APAC IPOs & Placements

Zhen Zhou, Toh

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

<div><a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (1869782D US)</a> is looking to raise US$1bn in its upcoming U.S. IPO. </div><div>Tuya is a Platform as a Service (PaaS) and Software as a Service (SaaS) provider to businesses and developers with a focus on IoT. The company’s IoT PaaS enables businesses and developers to easily develop, launch, manage, and monetize software-enabled devices and services while its Industry SaaS helps businesses deploy, connect, and manage a large number and different types of smart devices.</div><div>
In this note, we will take a look at comparable peers, share our thoughts on forecast and valuation. 
We have previously covered the company in:
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<a href="https://www.smartkarma.com/insights/tuya-pre-ipo-ride-the-iot-wave-via-tuya-s-platform" target="_blank" data-smartkarma-citation="insights:48740" rel="noopener">Tuya (涂鸦智能) Pre-IPO - Ride the IoT Wave Via Tuya’s Platform</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/tuya-pre-ipo-tuya-s-platform-usage-review" target="_blank" data-smartkarma-citation="insights:48822" rel="noopener">Tuya (涂鸦智能) Pre-IPO - Tuya's Platform Usage Review</a> </li>
</ul>
</div>

Tuya Inc (1869782D US) is looking to raise US$1bn in its upcoming U.S. IPO. Tuya is a Platform as a Service (PaaS) and Software as a Service (SaaS) provider to businesses and developers with a focus on IoT. The company’s IoT PaaS enables businesses and developers to easily develop, launch, manage, and monetize software-enabled devices and services while its Industry SaaS helps businesses deploy, connect, and manage a large number and different types of smart devices.
In this note, we will take a look at comparable peers, share our thoughts on forecast and valuation. 
We have previously covered the company in:


Tuya (涂鸦智能) Pre-IPO - Ride the IoT Wave Via Tuya’s Platform 

Tuya (涂鸦智能) Pre-IPO - Tuya's Platform Usage Review 



Tuya (涂鸦智能) Pre-IPO - Peer Comparison, Forecast, and Valuation

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Swimmingly Down Under: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] reported FY 1H21 operating results. Although operating losses expectedly persist (AUD 79.2 mn vs. AUD 8.2 mn in 2H20), the numbers overall exhibited significant improvement: Financially, we see a light at the end of the tunnel for Afterpay on two fronts: a) receivables impairment increased AUD 25.4 mn (54.5%) HOH. As the global market recover post-vaccine, we’d expect impairments to decline; and b) fair value losses increased AUD 63.7 mn (58.6x). Simply excluding the fair value challenge, After pay would have operated at break-even;  and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 322% over the past nine  months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways.

*Swimmingly Down Under: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] reported FY 1H21 operating results. Although operating losses expectedly persist (AUD 79.2 mn vs. AUD 8.2 mn in 2H20), the numbers overall exhibited significant improvement: Financially, we see a light at the end of the tunnel for Afterpay on two fronts: a) receivables impairment increased AUD 25.4 mn (54.5%) HOH. As the global market recover post-vaccine, we’d expect impairments to decline; and b) fair value losses increased AUD 63.7 mn (58.6x). Simply excluding the fair value challenge, After pay would have operated at break-even;  and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 322% over the past nine  months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways. 

Telco/Internet specialist

Kirk Boodry

Redex Research

<a target="_blank"></a>Coupang is by far the leader in one of the most compelling markets for eCommerce globally and one of the most attractive of the Vision Fund portfolio companies. But it is expensive: the $30 max offer price implies a 5x appreciation in value from its last private funding round in 2018 and a FY21 EV/sales multiple of 2.6x almost on par with Amazon which is a global leader in both eCommerce and cloud.  We value Coupang below the range at $26 using a 9-year DCF driven by 17% revenue CAGR and an 8% terminal OP margin.    This report includes our initial forecasts, valuation, a summary of the investment highlights and a list of questions we would ask on the roadshow.<h2>Highlights</h2>Coupang dominates a very attractive eCommerce market.  Korea scores high on two measures of eCommerce predictive success, Internet penetration and population density and Coupang is by-far the leading provider. It helps that global competition has been unable to gain traction whilst traditional retailers are smaller scale relative to other markets.eCommerce demand has accelerated as Covid-19 accelerates augments a secular shift in retail sales to online platforms.  Revenue growth expanded from 71% in Q4 19 to 100% in Q4 20 but expanding growth was a feature through 2019 as well. eCommerce penetration of c. 25% may have nearly doubled in FY20 although some of that demand shift may revert as the impact of Covid-19 fades.The company is flirting with profitability. Operating margins have moved from -30% in FY16 to -4% in FY20 with corresponding improvement in EBITDA (-30% to -3%).  In our model, we assume Coupang breaks even in FY21 although higher share-based compensation and/or higher spending as it puts IPO proceeds to work could extend that.But it is still burning a lot of cash.  Coupang might be close to break-even operationally but it has largely spent the money it received from <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>  in 2018. Over the last three years, $2.7bn has gone out the door including c. $800mn in FY20 alone (our measure of operating cash flow).Comparable valuations and relative changes to valuation highlight the premium valuation. <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>  max offer price values the company similarly to Amazon on FY21 EV/sales (2.7x v 2.8x) but the latter is a global leader and not just in eCommerce but cloud too. Similarly, Coupang’s value appreciation from its last private funding and March 2020 lows has outpaced peer group, sometimes significantly.

