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>Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce.</li>
<li>However, many expansion plans follow, including overseas market, physical stores, and fresh food wholesale.</li>
<li>We set an upside of 51% and a price target of HK$115 for March 2025.</li>
</ul>


Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce.
However, many expansion plans follow, including overseas market, physical stores, and fresh food wholesale.
We set an upside of 51% and a price target of HK$115 for March 2025.


Alibaba (9988 HK/BABA): 1Q25, Growth Lower Than Expectation, But Many Expansion Plans Following

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

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>Gaming Sector Update/NTES US: NPPA Releases November Domestic and Imported Game Approvals(+)</li>
<li>3690 HK/Douyin:Douyin Local Life’s Double 11 Sales Increase by 53% YoY, Indicating Rising Consumer Spending in China, Bodes Well for Meituan.(+)</li>
<li>BABA US/PDD US/JD US: Taobao/Tmall launches “Go Bargain” feature (+/+/+)</li>
</ul>


Gaming Sector Update/NTES US: NPPA Releases November Domestic and Imported Game Approvals(+)
3690 HK/Douyin:Douyin Local Life’s Double 11 Sales Increase by 53% YoY, Indicating Rising Consumer Spending in China, Bodes Well for Meituan.(+)
BABA US/PDD US/JD US: Taobao/Tmall launches “Go Bargain” feature (+/+/+)


[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>We compared similar growth stage of Alibaba to Pinduoduo, when GMV of both platforms increase from RMB1 trillion to RMB4 trillion, to facilitate better understanding of efficiency edge of Pinduoduo.</li>
<li>Contrary to consensus, Pinduoduo didn’t do better than Alibaba on OPEX (advertising expenditure in particular), but it did extract much greater value from the ecosystem via significantly higher take-rate.</li>
<li>The findings highlight how Pinduoduo aggregate user traffic at surprisingly high cost to beef up merchant competition in terms of cost optimization and user acquisition, with Pinduoduo  reaping greatest value.</li>
</ul>


We compared similar growth stage of Alibaba to Pinduoduo, when GMV of both platforms increase from RMB1 trillion to RMB4 trillion, to facilitate better understanding of efficiency edge of Pinduoduo.
Contrary to consensus, Pinduoduo didn’t do better than Alibaba on OPEX (advertising expenditure in particular), but it did extract much greater value from the ecosystem via significantly higher take-rate.
The findings highlight how Pinduoduo aggregate user traffic at surprisingly high cost to beef up merchant competition in terms of cost optimization and user acquisition, with Pinduoduo  reaping greatest value.


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.</li>
<li>We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and that number will change over the next 3 weeks depending on performance.</li>
</ul>


The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.

Meituan (3690 HK)'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.
We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of Meituan (3690 HK) and that number will change over the next 3 weeks depending on performance.


Meituan (3690 HK): Big Passive Selling in December

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)

Alibaba (9988 HK/BABA): 1Q25, Growth Lower Than Expectation, But Many Expansion Plans Following

Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce. However, many expansion plans follow, including overseas market,...

Ming Lu

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

Blue Lotus Research Institute

Pinduoduo: Behind Its Efficiency Edge

Comparison between Alibaba and Pinduoduo at similar growth stages reveals Pinduoduo's efficiency edge through higher take-rate despite higher...

Eric Chen

Meituan (3690 HK): Big Passive Selling in December

Meituan's recent underperformance will result in smaller passive selling than originally forecast. Passive trackers are now estimated to sell 27.4m...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Alibaba (9988 HK/BABA): 1Q25, Growth Lower Than Expectation, But Many Expansion Plans Following

Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce. However, many expansion plans follow, including overseas market,...

Ming Lu

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

​China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

Blue Lotus Research Institute

Pinduoduo: Behind Its Efficiency Edge

​Comparison between Alibaba and Pinduoduo at similar growth stages reveals Pinduoduo's efficiency edge through higher take-rate despite higher...

Eric Chen

Meituan (3690 HK): Big Passive Selling in December

Meituan's recent underperformance will result in smaller passive selling than originally forecast. Passive trackers are now estimated to sell 27.4m...

Brian Freitas

China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

Comparison between Alibaba and Pinduoduo at similar growth stages reveals Pinduoduo's efficiency edge through higher take-rate despite higher...