China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>700 HK： &lt; Metal Slug: Awakenings &gt; officially launches（ + ）</li>
<li>LEGN: CARVYKTI C1Q23 revenue rebounded QoQ but below our expectation(/)</li>
<li>JD/BABA/VIPS/3690.HK: March NBS consumption strengthened, especially apparel and catering (-/+/+/+)</li>
</ul>


700 HK： &lt; Metal Slug: Awakenings &gt; officially launches（ + ）
LEGN: CARVYKTI C1Q23 revenue rebounded QoQ but below our expectation(/)
JD/BABA/VIPS/3690.HK: March NBS consumption strengthened, especially apparel and catering (-/+/+/+)


China TMT Update（Apr.20）700 HK/Jd/Baba/Vips/3690.hk/LEGN:  Launches

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

<ul>
<li>Record number of active EM funds overweight in Internet Retail, with 60.9% of funds overweight the iShares EEM ETF.</li>
<li>Alibaba Group Holdings is the most widely held stock in Internet Retail, followed by JD.com Inc. and MercadoLibre.</li>
<li>Growth investors remain optimistic about Internet Retail, while recent price declines prompt Value investors to raise allocations</li>
</ul>


Record number of active EM funds overweight in Internet Retail, with 60.9% of funds overweight the iShares EEM ETF.
Alibaba Group Holdings is the most widely held stock in Internet Retail, followed by JD.com Inc. and MercadoLibre.
Growth investors remain optimistic about Internet Retail, while recent price declines prompt Value investors to raise allocations


Internet Retail: EM Funds Raise Overweights

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

Lalatech Holdings Co Ltd / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lalatech-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:36848:1" rel="noopener">Lalatech Holdings Co Ltd (LALA HK)</a>  is looking to raise about US$1bn in its upcoming HK IPO.</li>
<li>Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>



Lalatech Holdings Co Ltd (LALA HK)  is looking to raise about US$1bn in its upcoming HK IPO.
Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
In this note, we talk about the not-so-positive aspects of the deal.


Lalatech Holdings Limited Pre-IPO - The Negatives - Has Raised a Lot of Money, so Has the Founder

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Event-Driven

<ul>
<li>Softbank Vision Funds 1 and 2 were the biggest combined holdings at December 2022, accounting for 30% of group equity value; SVF private companies accounted for 73% of equity value</li>
<li>To December-end 2022, public companies in SVF2 were marked down by 52% versus investment cost, whereas SVF2 private companies were marked down by a more modest 33% versus investment cost</li>
<li>We believe that SVF2 private company valuations are at risk of further markdowns in 4QFY22 results, with many of these investments made close to the period of peak pandemic valuations</li>
</ul>


Softbank Vision Funds 1 and 2 were the biggest combined holdings at December 2022, accounting for 30% of group equity value; SVF private companies accounted for 73% of equity value
To December-end 2022, public companies in SVF2 were marked down by 52% versus investment cost, whereas SVF2 private companies were marked down by a more modest 33% versus investment cost
We believe that SVF2 private company valuations are at risk of further markdowns in 4QFY22 results, with many of these investments made close to the period of peak pandemic valuations


Softbank (9984 JP) – Focus on the SVFs, Are the Private Companies Appropriately Marked?

Equity Bottom-Up

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>Taiwan Semiconductor (TSMC) is by far the most dominant stock holding among active EM investors.</li>
<li>TSMC is owned by 87.5% of EM funds with an average weight of 6.1%, it is also the largest portfolio holding for 64.5% of managers.  </li>
<li>Despite high levels of positioning, there are no obvious signs that managers are scaling back positions. The risk of not holding TSMC may be greater than playing the contrarian.</li>
</ul>


Taiwan Semiconductor (TSMC) is by far the most dominant stock holding among active EM investors.
TSMC is owned by 87.5% of EM funds with an average weight of 6.1%, it is also the largest portfolio holding for 64.5% of managers.  
Despite high levels of positioning, there are no obvious signs that managers are scaling back positions. The risk of not holding TSMC may be greater than playing the contrarian.


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 TMT Update（Apr.20）700 HK/Jd/Baba/Vips/3690.hk/LEGN: Launches

700HK： <Metal Slug: Awakenings> officially launches（+）; LEGN: CARVYKTI C1Q23 revenue rebounded QoQ but below our expectation(/); JD/BABA/VIPS...

Blue Lotus Research Institute

Internet Retail: EM Funds Raise Overweights

The percentage of funds positioned overweight the Internet Retail sector hits record highs as Value funds enter the picture.

Steven Holden

Lalatech Holdings Limited Pre-IPO - The Negatives - Has Raised a Lot of Money, so Has the Founder

Lalatech Holdings is looking to raise about US$1bn in its upcoming HK IPO. In this note, we talk about the not-so-positive aspects of the deal.

Sumeet Singh

Softbank (9984 JP) – Focus on the SVFs, Are the Private Companies Appropriately Marked?

The NAV could be 10%-15% lower than stated now at the mid-May results release, due to a further squeeze in private company valuations; this would...

Victor Galliano

TSMC: Crowded Trade?

Active EM managers are heavily positioned in TSMC. It is the largest portfolio holding for 64.6% of the funds in our analysis. But is the risk of...

Steven Holden

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