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>
<li>Hellobike, an Alibaba’s investee and traffic source, will go public in 2Q21.</li>
<li>NetEase’s Cloud Music is seeking IPO next year.</li>
<li>The authorities said Tencent and Baidu were fined not because they eliminate competition, but because they forgot to ask for approval.</li>
<li>Tencent invests in Rakuten.</li>
</ul>


Hellobike, an Alibaba’s investee and traffic source, will go public in 2Q21.
NetEase’s Cloud Music is seeking IPO next year.
The authorities said Tencent and Baidu were fined not because they eliminate competition, but because they forgot to ask for approval.
Tencent invests in Rakuten.


China Internet Weekly (Mar 15): BABA & NTES Subsidiaries Seek IPO, Tencent Invests in Rakuten

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<div><p>Bairong, an independent AI-powered technology platform in China serving the financial services industry, plans to raise around US$300m in its Hong Kong IPO. According to F&amp;S, it was the largest independent financial big data analytics solutions provider in China by revenue in 2019, with a market share of 8.7%.</p></div><div><p>Over 2017-19, Bairong’s revenue expanded by 3.56x or at 88.8% CAGR. While its data analytics revenue increased by 66% over the period, its precision marketing services revenue grew 22.6x, and insurance distribution grew 54.5x. Over the same time, gross profit grew 3.99x and adjusted EBITDA, PAT and OCF all turned positive during that period.</p></div><div>
<p>I've covered the positive aspects of the deal in my earlier notes, <a href="https://www.smartkarma.com/insights/bairong-pre-ipo-the-positives-largest-independent-big-data-analytics-provider" target="_blank" rel="noopener">Bairong Pre-IPO - The Positives - Largest Independent Big-Data Analytics Provider </a>and <a href="https://www.smartkarma.com/insights/bairong-pre-ipo-the-negatives-playing-with-its-own-data" target="_blank" rel="noopener">Bairong Pre-IPO - The Negatives - Playing with Its Own Data.</a></p>
<p>In this note, we’ll provide our earnings forecast for FY20-22 and talk about valuation.</p>
</div>

Bairong, an independent AI-powered technology platform in China serving the financial services industry, plans to raise around US$300m in its Hong Kong IPO. According to F&amp;S, it was the largest independent financial big data analytics solutions provider in China by revenue in 2019, with a market share of 8.7%.Over 2017-19, Bairong’s revenue expanded by 3.56x or at 88.8% CAGR. While its data analytics revenue increased by 66% over the period, its precision marketing services revenue grew 22.6x, and insurance distribution grew 54.5x. Over the same time, gross profit grew 3.99x and adjusted EBITDA, PAT and OCF all turned positive during that period.
I've covered the positive aspects of the deal in my earlier notes, Bairong Pre-IPO - The Positives - Largest Independent Big-Data Analytics Provider and Bairong Pre-IPO - The Negatives - Playing with Its Own Data.
In this note, we’ll provide our earnings forecast for FY20-22 and talk about valuation.


Bairong Pre-IPO - Earnings Forecast, Peer Comparison and Valuation

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.

<p><a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> launched a $3 billion secondary listing in Hong Kong last Thursday evening. Bookbuilding is scheduled to run until the pricing on 17 March. The secondary listing has received good early demand with the books covered on the first day, according to press reports. The H-shares will begin trading on 23 March. </p><p>In <a href="https://www.smartkarma.com/insights/baidu-secondary-listing-searching-for-the-next-big-thing" target="_blank" data-smartkarma-citation="insights:49043" rel="noopener">Baidu Secondary Listing: Searching for the Next Big Thing</a>, we outlined our views on Baidu’ fundamentals and valuation. Baidu is making great strides in expanding its total addressable market (TAM) through ongoing investments. In combination with the potential valuation upside to the last close price (based on SoTP), we concluded that the equity story is attractive. </p><div class="content-highlight"><p>In this note, we will look at Baidu’s potential HK-ADS premium/(discount). Baidu will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. However, market conditions remain volatile and there remains a possibility of a renewed global equity sell-off. Consequently, Baidu will likely price its H-shares at a wider discount than the median HK-ADS discount of previous secondary listings. Overall, Baidu pricing its H-shares at a discount range of 3% to 4% to its ADSs will be reasonable.</p></div>

Baidu (BIDU US) launched a $3 billion secondary listing in Hong Kong last Thursday evening. Bookbuilding is scheduled to run until the pricing on 17 March. The secondary listing has received good early demand with the books covered on the first day, according to press reports. The H-shares will begin trading on 23 March. In Baidu Secondary Listing: Searching for the Next Big Thing, we outlined our views on Baidu’ fundamentals and valuation. Baidu is making great strides in expanding its total addressable market (TAM) through ongoing investments. In combination with the potential valuation upside to the last close price (based on SoTP), we concluded that the equity story is attractive. In this note, we will look at Baidu’s potential HK-ADS premium/(discount). Baidu will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. However, market conditions remain volatile and there remains a possibility of a renewed global equity sell-off. Consequently, Baidu will likely price its H-shares at a wider discount than the median HK-ADS discount of previous secondary listings. Overall, Baidu pricing its H-shares at a discount range of 3% to 4% to its ADSs will be reasonable.

