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 Capital Markets

The Chinese ride hailing giant <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>  has priced its IPO at US$14 per ADS, at the upper end of the IPO price range of US$13-14 per ADS. Didi will raise approx. US$4.0bn at the above price of US$14 per ADS at a market capitalisation of US$67.0bn and a post-money enterprise value of US$56.0bn. According to Reuters and Bloomberg, Didi has upsized its deal to 317m ADSs from the original plan of selling 288m ADSs which would raise approx. US$4.4bn.In our previous insights on the company's IPO, we examined Didi’s business model, financials, outlook and valuation. We have also discussed in detail the ongoing Chinese regulatory probe on Didi and how it could impact its IPO and valuation.

The Chinese ride hailing giant DiDi Chuxing (DIDI US)  has priced its IPO at US$14 per ADS, at the upper end of the IPO price range of US$13-14 per ADS. Didi will raise approx. US$4.0bn at the above price of US$14 per ADS at a market capitalisation of US$67.0bn and a post-money enterprise value of US$56.0bn. According to Reuters and Bloomberg, Didi has upsized its deal to 317m ADSs from the original plan of selling 288m ADSs which would raise approx. US$4.4bn.In our previous insights on the company's IPO, we examined Didi’s business model, financials, outlook and valuation. We have also discussed in detail the ongoing Chinese regulatory probe on Didi and how it could impact its IPO and valuation.

Didi Chuxing IPO: Thoughts on First Day Trading

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/sumo-logic-inc" target="_blank" data-smartkarma-citation="entities:29265:1" rel="noopener">Sumo Logic Inc (SUMO US)</a> , the pioneer in new category of software Continuous Intelligence, has announced strong 1Q FY22 financial results and the business continued to recover from COVID-19 pandemic. Sumo Logic shares are still down ~26% YTD while Nasdaq Composite index hit fresh all-time highs. Company made two key strategic acquisitions after IPO: Italian corporation and leader in SOAR capabilities DFLabs and leading VC-backed player in open-source monitoring Sensu, Inc. We see modest revenue growth of ~16% in FY22/FY21 and model revenue of $284M in FY23, translating to YoY revenue growth of 21%.

Sumo Logic Inc (SUMO US) , the pioneer in new category of software Continuous Intelligence, has announced strong 1Q FY22 financial results and the business continued to recover from COVID-19 pandemic. Sumo Logic shares are still down ~26% YTD while Nasdaq Composite index hit fresh all-time highs. Company made two key strategic acquisitions after IPO: Italian corporation and leader in SOAR capabilities DFLabs and leading VC-backed player in open-source monitoring Sensu, Inc. We see modest revenue growth of ~16% in FY22/FY21 and model revenue of $284M in FY23, translating to YoY revenue growth of 21%.   

Sumo Logic: Getting Back On Track, Growth Ahead

Alpha-Centric ESG Research

Kyle Rudden

This is a pre-IPO ESG assessment of <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 leading ride-hailing platform. DiDi is set to finalise its US$4 billion IPO at an implied valuation of US$65 billion – the largest IPO of a Chinese issuer on a U.S. exchange since Alibaba's (BABA US) US$25 billion IPO in 2014.Impressive, except for one minor nuance. That US$65 billion is less than DiDi's earlier expectations of US$100 million, despite strong interest. Economic factors (e.g., growth rates, profitability) had a lot to do with the lower valuation. Regulatory risk and uncertainty probably factored in as well.Therein lies the quandary of this ESG analysis. Regulatory risk and uncertainty.DiDi is committed to corporate social responsibility, and its ESG performance is strong (though not perfect) in critical areas under its control. DiDi is reducing emissions, improving safety, rooting out corruption, and is lightyears ahead of its peers on gender equality and empowerment of women.DiDi is doing all the right things, where it has some semblance of direct control.But then, there's that quandary. DiDi's ESG achievements are overshadowed by regulatory risks and uncertainty, all beyond DiDi's control. Nearly concerning enough to justify a bearish imperative but the "control" issue – proactive ESG positives, versus passive ESG negatives – ultimately won out.

