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

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div><p>We have covered most aspects of the deal in our earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul></div><div><ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-low-end-still-appear-reasonable-but-stock-will-more-likely-be-driven-by-sentiment" target="_blank" rel="noopener">Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment</a></li></ul><div><p>In this note we will compare KP with its sister company, Kakao Bank.</p></div>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.We have covered most aspects of the deal in our earlier notes:
Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,
Kakao Pay IPO - Peer comparison - local and international, and
Kakao Pay IPO - Valuation and Likely Impact of Latest AnnouncementKakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by SentimentIn this note we will compare KP with its sister company, Kakao Bank.

Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation

Equity Research in HK and Mainland China

Li Tang

Thematic (Sector/Industry)

<p>China plans to elevate the status of its antitrust bureau as it steps up its campaign against anti-competitive behaviour. The antitrust bureau is likely to become the National Antimonopoly Bureau and be elevated to deputy-ministerial status, while remaining within the SAMR, according to news reported.</p>
<p>Antitrust mechanism and systems will be improved with capacity of regulatory team expanded, in order to step up law enforcement, particularly in the key areas including platform economy, technological innovation, and data security. Both the anti-monopoly policy and the "common prosperity" policy are going to hit some firms such as <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><a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> , <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> , <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> ,  <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> .</p>

China plans to elevate the status of its antitrust bureau as it steps up its campaign against anti-competitive behaviour. The antitrust bureau is likely to become the National Antimonopoly Bureau and be elevated to deputy-ministerial status, while remaining within the SAMR, according to news reported.
Antitrust mechanism and systems will be improved with capacity of regulatory team expanded, in order to step up law enforcement, particularly in the key areas including platform economy, technological innovation, and data security. Both the anti-monopoly policy and the "common prosperity" policy are going to hit some firms such as Alibaba Group (BABA US)Pinduoduo (PDD US) , Tencent Holdings (700 HK) , JD.com Inc (ADR) (JD US) ,  Meituan (3690 HK) .

China and US Equity Analyst

Roger Xie

Equity Bottom-Up

<ul>
<li>Regulatory risk is the major headwind for <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a>, a twitter-like social media platform for sharing news and user opinions.  As Beijing tightening its grip on social media platform, we have observed Weibo's value declining 65% from its high in 3-year period. In the latest move, China reiterates the ban on private enterprise in news organizations. In the past 10 months, the magnitude of policy change on tech giant is unprecedent. The latest rounds of measurements on social media include: 1) crackdown of internet influencer/celebrity culture; 2) adjustment on algorithm-powered feeds; 3) macro impact on SME ad campaign spending. </li>
<li>We believe <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a> has strong presence in celebrity and key opinion leaders on social media, which differentiates it from other major platform such as <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)'s  </a>WeChat/QQ, and <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1439927D CH)</a>'s Toutiao.  With its 521 million monthly active users and 225 million daily active users, Weibo is one of the largest social platform.  As more key opinion leaders join Weibo, more users use Weibo to read view the key opinion leaders’ content and engage with them through replying, sharing, and clicking the “Like” button. These key opinion leaders can also get tipping from or sell merchandise to their fans. We believe Weibo's business model and scale is hard to replicate. </li>
<li>
<a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a> has strategic partnership with <a href="https://www.smartkarma.com/entities/sina-corp-china" target="_blank" data-smartkarma-citation="entities:22691:1" rel="noopener">Sina Corp (Class A) (SINA US)</a> and <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> The parent company Sina owns 45% Weibo outstanding shares and has 71% voting right. Alibaba owns 30% Weibo outstanding shares and has 16% voting right. Given the recent scrutiny of Alibaba and forcing exit from media industry, we think the upcoming recapitalization of Weibo could be a positive catalyst. Weibo has already explored the potential Hong Kong secondary listing.  And it could use the IPO proceed to partially buyout Alibaba stake. Another option is that new strategic investors could be introduced to take Alibaba's stake as well. <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a> is traded at forward 15x consensus P/E, and could deliver 15% revenue CAGR in the next 3 year. We think valuation is attractive for Weibo's scale and monetization potential. </li>
</ul>


Regulatory risk is the major headwind for Weibo Corp (WB US), a twitter-like social media platform for sharing news and user opinions.  As Beijing tightening its grip on social media platform, we have observed Weibo's value declining 65% from its high in 3-year period. In the latest move, China reiterates the ban on private enterprise in news organizations. In the past 10 months, the magnitude of policy change on tech giant is unprecedent. The latest rounds of measurements on social media include: 1) crackdown of internet influencer/celebrity culture; 2) adjustment on algorithm-powered feeds; 3) macro impact on SME ad campaign spending. 
We believe Weibo Corp (WB US) has strong presence in celebrity and key opinion leaders on social media, which differentiates it from other major platform such as Tencent (700 HK)'s  WeChat/QQ, and ByteDance (1439927D CH)'s Toutiao.  With its 521 million monthly active users and 225 million daily active users, Weibo is one of the largest social platform.  As more key opinion leaders join Weibo, more users use Weibo to read view the key opinion leaders’ content and engage with them through replying, sharing, and clicking the “Like” button. These key opinion leaders can also get tipping from or sell merchandise to their fans. We believe Weibo's business model and scale is hard to replicate. 

