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><p>Kakao Bank (KB), South Korea’s largest digital bank, raised US$2.2bn in its South Korean IPO. It ended the first day of trading up 79% from its IPO price. </p></div><div>We have covered various aspects of the deal in our previous notes:</div><div><ul>
<li>
<a href="https://www.smartkarma.com/insights/kakao-bank-ipo-riding-on-parent-s-network-but-boundaries-with-kakao-pay-remain-unclear" target="_blank" rel="noopener">Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear</a>, </li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-pricey-as-it-should-be" target="_blank" rel="noopener">Kakao Bank IPO - Pricey as It Should Be</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-lack-of-lock-up-and-msci-ftse-index-implications" target="_blank" rel="noopener">Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-trading-one-for-instis-closer-look-at-ftse-and-msci-inclusion-remain-buyers" target="_blank" rel="noopener">Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers</a></li>
</ul></div><div><p>In this note, we will talk about the first day trading and index inclusion.</p></div>

Kakao Bank (KB), South Korea’s largest digital bank, raised US$2.2bn in its South Korean IPO. It ended the first day of trading up 79% from its IPO price. We have covered various aspects of the deal in our previous notes:

Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear, 
Kakao Bank IPO - Pricey as It Should Be
Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and
Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers
In this note, we will talk about the first day trading and index inclusion.

Kakao Bank - MSCI Done, Missed FTSE by a Whisker.

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*Competitor Sees 73% Upside: </em></strong> A bulge bracket competitor recently published a table pounding note on the shares of Tencent Holdings (700.HK) [Tencent], which states that the shares are undervalued to the tune of 73%; and  </p><p><strong><em>*We Beg To Differ:</em></strong> Mainland China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". We have witnessed fines at Tencent, new user WeChat suspensions. Tencent may have to give up its exclusive music rights and possibly dispose of Kuwo and Kugou, and likely form of a financial holding company. The big table pounding report and a massive need for equity; this has all of the markings of the usual near-term gigantic capital raise.      </p>

*Competitor Sees 73% Upside:  A bulge bracket competitor recently published a table pounding note on the shares of Tencent Holdings (700.HK) [Tencent], which states that the shares are undervalued to the tune of 73%; and  *We Beg To Differ: Mainland China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". We have witnessed fines at Tencent, new user WeChat suspensions. Tencent may have to give up its exclusive music rights and possibly dispose of Kuwo and Kugou, and likely form of a financial holding company. The big table pounding report and a massive need for equity; this has all of the markings of the usual near-term gigantic capital raise.      

APAC IPOs & Placements

Zhen Zhou, Toh

Equity Capital Markets

Bukalapak.com PT Tbk / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a> raised US$1.5bn at IDR850 per share, the top end of its IPO price range.</p>
</div>
<div>
<p>Bukalapak (BUKA) is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace that connects buyers and sellers. The company also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to micro, small and medium enterprises (MSMEs).</p>
<p>We covered the IPO earlier in:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/bukalapak-ipo-structural-tailwinds-with-a-noble-cause" target="_blank" data-smartkarma-citation="insights:54284" rel="noopener">Bukalapak IPO - Structural Tailwinds with a Noble Cause</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/bukalapak-ipo-peers-valuation-betting-on-its-potential" target="_blank" data-smartkarma-citation="insights:54369" rel="noopener">Bukalapak IPO - Peers &amp; Valuation - Betting on Its Potential</a> </li>
</ul>
</div>


Bukalapak (BUKA IJ) raised US$1.5bn at IDR850 per share, the top end of its IPO price range.


Bukalapak (BUKA) is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace that connects buyers and sellers. The company also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to micro, small and medium enterprises (MSMEs).
We covered the IPO earlier in:


Bukalapak IPO - Structural Tailwinds with a Noble Cause 

Bukalapak IPO - Peers &amp; Valuation - Betting on Its Potential 



Bukalapak IPO Trading - Largest Indo IPO, Big Pop Could Get It into FTSE

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.

Alibaba Group Holding  / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> shares dropped 1.35% yesterday despite an OP beat of 17.6% as 1QFY22 wasn’t the blowout results that were needed to overturn Alibaba’s recent weaknesses due to regulatory crackdowns focusing on the Chinese tech sector.</p>

Alibaba Group (9988 HK) shares dropped 1.35% yesterday despite an OP beat of 17.6% as 1QFY22 wasn’t the blowout results that were needed to overturn Alibaba’s recent weaknesses due to regulatory crackdowns focusing on the Chinese tech sector.

