Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>With the penetration rate as high as 42%, Mitra could be fast running out of room for growth.</li>
<li>Consensus seems to be overestimating <a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a>’s 2021 and 2022 revenue by 22% and 40% respectively.</li>
<li>At 6.0x consensus FY+2 revenue, Bukalapak is still expensive compared to the peer average of 4.3x.</li>
</ul>


With the penetration rate as high as 42%, Mitra could be fast running out of room for growth.
Consensus seems to be overestimating Bukalapak (BUKA IJ)’s 2021 and 2022 revenue by 22% and 40% respectively.
At 6.0x consensus FY+2 revenue, Bukalapak is still expensive compared to the peer average of 4.3x.


Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang

China and US Equity Analyst

Roger Xie

Thematic (Sector/Industry)

<ul>
<li>Trial version e-CNY digital wallet has been launched on iOS and Android app store as the country's central bank steps up its push to develop its own digital currency.</li>
<li>The initial usage shows e-CNY digital wallet is best paired with bank-app to fulfill KYC requirement to open account; standalone digital wallet has difficulty to verify identification.</li>
<li>The rising of China Digital Currency/Electronic Payment system could be disruptive to financial system. We believe it will lead the changes in payment, risk control, user data and credit history. </li>
</ul>


Trial version e-CNY digital wallet has been launched on iOS and Android app store as the country's central bank steps up its push to develop its own digital currency.
The initial usage shows e-CNY digital wallet is best paired with bank-app to fulfill KYC requirement to open account; standalone digital wallet has difficulty to verify identification.
The rising of China Digital Currency/Electronic Payment system could be disruptive to financial system. We believe it will lead the changes in payment, risk control, user data and credit history. 


China Digital Currency: E-CNY Wallet App Launched Before Winter Olympics

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The SEC has finalised the Holding Foreign Companies Accountable Act rules. Under the current timeframe, the SEC may force the delisting of foreign companies in three years if in contravention.</li>
<li>Amid <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>'s intention to delist from the US, the CSRC refutes it is pushing for VIEs to drop their listings in the United States.</li>
<li>Expect continued volatility as the ~248 US-listed China plays seek to avoid delisting if they don’t comply with auditing rules.</li>
</ul>


The SEC has finalised the Holding Foreign Companies Accountable Act rules. Under the current timeframe, the SEC may force the delisting of foreign companies in three years if in contravention.
Amid DiDi Global (DIDI US)'s intention to delist from the US, the CSRC refutes it is pushing for VIEs to drop their listings in the United States.
Expect continued volatility as the ~248 US-listed China plays seek to avoid delisting if they don’t comply with auditing rules.


Delisting Chinese ADRs: High Foreign-Holding, With No Fixed Abode, Most At Risk

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.

<ul>
<li>On 13th Apr 2021, Grab (0967655D SP) announced that it plans to go public in the US in partnership with Altimeter Growth Corp (AGC US) at an equity valuation of US$39.6bn.</li>
<li>The merger and listing will be completed on 2nd Dec 2021.</li>
<li>In this note, we will talk about valuations and the lock-up release schedule.</li>
</ul>


On 13th Apr 2021, Grab (0967655D SP) announced that it plans to go public in the US in partnership with Altimeter Growth Corp (AGC US) at an equity valuation of US$39.6bn.
The merger and listing will be completed on 2nd Dec 2021.
In this note, we will talk about valuations and the lock-up release schedule.


Grab SPAC Listing - Thoughts on Valuation, Lock-Up Release

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

The State Administration for Market Regulation, China's antitrust regulator, imposed a fine of RMB3.4 billion (USD530 million) on food delivery group <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> for abusing its market position and ordered the company to rectify its operations.Amongst other required remedial actions, Meituan was ordered to return deposit money to merchants. Merchant had reportedly used deposits, algorithms, and data to ensure that its restaurant merchants remained loyal to the platform, according to an <a href="https://www.ft.com/content/8862b118-75ad-45b1-85df-b3fa09d26ac3" target="_blank" rel="noopener">FT article</a>. This begs the question. Why are merchant deposits required by e-commerce companies like Meituan, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>? After all, most of the merchant transactions are 3P, which means the platforms do not carry any inventory risk and therefore do not need merchant deposits to offset risks. Could it be to increase switching costs or even to hold merchants ransom as the FT article suggests. In this Insight, we discuss how merchant deposits and merchant payables have been used as a means to pad operating cashflows (even though they are not strictly free cashflows), particularly for fast growing e-commerce platforms.Further, we have seen the "walled gardens" of China's tech giants <a href="https://www.scmp.com/tech/big-tech/article/3148572/big-techs-walled-gardens-start-crack-tencent-vows-follow-beijings" target="_blank" rel="noopener">start to crack</a> - in other words, merchants can freely switch platforms taking away merchant deposits with them, which could potentially affect cashflows.

The State Administration for Market Regulation, China's antitrust regulator, imposed a fine of RMB3.4 billion (USD530 million) on food delivery group Meituan (3690 HK) for abusing its market position and ordered the company to rectify its operations.Amongst other required remedial actions, Meituan was ordered to return deposit money to merchants. Merchant had reportedly used deposits, algorithms, and data to ensure that its restaurant merchants remained loyal to the platform, according to an FT article. This begs the question. Why are merchant deposits required by e-commerce companies like Meituan, Alibaba Group (9988 HK) and Pinduoduo (PDD US)? After all, most of the merchant transactions are 3P, which means the platforms do not carry any inventory risk and therefore do not need merchant deposits to offset risks. Could it be to increase switching costs or even to hold merchants ransom as the FT article suggests. In this Insight, we discuss how merchant deposits and merchant payables have been used as a means to pad operating cashflows (even though they are not strictly free cashflows), particularly for fast growing e-commerce platforms.Further, we have seen the "walled gardens" of China's tech giants start to crack - in other words, merchants can freely switch platforms taking away merchant deposits with them, which could potentially affect cashflows.  

Merchant Deposits and Payables to Pad Cashflows - Who's Culpable?

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)

Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang

If Bukalapak maintains the revenue trajectory, which sounds a bit optimistic considering that Mitra is running out of room for growth, Bukalapak's...

Oshadhi Kumarasiri

China Digital Currency: E-CNY Wallet App Launched Before Winter Olympics

Trial version e-CNY digital wallet has been launched on iOS and Android app store as the country's central bank steps up its push to develop its...

Roger Xie

Delisting Chinese ADRs: High Foreign-Holding, With No Fixed Abode, Most At Risk

This does not strike me as the time to be bargain hunting. Not when there remains confusion as to how and when delistings will unfold. The focus...

David Blennerhassett

Grab SPAC Listing - Thoughts on Valuation, Lock-Up Release

On 13th Apr 21, Grab announced that it plans to go public in the US in partnership with Altimeter Growth Corp at an equity val of US$39.6bn. In...

Sumeet Singh

Merchant Deposits and Payables to Pad Cashflows - Who's Culpable?

Merchant deposits and merchant payables have been used to pad operating cashflows (even though they are not free cashflows), particularly for fast...

Jason Yap, CFA

Price Gauge

52-week Range

Market Cap (USDm)

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