Weibo Corp (WB US) has strategic partnership with Sina Corp (Class A) (SINA US) and Alibaba Group (BABA US). The parent company Sina owns 45% Weibo outstanding shares and has 71% voting right. Alibaba owns 30% Weibo outstanding shares and has 16% voting right. Given the recent scrutiny of Alibaba and forcing exit from media industry, we think the upcoming recapitalization of Weibo could be a positive catalyst. Weibo has already explored the potential Hong Kong secondary listing.  And it could use the IPO proceed to partially buyout Alibaba stake. Another option is that new strategic investors could be introduced to take Alibaba's stake as well. Weibo Corp (WB US) is traded at forward 15x consensus P/E, and could deliver 15% revenue CAGR in the next 3 year. We think valuation is attractive for Weibo's scale and monetization potential. 


Weibo (WB US): Regulatory Risks Overshadow Cheap Valuation And Recapitalization Optionality

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<p>We look in to the recent collapse of Consumer Discretionary allocations among active GEM managers.</p><p>Consumer Discretionary allocations have dropped down to 3rd in the sector rankings among active EM managers.  Average weights stand at 14.1%, in line with the benchmark with just under half of the 247 managers in our analysis overweight the benchmark MSCI EM Index.  Over the period 10/31/2020 to 09/30/2021, average holding weights dropped by -4.99%, the most of any sector.</p><p>Analysis of stock positioning changes over the same period reveals the bulk of the decline was caused by one stock, <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>, with average holding weights falling by 4.04%, outflows of $2.26bn and 5.2% of funds closing positions.  Other contributors on the negative side were the educators, with <a href="https://www.smartkarma.com/entities/new-oriental-education-technology-group" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Technology Group (9901 HK)</a> and <a href="https://www.smartkarma.com/entities/tal-education-group" target="_blank" data-smartkarma-citation="entities:1124:1" rel="noopener">TAL Education (TAL US)</a> losing 18% and 12.6% of investors respectively.  </p><p>Despite these closures, <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> remains by far the most widely held stock in the sector, with 78.5% of funds holding a position at an average weight of 2.54%, though only 35.2% of managers are overweight the benchmark.  Widely held though it is, Alibaba's relevance in the sector has been hugely diminished.  At its peak, average holding weights in <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> across the 247 active funds in our analysis stood at 6.57%.</p><p><em>Analysis taken from our EM research, covering 247 active GEM funds with combined AUM of $500bn </em></p>

We look in to the recent collapse of Consumer Discretionary allocations among active GEM managers.Consumer Discretionary allocations have dropped down to 3rd in the sector rankings among active EM managers.  Average weights stand at 14.1%, in line with the benchmark with just under half of the 247 managers in our analysis overweight the benchmark MSCI EM Index.  Over the period 10/31/2020 to 09/30/2021, average holding weights dropped by -4.99%, the most of any sector.Analysis of stock positioning changes over the same period reveals the bulk of the decline was caused by one stock, Alibaba Group (BABA US), with average holding weights falling by 4.04%, outflows of $2.26bn and 5.2% of funds closing positions.  Other contributors on the negative side were the educators, with New Oriental Education &amp; Technology Group (9901 HK) and TAL Education (TAL US) losing 18% and 12.6% of investors respectively.  Despite these closures, Alibaba Group (BABA US) remains by far the most widely held stock in the sector, with 78.5% of funds holding a position at an average weight of 2.54%, though only 35.2% of managers are overweight the benchmark.  Widely held though it is, Alibaba's relevance in the sector has been hugely diminished.  At its peak, average holding weights in Alibaba Group (BABA US) across the 247 active funds in our analysis stood at 6.57%.Analysis taken from our EM research, covering 247 active GEM funds with combined AUM of $500bn 

EM Consumer Discretionary:  Turbulent Times for Alibaba

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

<p>On Friday October 8th post-market close, the State Administration for Market Regulation issued a notice to fine Meituan $534m for its monopolistic behavior of "two-choose-one". In this note, we will analyze the impact of this notice. We think the quantum of the fine is within the market expectation and most importantly, the major overhang of the stock is removed. Recent data also shows that Meituan continues to be a beneficiary of the movement restriction due to COVID-19 and the growing penetration rate of the O2O services in China. </p>

On Friday October 8th post-market close, the State Administration for Market Regulation issued a notice to fine Meituan $534m for its monopolistic behavior of "two-choose-one". In this note, we will analyze the impact of this notice. We think the quantum of the fine is within the market expectation and most importantly, the major overhang of the stock is removed. Recent data also shows that Meituan continues to be a beneficiary of the movement restriction due to COVID-19 and the growing penetration rate of the O2O services in China. 

Meituan: Major Overhang Cleared After $534m Fine

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 (9988 HK)

Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. In this...

Sumeet Singh

China Plans to Strengthen Power of SAMR

The move of antitrust and anti-unfair competition shows China intends to maintain its strict stance on monopolistic and uncompetitive practices in...

Li Tang

Weibo (WB US): Regulatory Risks Overshadow Cheap Valuation And Recapitalization Optionality

Although Weibo (WB.US) is facing regulatory risk and growth is slow, we think valuation is attractive for its scale and monetization potential....

Roger Xie

EM Consumer Discretionary: Turbulent Times for Alibaba

We look in to the recent collapse of Consumer Discretionary allocations among active GEM managers, and find that Alibaba is the driving force...

Steven Holden

Meituan: Major Overhang Cleared After $534m Fine

On Friday October 8th post-market close, the State Administration for Market Regulation issued a notice to fine Meituan. We analyze the impact and...

Ke Yan, CFA, FRM

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