Core-Commerce Grows at The Expense of Margins, Cloud Profitability Goes Down the Drain

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

<p><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> reported underwhelming June quarter results (FY22Q1), even if we account for the unfavorable comps against the COVID boosted June 2020 quarter.  With the regulatory share overhang continuing to linger, is this the right time to press the stop-loss button? </p><p>Four reasons why I am staying constructive: </p><ol>
<li>
<strong>Downside support with cheap valuations:</strong> BABA trades at 16.5x FY23 consensus earnings on 23% earnings growth in FY23 (consensus estimates are likely to decline).  (Figure 1) The stock's operating profit grew 25% per year for the last two fiscal years (despite the flat operating profit growth in FY21) (Figure 2.)</li>
<li>
<strong>Revenue growth was soft but for a good reason.</strong> Revenue growth in the June quarter looked weak because of the unfavorable comparison to the COVID boosted quarter and because BABA is in a transitional stage.  From 2014 to late 2015, BABA's share price fell close to 40%, only to fully recover in the following 12 months as revenue growth accelerated from new ad load and increase in customer demand.  (See Figure 3.)  In my view, short-term investors will miss out on the upside once the new revenue engines rev up.  </li>
<li>
<strong>Earnings margins were compressed due to investments in growth but the core earnings remain strong.</strong> Earnings growth fell because of the company's investments in strategic businesses.  While these investments still recorded losses, they generated 48% of the company's revenue growth.  Profits will follow, but not in 2021. Keep in mind that the Marketplace EBITA margin has rebounded to 73% from 70% in the March quarter. </li>
</ol>

Alibaba Group (BABA US) reported underwhelming June quarter results (FY22Q1), even if we account for the unfavorable comps against the COVID boosted June 2020 quarter.  With the regulatory share overhang continuing to linger, is this the right time to press the stop-loss button? Four reasons why I am staying constructive: 

Downside support with cheap valuations: BABA trades at 16.5x FY23 consensus earnings on 23% earnings growth in FY23 (consensus estimates are likely to decline).  (Figure 1) The stock's operating profit grew 25% per year for the last two fiscal years (despite the flat operating profit growth in FY21) (Figure 2.)

Revenue growth was soft but for a good reason. Revenue growth in the June quarter looked weak because of the unfavorable comparison to the COVID boosted quarter and because BABA is in a transitional stage.  From 2014 to late 2015, BABA's share price fell close to 40%, only to fully recover in the following 12 months as revenue growth accelerated from new ad load and increase in customer demand.  (See Figure 3.)  In my view, short-term investors will miss out on the upside once the new revenue engines rev up.  

Earnings margins were compressed due to investments in growth but the core earnings remain strong. Earnings growth fell because of the company's investments in strategic businesses.  While these investments still recorded losses, they generated 48% of the company's revenue growth.  Profits will follow, but not in 2021. Keep in mind that the Marketplace EBITA margin has rebounded to 73% from 70% in the March quarter. 


Alibaba (BABA US): Why I Remain Constructive

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba Group Holding (BABA US)

Kakao Bank - MSCI Done, Missed FTSE by a Whisker.

Kakao Bank (KB), South Korea’s largest digital bank, raised US$2.2bn in its South Korean IPO. It ended the first day of trading up 79% from its IPO...

Sumeet Singh

Tencent Holdings - Bulge Bracket Bull

TENCENT HOLDINGS: A competitor recently suggested the shares of Tencent have 73% upside. We beg to differ, further pain in these shares is expected...

Thomas J. Monaco

Bukalapak IPO Trading - Largest Indo IPO, Big Pop Could Get It into FTSE

Bukalapak (BUKA IJ) raised US$1.5bn at IDR850 per share, the top end of its IPO price range. Bukalapak (BUKA) is an Indonesian e-commerce company.

Zhen Zhou, Toh

Core-Commerce Grows at The Expense of Margins, Cloud Profitability Goes Down the Drain

Alibaba shares dropped 1.35% yesterday despite an OP beat of 17.6% as 1QFY22 wasn’t the blowout results that were needed to overturn Alibaba’s...

Oshadhi Kumarasiri

Alibaba (BABA US): Why I Remain Constructive

Baba reported underwhelming results, but I offer three reasons to remain constructive: cheap valuation, solid revenue growth, strong core...

Mitchell Kim

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