This is a pre-IPO ESG assessment of DiDi Chuxing (DIDI US), China's leading ride-hailing platform. DiDi is set to finalise its US$4 billion IPO at an implied valuation of US$65 billion – the largest IPO of a Chinese issuer on a U.S. exchange since Alibaba's (BABA US) US$25 billion IPO in 2014.Impressive, except for one minor nuance. That US$65 billion is less than DiDi's earlier expectations of US$100 million, despite strong interest. Economic factors (e.g., growth rates, profitability) had a lot to do with the lower valuation. Regulatory risk and uncertainty probably factored in as well.Therein lies the quandary of this ESG analysis. Regulatory risk and uncertainty.DiDi is committed to corporate social responsibility, and its ESG performance is strong (though not perfect) in critical areas under its control. DiDi is reducing emissions, improving safety, rooting out corruption, and is lightyears ahead of its peers on gender equality and empowerment of women.DiDi is doing all the right things, where it has some semblance of direct control.But then, there's that quandary. DiDi's ESG achievements are overshadowed by regulatory risks and uncertainty, all beyond DiDi's control. Nearly concerning enough to justify a bearish imperative but the "control" issue – proactive ESG positives, versus passive ESG negatives – ultimately won out.

Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
Our base case valuation of <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> is implied market cap of $99 billion or target price of $20.4 per share. This represents a 46% upside to the high end of the IPO price range of $14 per share. Given the excellent upside, we continue to maintain a positive view of Didi Chuxing. 
At the high end of the IPO price range of <a href="https://www.scmp.com/business/article/3138683/chinese-ride-hailing-giant-didi-chuxing-plans-raise-us4-billion-us-ipo" target="_blank" rel="noopener">$14 per share,</a> the company would be valued at $67 billion, which is 8% higher than its last private market fundraising valuation of $62 billion in 2019.
The fact that Didi Chuxing is getting priced at much lower levels than what the company was contemplating in early 2021 also suggests increasing investors' concerns about the Chinese government's potential anti-trust related crackdown combined with weaker IPO environment globally in 2021 versus 2020. 
</div>


Our base case valuation of DiDi Chuxing (DIDI US) is implied market cap of $99 billion or target price of $20.4 per share. This represents a 46% upside to the high end of the IPO price range of $14 per share. Given the excellent upside, we continue to maintain a positive view of Didi Chuxing. 
At the high end of the IPO price range of $14 per share, the company would be valued at $67 billion, which is 8% higher than its last private market fundraising valuation of $62 billion in 2019.
The fact that Didi Chuxing is getting priced at much lower levels than what the company was contemplating in early 2021 also suggests increasing investors' concerns about the Chinese government's potential anti-trust related crackdown combined with weaker IPO environment globally in 2021 versus 2020. 


<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 Chinese mobility technology platform has announced the indicative price range for its US IPO. Didi plans to issue 288m ADSs at an indicative price range of US$13-14 per ADS. Each ordinary share of Didi represents four ADSs, and at the midpoint of the indicative IPO price range of US$13.5 per ADS, the company will raise US$3.8bn at a market capitalisation of US$64.5bn (excluding over-allotment) and a post-money enterprise value of US$53.4bn.<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 183.0pt;">Didi IPO Details</td></tr>
<tr>
<td style="width: 133.0pt;">No. of ADS Issued (m)</td>
<td style="width: 50.0pt;">288</td>
</tr>
<tr>
<td style="width: 133.0pt;">IPO Price per ADS (US$)</td>
<td style="width: 50.0pt;">13-14</td>
</tr>
<tr>
<td style="width: 133.0pt;">No. of ADS per Share</td>
<td style="width: 50.0pt;">4</td>
</tr>
<tr>
<td style="width: 133.0pt;">Offer as a % of Outstanding Shares</td>
<td style="width: 50.0pt;">6.01%</td>
</tr>
<tr>
<td style="width: 133.0pt;">Total Shares Outstanding (m)</td>
<td style="width: 50.0pt;">               1,199</td>
</tr>
<tr>
<td style="width: 133.0pt;">Net Proceeds (US$m)</td>
<td style="width: 50.0pt;">               3,795</td>
</tr>
<tr>
<td style="width: 133.0pt;">Market Capitalisation (US$m)</td>
<td style="width: 50.0pt;">64,726</td>
</tr>
<tr>
<td style="width: 133.0pt;">Enterprise Value (US$m)</td>
<td style="width: 50.0pt;">            53,377</td>
</tr>
</tbody></table>Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the indicative IPO price range)Some of Didi’s existing and new investors have expressed their interest in subscribing for an aggregate of US$1.25bn worth of ADSs offered at the IPO, representing approx. 32.2% of the gross IPO proceeds at the midpoint of the indicative IPO price range. These investors include Morgan Stanley Investment Management (US$750m) and an indirect wholly-owned subsidiary of Temasek Holdings (US$500m).Didi plans to use approx. 30% of the net IPO proceeds on enhancing its technological capabilities including shared mobility, EVs and autonomous technologies, another 30% of the proceeds on expanding into selected international markets (outside of China), approx. 20% on launching new products and expand its existing offerings and the remainder will be spent on working capital and general corporate purposes.

