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.

Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p>
<p>At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. </p></div></div></div>


Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.
At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. 
In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. 

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".</p><p>The main changes to the index are:</p><ul>
<li>Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>To have a more balanced representation of the Hong Kong stock market, the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.</li>
<li>To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.</li>
<li>There will be 20-25 'Hong Kong companies' in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and this number will be evaluated at least every 2 years.</li>
<li>All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as well.</li>
</ul><p>There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.</p><p>With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.</p>

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:
Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the Hong Kong Hang Seng Index (HSI INDEX). 
To have a more balanced representation of the Hong Kong stock market, the Hong Kong Hang Seng Index (HSI INDEX) constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.
To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.
There will be 20-25 'Hong Kong companies' in the Hong Kong Hang Seng Index (HSI INDEX) and this number will be evaluated at least every 2 years.
All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as well.
There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

HSI Market Consultation: BIG Changes Coming

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>JD has more exclusive users than Pinduoduo (PDD) and Alibaba (BABA)’s Taobao.</li>
<li>JD runs an asset-light strategy in the fresh food market.</li>
<li>We believe revenue will grow by 22% in 2021, compared to 28% in 2020.</li>
<li>We still believe the stock price is a little bit high.</li>
</ul>


JD has more exclusive users than Pinduoduo (PDD) and Alibaba (BABA)’s Taobao.
JD runs an asset-light strategy in the fresh food market.
We believe revenue will grow by 22% in 2021, compared to 28% in 2020.
We still believe the stock price is a little bit high.


JD.com (JD): Found More Exclusive Advantages, But Need More Reasonable Price

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Kuaishou (1024 HK)’s vice president of community content was arrested for taking bribes.</li>
<li>Alibaba (BABA)’s public relation manager was rumored to jump off the office building in Beijing.</li>
<li>Suning Commerce (002024 CN)’s founder will sell his shareholdings.</li>
</ul>


Kuaishou (1024 HK)’s vice president of community content was arrested for taking bribes.
Alibaba (BABA)’s public relation manager was rumored to jump off the office building in Beijing.
Suning Commerce (002024 CN)’s founder will sell his shareholdings.


China Internet Weekly (Feb 22): Kuaishou VP Arrested, BABA Manager Dead “by Accident”, & Q4 Results

HK/China Equity Long-Short

Osbert Tang, CFA

<p>We find <a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang Group Co (3818 HK)</a> (CNDX) an interesting and deeply undervalued asset play - investors will miss the big picture if they still consider the company as a sportswear with a weak competitive position. The vast value of CNDX lies in its investment portfolio and net cash, and the current 0.38x P/B is too depressed for its quality investments and strong financial position. </p><p>Through its investments, particularly PE investments, CNDX gains indirect interests to many superb names include <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group</a>, <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, Cainiao Network, <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a>, JD Digital, MeWe etc. We see potential positive catalysts include a sale of Kappa, IPOs of the PE-owned ventures, increase in dividend payout and a privatisation of the company.</p>

We find China Dongxiang Group Co (3818 HK) (CNDX) an interesting and deeply undervalued asset play - investors will miss the big picture if they still consider the company as a sportswear with a weak competitive position. The vast value of CNDX lies in its investment portfolio and net cash, and the current 0.38x P/B is too depressed for its quality investments and strong financial position. Through its investments, particularly PE investments, CNDX gains indirect interests to many superb names include Ant Financial Services Group, Alibaba Health Information Technology (241 HK), Cainiao Network, Tsingtao Brewery Co Ltd H (168 HK), JD Digital, MeWe etc. We see potential positive catalysts include a sale of Kappa, IPOs of the PE-owned ventures, increase in dividend payout and a privatisation of the company.

China Dongxiang (3818 HK): It's Not a Sportswear Company....It's a Cheap Investment Fund

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)

Coupang IPO: Valuation Insights

The $27-30 price range implies gross proceeds up to $3.6 billion and values Coupang at $46-51 billion. At the price range, Coupang is attractively...

Arun George

HSI Market Consultation: BIG Changes Coming

Hang Seng Indexes has announced the conclusions of the market consultation and the HSI is going to look different in a years time. Financials see a...

Brian Freitas

JD.com (JD): Found More Exclusive Advantages, But Need More Reasonable Price

JD has more exclusive users than Pinduoduo and Alibaba’s Taobao. JD runs an asset-light strategy in the fresh food market. We still believe the...

Ming Lu

China Internet Weekly (Feb 22): Kuaishou VP Arrested, BABA Manager Dead “by Accident”, & Q4 Results

Kuaishou’s vice president was arrested for taking bribes. Alibaba’s manager was rumored to jump off the office building. Suning Commerce’s founder...

Ming Lu

China Dongxiang (3818 HK): It's Not a Sportswear Company....It's a Cheap Investment Fund

China Dongxiang is a deeply undervalued asset play, instead of a second-tier sportswear company in China. We believe focusing on the sportswear...

Osbert Tang, CFA

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