Baidu Secondary Listing: HK-ADS Premium/​(Discount) Views

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

<p> <strong><em>*Fines: </em></strong>As previously discussed, State Administration for Market Regulations (SAMR) fined China Literature (772.HK), Tencent Holdings’ (700.HK) [Tencent] subsidiary CNY 500,000 for failing to gain certain acquisition or buyout approvals – thereby violating the country’s anti-monopoly laws. The fine was relatively small given the size of the acquisition despite regulators determining that those Tencent’s deals weren’t anti-competitive. Nevertheless, the fine should have served as a wake-up call to halt M&amp;A activity without the requisite regulatory sign off; and  </p><p><strong><em>*Financial Holding Company Structure: </em></strong>According to Bloomberg, Tencent likely will be required to create a financial holding company for all of its banking, insurance, and payment services businesses – and be regulated along the lines of the banking sector. For Tencent, WeChat Pay and the broader lending/deposit taking business are likely to be reined-in. </p>

 *Fines: As previously discussed, State Administration for Market Regulations (SAMR) fined China Literature (772.HK), Tencent Holdings’ (700.HK) [Tencent] subsidiary CNY 500,000 for failing to gain certain acquisition or buyout approvals – thereby violating the country’s anti-monopoly laws. The fine was relatively small given the size of the acquisition despite regulators determining that those Tencent’s deals weren’t anti-competitive. Nevertheless, the fine should have served as a wake-up call to halt M&amp;A activity without the requisite regulatory sign off; and  *Financial Holding Company Structure: According to Bloomberg, Tencent likely will be required to create a financial holding company for all of its banking, insurance, and payment services businesses – and be regulated along the lines of the banking sector. For Tencent, WeChat Pay and the broader lending/deposit taking business are likely to be reined-in. 

Autohome Inc (Adr) / Equity Capital Markets

<div><p>Autohome raised around US$700m in its secondary listing in Hong Kong. </p></div><div>
<p>I have covered most aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/autohome-secondary-listing-doesn-t-need-the-cash-at-all" target="_blank" rel="noopener">Autohome Secondary Listing - Doesn’t Need the Cash at All </a> and <a href="https://www.smartkarma.com/insights/autohome-secondary-listing-going-down-a-different-route" target="_blank" rel="noopener">Autohome Secondary Listing - Going Down a Different Route.</a></p>
<p>In this note, I'll talk about the updates since my last note.</p>
</div>

Autohome raised around US$700m in its secondary listing in Hong Kong. 
I have covered most aspects of the deal in my earlier note, Autohome Secondary Listing - Doesn’t Need the Cash at All  and Autohome Secondary Listing - Going Down a Different Route.
In this note, I'll talk about the updates since my last note.


Autohome Secondary Trading - Strong Retail, Weak Insti Coverage

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)

China Internet Weekly (Mar 15): BABA & NTES Subsidiaries Seek IPO, Tencent Invests in Rakuten

Tencent was fined not because they eliminate competition, but because they forgot to ask for approval. Tencent invests in Rakuten. Hellobike and...

Ming Lu

Bairong Pre-IPO - Earnings Forecast, Peer Comparison and Valuation

Bairong, an independent AI-powered technology platform in China serving the financial services industry, plans to raise around US$300m in its Hong...

Sumeet Singh

Baidu Secondary Listing: HK-ADS Premium/(Discount) Views

Baidu has launched a $3 bn secondary listing in Hong Kong. Due to choppy market conditions, Baidu pricing its H-shares at a discount range of 3% to...

Arun George

Tencent Holdings – Shaking Its Tree

TENCENT HOLDINGS: Tencent and the FinTech's likely will now be required to create a financial holding company, which will likely rein-in WeChat Pay...

Thomas J. Monaco

Autohome Secondary Trading - Strong Retail, Weak Insti Coverage

Autohome raised around US$700m in its secondary listing in Hong Kong. I have covered most aspects of the deal in my earlier note. In this note,...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Internet Weekly (Mar 15): BABA & NTES Subsidiaries Seek IPO, Tencent Invests in Rakuten

Tencent was fined not because they eliminate competition, but because they forgot to ask for approval. Tencent invests in Rakuten. Hellobike and...

Ming Lu

Bairong Pre-IPO - Earnings Forecast, Peer Comparison and Valuation

Bairong, an independent AI-powered technology platform in China serving the financial services industry, plans to raise around US$300m in its Hong...

Sumeet Singh

Baidu Secondary Listing: HK-ADS Premium/​(Discount) Views

Baidu has launched a $3 bn secondary listing in Hong Kong. Due to choppy market conditions, Baidu pricing its H-shares at a discount range of 3% to...

Arun George

Tencent Holdings – Shaking Its Tree

TENCENT HOLDINGS: Tencent and the FinTech's likely will now be required to create a financial holding company, which will likely rein-in WeChat Pay...

Thomas J. Monaco

Autohome Secondary Trading - Strong Retail, Weak Insti Coverage

Autohome raised around US$700m in its secondary listing in Hong Kong. I have covered most aspects of the deal in my earlier note. In this note,...

Sumeet Singh

Baidu Secondary Listing: HK-ADS Premium/(Discount) Views