DiDi Chuxing (DIDI US) , the Chinese mobility technology platform has announced the indicative price range for its US IPO. Didi plans to issue 288m ADSs at an indicative price range of US$13-14 per ADS. Each ordinary share of Didi represents four ADSs, and at the midpoint of the indicative IPO price range of US$13.5 per ADS, the company will raise US$3.8bn at a market capitalisation of US$64.5bn (excluding over-allotment) and a post-money enterprise value of US$53.4bn.
Didi IPO Details

No. of ADS Issued (m)
288


IPO Price per ADS (US$)
13-14


No. of ADS per Share
4


Offer as a % of Outstanding Shares
6.01%


Total Shares Outstanding (m)
               1,199


Net Proceeds (US$m)
               3,795


Market Capitalisation (US$m)
64,726


Enterprise Value (US$m)
            53,377

Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the indicative IPO price range)Some of Didi’s existing and new investors have expressed their interest in subscribing for an aggregate of US$1.25bn worth of ADSs offered at the IPO, representing approx. 32.2% of the gross IPO proceeds at the midpoint of the indicative IPO price range. These investors include Morgan Stanley Investment Management (US$750m) and an indirect wholly-owned subsidiary of Temasek Holdings (US$500m).Didi plans to use approx. 30% of the net IPO proceeds on enhancing its technological capabilities including shared mobility, EVs and autonomous technologies, another 30% of the proceeds on expanding into selected international markets (outside of China), approx. 20% on launching new products and expand its existing offerings and the remainder will be spent on working capital and general corporate purposes.

Didi IPO: Forecasts, Peer Comparison and Valuation

United States

Uber Technologies Inc provides ride hailing services. The Company develops applications for road transportation, navigation, ride sharing, and payment processing solutions. Uber Technologies serves customers worldwide.

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Uber Technologies (UBER US)

Didi Chuxing IPO: Thoughts on First Day Trading

The attractive IPO pricing and oversubscription by multiple times suggest that Didi’s shares are set for a strong open at its debut. Investors who...

Shifara Samsudeen, ACMA, CGMA

Sumo Logic: Getting Back On Track, Growth Ahead

We reaffirm our 12-month price target of $30 on the shares of Sumo Logic and see further upside potential, driven by accelerated rate of new...

Andrei Zakharov

Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty

DiDi boasts positive ESG achievements in areas under its control, but there's a big ESG issue beyond its control – regulatory risk. But, proactive...

Kyle Rudden

Didi Chuxing IPO Valuation Analysis

Our base case valuation of DiDi Chuxing is implied market cap of $99 billion or target price of $20.4 per share. This represents a 46% upside to...

Douglas Kim

Didi IPO: Forecasts, Peer Comparison and Valuation

Didi’s IPO is fairly valued at the indicative IPO price range compared to its peers Uber, Lyft and Grab who are trading at higher EV/Revenue...

Shifara Samsudeen, ACMA, CGMA

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