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.

Equity Capital Markets

RLX Technology Inc / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.In this insight, I'll talk about the positive aspects of the company.

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.In this insight, I'll talk about the positive aspects of the company.

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/678/original/BANNER-TTOtherDec20_GreyOrange.png?1608575984" class="editor-image img-responsive" data-smartkarma-image-id="179678"></figure></section>We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

The news that <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but also for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a>
One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>.
<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> in Indonesia.

The news that Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but also for Grab (0967655D SP), which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
Gojek (1379371D IJ) has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).
One key area of overlap between Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for Tokopedia PT (1087142D IJ).
The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for Sea Ltd (SE US) in Indonesia.

Gojek and Tokopedia - Digital Game of Thrones

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a> along with their ADRs (<a href="https://www.smartkarma.com/entities/china-mobile-ltd-spon-adr" target="_blank" data-smartkarma-citation="entities:16398:1" rel="noopener">China Mobile Ltd Spon Adr (CHL US)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-adr" target="_blank" data-smartkarma-citation="entities:1017:1" rel="noopener">China Telecom Corp Ltd (Adr) (CHA US)</a>, and <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-adr" target="_blank" data-smartkarma-citation="entities:1000:1" rel="noopener">China Unicom Hong Kong (Adr) (CHU US)</a>) present a very strange problem. The Trump <a href="https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-securities-investments-finance-communist-chinese-military-companies/" target="_blank" rel="noopener">Executive Order</a> (Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies) is something of nuisance. It doesn’t sanction most of the names on the Defense Department Qualifying Entity list but it makes it so that US Persons and those that invest US Person money cannot invest in the securities of these companies and in certain subsidiaries. But the list of Communist Chinese Military Companies includes the parent companies of the three Chinese mobile telephony companies, and those three companies, along with many Chinese companies, have underperformed peers in other markets since the Executive Order was announced.The new FAQs published by the Treasury Department OFAC (discussed in <a href="https://www.smartkarma.com/insights/ofac-makes-a-longer-list-of-trump-names-of-china-military-cos" target="_blank" data-smartkarma-citation="insights:46704" rel="noopener">OFAC Makes a Longer List of Trump Names of China Military Cos</a>) suggest all 50% subsidiaries or ‘entities determined to be controlled by one or more Communist Chinese military company(ies) identified in or pursuant to EO 13959’ will be covered under the Executive Order but also says that the deadline for not transacting in such names would be 60 days after the OFAC adds the specific name to the list. <blockquote>The initial prohibitions pursuant to section 1(a)(ii) of E.O. 13959 would go into effect beginning 9:30 a.m. eastern time on the date that is 60 days after such subsidiary is added to OFAC’s new list to further implement E.O. 13959. <a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/857" target="_blank" rel="noopener">FAQ 857</a></blockquote>The three HK-listed telecom stocks are subsidiaries of QEs but they have yet to be listed, and the US-listed ADRs have also yet to be listed on the OFAC list. That means the NYSE <a href="https://ir.theice.com/press/news-details/2020/NYSE-to-Commence-Delisting-Proceedings-in-Securities-of-Three-Issuers-to-Comply-with-Executive-Order-13959/default.aspx" target="_blank" rel="noopener">decision</a> to delist the stocks was somewhat precipitous, and I expect there may have been political pressure to delist prior to the 11th when the deadline for the first set of stocks arrives at their initial 60-day deadline.Saturday, China's Commerce Ministry warned of "necessary countermeasures to resolutely safeguard the legitimate rights and interests of Chinese companies" in response to the NYSE announcement but there were no details, and in announcing the criticism, saying that the NYSE's actions would "greatly weaken all parties' confidence in the US capital markets", the Chinese Commerce Ministry was effectively saying that retaliation would greatly weaken all parties' confidence in Chinese capital markets. One can't have it both ways, and it must be noted that given the SEC's <a href="https://www.sec.gov/corpfin/disclosure-considerations-china-based-issuers" target="_blank" rel="noopener">guidance</a> at end-November on Chinese ADRs in the US is really a matter of time given China's Securities Law. Yesterday, the CSRC <a href="http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwdd/202101/t20210103_390002.html" target="_blank" rel="noopener">responded</a> with a measured comment, and today, in what has to be seen as an embarrassing walk-back, the NYSE has <a href="https://ir.theice.com/press/news-details/2021/NYSE-Updates-Guidance-on-Delisting-Determination-for-Securities-of-Three-Issuers-in-Relation-to-Executive-Order-13959--/default.aspx" target="_blank" rel="noopener">walked back their decision to delist the three ADRs</a>. This was accompanied by further clarification from OFAC in the form of FAQ 862, which notes that nothing requires that US Persons actually sell their holdings, just that they might be restricted from doing so if they do not do so in the period between the 60 day deadline and the subsequent exemption period end.The three names have popped sharply in Hong Kong, more than making up for yesterday's smaller fall in price.That leaves investors with another issue.Discussion ensues below.

