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

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>As we expected, the expansion of Freshippo cut margin.</li>
<li>We find the exemption of third-party retailer commission also squeezed margin.</li>
<li>Revenue still grew fast.</li>
<li>We believe the stock price has a downside of 23%.</li>
</ul>


As we expected, the expansion of Freshippo cut margin.
We find the exemption of third-party retailer commission also squeezed margin.
Revenue still grew fast.
We believe the stock price has a downside of 23%.


Alibaba (BABA): One More Factor Squeezing Margin in 2Q21 Than Expected

Equity Analyst, LightStream Research

Supun Walpola

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 Capital Markets

The best move for Ant currently seems to be to negotiate with the authorities to get the suspended IPO up and running as soon as possible. However, given the nature of the provisions of the newly proposed regulations on online lending, we believe that this alone might not be sufficient to make Ant attractive again in the eyes of investors. Ant will also need to find a way to fight off the incoming regulations if it wants to continue to leverage the Chinese consumer credit boom.

The best move for Ant currently seems to be to negotiate with the authorities to get the suspended IPO up and running as soon as possible. However, given the nature of the provisions of the newly proposed regulations on online lending, we believe that this alone might not be sufficient to make Ant attractive again in the eyes of investors. Ant will also need to find a way to fight off the incoming regulations if it wants to continue to leverage the Chinese consumer credit boom.

Ant Group: A Suspended IPO Could Be Only the Start of Ant’s Woes

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Alibaba Group Holding  / Technical Analysis

BABA's gap lower provides a good resistance ceiling to mark an area to reduce long exposure amid a more bullish US market equity tone and micro negative news on ANT. Our focus is on trimming long exposure and pinpointing  support to re cycle/buy.Price peaks in July, August and October have not be confirmed by indicators for a case of bear divergence.Weaker buy volume trend on new price highs implies the rise is not only mature but vulnerable.

BABA's gap lower provides a good resistance ceiling to mark an area to reduce long exposure amid a more bullish US market equity tone and micro negative news on ANT. Our focus is on trimming long exposure and pinpointing  support to re cycle/buy.Price peaks in July, August and October have not be confirmed by indicators for a case of bear divergence.Weaker buy volume trend on new price highs implies the rise is not only mature but vulnerable.

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Despite strong volume growth, Chinese express delivery firms <a href="https://www.smartkarma.com/entities/ningbo-xinhai-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:10863:1" rel="noopener">Yunda Holding (002120 CH)</a>, <a href="https://www.smartkarma.com/entities/yto-express" target="_blank" data-smartkarma-citation="entities:20319:1" rel="noopener">YTO Express (600233 CH)</a>, and <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a> all reported poor earnings results in Q3.
On a combined basis, Gross Margin for these three companies declined by over 500 bps YoY, to just 6.8%. The three companies' combined Gross Margins have fallen by about two-thirds since Q316.
With Operating Cash Flow declining sharply in recent periods, these companies will soon face a tough choice: raise debt or equity capital to fund CapEx, or cut back on investments. The first choice would smother future growth; the latter would undermine long-term competitiveness.
In contrast to the struggles of Yunda, YTO, and STO, <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>'s strategy of moving down-market to increase its share of inter-city parcel volumes continues to generate positive results. We retain our BUY rating on SF Holding on the expectation it can continue to profitably gain express market share in the medium-term.

Despite strong volume growth, Chinese express delivery firms Yunda Holding (002120 CH), YTO Express (600233 CH), and STO Express (002468 CH) all reported poor earnings results in Q3.
On a combined basis, Gross Margin for these three companies declined by over 500 bps YoY, to just 6.8%. The three companies' combined Gross Margins have fallen by about two-thirds since Q316.
With Operating Cash Flow declining sharply in recent periods, these companies will soon face a tough choice: raise debt or equity capital to fund CapEx, or cut back on investments. The first choice would smother future growth; the latter would undermine long-term competitiveness.
In contrast to the struggles of Yunda, YTO, and STO, S.F. Holding (002352 CH)'s strategy of moving down-market to increase its share of inter-city parcel volumes continues to generate positive results. We retain our BUY rating on SF Holding on the expectation it can continue to profitably gain express market share in the medium-term. 

Bad, Worse, & Worst | Ugly Q320 Results from Yunda, YTO Express, & STO Express

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> almost raised US$35bn in the largest IPO in history. While the IPO may eventually proceed, we are unsure of the valuations the company could demand the next time around.Following the suspension of listing on the STAR Market by the Shanghai Stock Exchange due to a 'major event', <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> announced the suspension of the H-share listing too. The company also said that the refund of the application monies will be made as soon as possible to Hong Kong retail investors.This 'major event' will have knock-on implications for a host of other trades/strategies as well. In this Insight, we take a look at some of them.

Ant Group (6688 HK) almost raised US$35bn in the largest IPO in history. While the IPO may eventually proceed, we are unsure of the valuations the company could demand the next time around.Following the suspension of listing on the STAR Market by the Shanghai Stock Exchange due to a 'major event', Ant Group (6688 HK) announced the suspension of the H-share listing too. The company also said that the refund of the application monies will be made as soon as possible to Hong Kong retail investors.This 'major event' will have knock-on implications for a host of other trades/strategies as well. In this Insight, we take a look at some of them.

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)

Alibaba (BABA): One More Factor Squeezing Margin in 2Q21 Than Expected

As we expected, the expansion of Freshippo cut margin. We find the exemption of third-party retailer commission also squeezed margin.

Ming Lu

Ant Group: A Suspended IPO Could Be Only the Start of Ant’s Woes

On the back of Ant's IPO suspension, we take a look at how potential regulatory changes could materially affect Ant’s business.

Supun Walpola

BABA Sell Resistance and Fresh Long Zone

BABA's gap lower provides a good resistance to reduce long exposure amid a more bullish US market equity tone. Our pinpointing support to re cycle...

Thomas Schroeder

Bad, Worse, & Worst | Ugly Q320 Results from Yunda, YTO Express, & STO Express

Despite strong volume growth, a price war decimated earnngs for at least three of China's express delivery companies in Q3. Soon these companies...

Tracking Traffic

Ant Group: IPO Suspension Implications

With Ant Group suspending the H-share listing following SSE's suspension of the A-share listing, there will be multiple implications for trades and...

Brian Freitas

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