Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Thematic (Sector/Industry)

<ul>
<li>Our analysis of China retail sales data for 1Q21 shows online retail spending growth has been big.  If I am looking for an entry point, I would look to take a long position now before the earnings rather than after.   </li>
<li>Online sales growth was strongest for apparel, food, then general merchandise and electronics. </li>
<li>Vipshop (apparel) and PDD (food) should be big winners.   </li>
<li>but Alibaba's 54% revenue growth and JD's 34% is not to be brushed aside.  </li>
<li>Find out why I would still prefer to own Alibaba and JD.com over VIPS and PDD. </li>
<li>More details on China retail sales data breakdown, 1Q21 earnings expectations and valuations comparisons provided in this report. </li>
</ul>


Our analysis of China retail sales data for 1Q21 shows online retail spending growth has been big.  If I am looking for an entry point, I would look to take a long position now before the earnings rather than after.   
Online sales growth was strongest for apparel, food, then general merchandise and electronics. 
Vipshop (apparel) and PDD (food) should be big winners.   
but Alibaba's 54% revenue growth and JD's 34% is not to be brushed aside.  
Find out why I would still prefer to own Alibaba and JD.com over VIPS and PDD. 
More details on China retail sales data breakdown, 1Q21 earnings expectations and valuations comparisons provided in this report. 


China E-Commerce: Robust Consumption Data Hints at Online Spending Spree

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul class="">
<li>The State Administration for Market Regulation (SAMR) began to investigate Meituan.</li>
<li>We believe Meituan must be fined after the investigation.</li>
<li>We also believe Alibaba’s Ele.me will benefit from the investigation and may possibly change its disadvantageous situation.</li>
<li>We set the downside for Meituan between 21% and 23%.</li>
</ul>


The State Administration for Market Regulation (SAMR) began to investigate Meituan.
We believe Meituan must be fined after the investigation.
We also believe Alibaba’s Ele.me will benefit from the investigation and may possibly change its disadvantageous situation.
We set the downside for Meituan between 21% and 23%.


Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba

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.

<p>We had many concerns regarding <a href="https://www.smartkarma.com/entities/gome-retail-holdings-ltd" target="_blank" data-smartkarma-citation="entities:170:1" rel="noopener">Gome Electrical Appliances (493 HK)</a>, of which the most pressing issue was that we thought the company would struggle to refinance the RMB 17.9 billion falling due in the immediate future.</p><p>GOME Retail faced a mixed situation since we last wrote about the company in November 2020. The shares rallied 156% following the successful refinancing of over RMB 4.0bn corporate bonds. After peaking at HK$ 2.38 per share in February 2021, GOME’s share price went down by 45% following a profit warning on 26<sup>th</sup> February 2021 and a seasoned equity offering in March 2021.</p><p>GOME’s immediate liquidity issues are almost entirely solved. However, the company is yet to showcase any improvement in financial performance for us to be confident about the company’s medium-long term financial stability. Therefore, we think GOME is overvalued at 1.3x P/B, compared to the 2014-20 median of 0.9x.</p>

We had many concerns regarding Gome Electrical Appliances (493 HK), of which the most pressing issue was that we thought the company would struggle to refinance the RMB 17.9 billion falling due in the immediate future.GOME Retail faced a mixed situation since we last wrote about the company in November 2020. The shares rallied 156% following the successful refinancing of over RMB 4.0bn corporate bonds. After peaking at HK$ 2.38 per share in February 2021, GOME’s share price went down by 45% following a profit warning on 26th February 2021 and a seasoned equity offering in March 2021.GOME’s immediate liquidity issues are almost entirely solved. However, the company is yet to showcase any improvement in financial performance for us to be confident about the company’s medium-long term financial stability. Therefore, we think GOME is overvalued at 1.3x P/B, compared to the 2014-20 median of 0.9x.

GOME Retail: No More Going Concern Issues

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a>, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. <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> owned 22.1% and <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> owned 5.7% of the company prior to its listing.</p></div><div><p>In our previous note, <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-positives-fast-growth-strong-backers" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers</a>, we spoke about the positive aspects of the deal. </p></div><div><p>In this note, we will talk about the not so flattering aspects</p></div>

Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.In our previous note, Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers, we spoke about the positive aspects of the deal. In this note, we will talk about the not so flattering aspects

Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation

APAC IPOs & Placements

Zhen Zhou, Toh

<div><p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> is looking to raise US$4bn in its upcoming Hong Kong IPO. </p></div><div>
<p>JD Logistics (JDL) was the leading supply chain solutions and logistics services provider in China in terms of revenue in 2018 and 2019. The company offers a full spectrum of supply chain solutions and logistics services ranging from warehousing to distribution, spanning across manufacturing to end-customers, covering regular and specialized items. </p>
<p>In this note, we take a look at the industry dynamics and how JD Logistics competes against peers.</p>
</div>

JD Logistics (JDL HK) is looking to raise US$4bn in its upcoming Hong Kong IPO. 
JD Logistics (JDL) was the leading supply chain solutions and logistics services provider in China in terms of revenue in 2018 and 2019. The company offers a full spectrum of supply chain solutions and logistics services ranging from warehousing to distribution, spanning across manufacturing to end-customers, covering regular and specialized items. 
In this note, we take a look at the industry dynamics and how JD Logistics competes against peers.


JD Logistics (京东物流) Pre-IPO - Peer Comparison - Shielded from Price War

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com Inc (ADR) (JD US)

China E-Commerce: Robust Consumption Data Hints at Online Spending Spree

China retail sales data hints at a big online spending quarter. Vipshop and PDD are expected to be big winners, but find out why you should jump...

Mitchell Kim

Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba

State Administration for Market Regulation (SAMR) began to investigate Meituan. We believe penalty must follow. We also believe Alibaba’s Ele.me...

Ming Lu

GOME Retail: No More Going Concern Issues

GOME’s immediate liquidity issues are almost entirely solved. However, the company is yet to showcase any improvement in financial performance for...

Oshadhi Kumarasiri

Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation

Waterdrop, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent owned 22.1%...

Sumeet Singh

JD Logistics (京东物流) Pre-IPO - Peer Comparison - Shielded from Price War

JD Logistics (JDL HK) is looking to raise US$4bn in its upcoming Hong Kong IPO. JD Logistics (JDL) was the leading supply chain solutions and...

Zhen Zhou, Toh

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