China Mobile (941 HK), China Telecom Corp Ltd (H) (728 HK), and China Unicom Hong Kong (762 HK) along with their ADRs (China Mobile Ltd Spon Adr (CHL US), China Telecom Corp Ltd (Adr) (CHA US), and China Unicom Hong Kong (Adr) (CHU US)) present a very strange problem. The Trump Executive Order (Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies) is something of nuisance. It doesn’t sanction most of the names on the Defense Department Qualifying Entity list but it makes it so that US Persons and those that invest US Person money cannot invest in the securities of these companies and in certain subsidiaries. But the list of Communist Chinese Military Companies includes the parent companies of the three Chinese mobile telephony companies, and those three companies, along with many Chinese companies, have underperformed peers in other markets since the Executive Order was announced.The new FAQs published by the Treasury Department OFAC (discussed in OFAC Makes a Longer List of Trump Names of China Military Cos) suggest all 50% subsidiaries or ‘entities determined to be controlled by one or more Communist Chinese military company(ies) identified in or pursuant to EO 13959’ will be covered under the Executive Order but also says that the deadline for not transacting in such names would be 60 days after the OFAC adds the specific name to the list. The initial prohibitions pursuant to section 1(a)(ii) of E.O. 13959 would go into effect beginning 9:30 a.m. eastern time on the date that is 60 days after such subsidiary is added to OFAC’s new list to further implement E.O. 13959. FAQ 857The three HK-listed telecom stocks are subsidiaries of QEs but they have yet to be listed, and the US-listed ADRs have also yet to be listed on the OFAC list. That means the NYSE decision to delist the stocks was somewhat precipitous, and I expect there may have been political pressure to delist prior to the 11th when the deadline for the first set of stocks arrives at their initial 60-day deadline.Saturday, China's Commerce Ministry warned of "necessary countermeasures to resolutely safeguard the legitimate rights and interests of Chinese companies" in response to the NYSE announcement but there were no details, and in announcing the criticism, saying that the NYSE's actions would "greatly weaken all parties' confidence in the US capital markets", the Chinese Commerce Ministry was effectively saying that retaliation would greatly weaken all parties' confidence in Chinese capital markets. One can't have it both ways, and it must be noted that given the SEC's guidance at end-November on Chinese ADRs in the US is really a matter of time given China's Securities Law. Yesterday, the CSRC responded with a measured comment, and today, in what has to be seen as an embarrassing walk-back, the NYSE has walked back their decision to delist the three ADRs. This was accompanied by further clarification from OFAC in the form of FAQ 862, which notes that nothing requires that US Persons actually sell their holdings, just that they might be restricted from doing so if they do not do so in the period between the 60 day deadline and the subsequent exemption period end.The three names have popped sharply in Hong Kong, more than making up for yesterday's smaller fall in price.That leaves investors with another issue.Discussion ensues below.

China Mobile (941 HK): Probably Too Cheap

Alibaba Group Holding  / Equity Capital Markets

2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.

2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Alibaba Group Holding (BABA US)

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration

RLX Technology (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

One month in, our three suggested pair trades have generated returns ranging from "meh" to "You're fired!" In this note we take a look at what went...

Tracking Traffic

Gojek and Tokopedia - Digital Game of Thrones

The potential merger of Gojek and Tokopedia with a listing of the combined entity planned at a future date will provide investors with an exciting...

Angus Mackintosh

China Mobile (941 HK): Probably Too Cheap

China Mobile Telcos are between a rock and a hard place. The NYSE acted too quickly. The Treasury Dept has been slow to clarify. Investors are...

Travis Lundy

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

2020 marked our second year of operations as an Independent Research Company, and our fifth year covering ECM. In 2020 we had an accuracy rate of...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)