and some amazing qtr-end moves by a few VF stocks. Report includes updated...

Kirk Boodry

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