Coupang is by far the leader in one of the most compelling markets for eCommerce globally and one of the most attractive of the Vision Fund portfolio companies. But it is expensive: the $30 max offer price implies a 5x appreciation in value from its last private funding round in 2018 and a FY21 EV/sales multiple of 2.6x almost on par with Amazon which is a global leader in both eCommerce and cloud.  We value Coupang below the range at $26 using a 9-year DCF driven by 17% revenue CAGR and an 8% terminal OP margin.    This report includes our initial forecasts, valuation, a summary of the investment highlights and a list of questions we would ask on the roadshow.HighlightsCoupang dominates a very attractive eCommerce market.  Korea scores high on two measures of eCommerce predictive success, Internet penetration and population density and Coupang is by-far the leading provider. It helps that global competition has been unable to gain traction whilst traditional retailers are smaller scale relative to other markets.eCommerce demand has accelerated as Covid-19 accelerates augments a secular shift in retail sales to online platforms.  Revenue growth expanded from 71% in Q4 19 to 100% in Q4 20 but expanding growth was a feature through 2019 as well. eCommerce penetration of c. 25% may have nearly doubled in FY20 although some of that demand shift may revert as the impact of Covid-19 fades.The company is flirting with profitability. Operating margins have moved from -30% in FY16 to -4% in FY20 with corresponding improvement in EBITDA (-30% to -3%).  In our model, we assume Coupang breaks even in FY21 although higher share-based compensation and/or higher spending as it puts IPO proceeds to work could extend that.But it is still burning a lot of cash.  Coupang might be close to break-even operationally but it has largely spent the money it received from Softbank Group (9984 JP)  in 2018. Over the last three years, $2.7bn has gone out the door including c. $800mn in FY20 alone (our measure of operating cash flow).Comparable valuations and relative changes to valuation highlight the premium valuation. Coupang (CPNG US)  max offer price values the company similarly to Amazon on FY21 EV/sales (2.7x v 2.8x) but the latter is a global leader and not just in eCommerce but cloud too. Similarly, Coupang’s value appreciation from its last private funding and March 2020 lows has outpaced peer group, sometimes significantly.

Coupang IPO and Softbank Group - A Vision Fund Jewel Emerges but It Is Pricey

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month. Yesterday, it undertook a share subdivision and ADR to shares ratio adjustment in its EGM.  So far ten companies have undertaken a secondary listing in Hong Kong, raising a total of US$28bn with a range of US$0.5-11.4bn. Along with covering all of the past listings, we have also looked at the drivers for the secondary listings in our earlier notes, links to which are below: <ul>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline looks rich, have three years to move</a>, published in Feb 2021, we looked at the recent updates from the Holding Foreign Companies Accountable Act and Hong Kong Exchanges changes to corporate weighted average voting rights. In this note, we’ll take an early look at the deal and talk about likely timing and impact of the raising.</li>
</ul>In this note, we’ll take a look at the deal and talk about the likely impact of the raising.

Baidu (BIDU US) plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month. Yesterday, it undertook a share subdivision and ADR to shares ratio adjustment in its EGM.  So far ten companies have undertaken a secondary listing in Hong Kong, raising a total of US$28bn with a range of US$0.5-11.4bn. Along with covering all of the past listings, we have also looked at the drivers for the secondary listings in our earlier notes, links to which are below: 

China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline looks rich, have three years to move, published in Feb 2021, we looked at the recent updates from the Holding Foreign Companies Accountable Act and Hong Kong Exchanges changes to corporate weighted average voting rights. In this note, we’ll take an early look at the deal and talk about likely timing and impact of the raising.
In this note, we’ll take a look at the deal and talk about the likely impact of the raising.

Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Since my last detailed look at <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>’s valuation back in September last year (<a href="https://www.smartkarma.com/insights/baidu-strategies-for-operating-in-an-industry-in-decline" target="_blank" data-smartkarma-citation="insights:43393" rel="noopener">Baidu: Strategies for Operating in an Industry in Decline</a>) Baidu’s share price has witnessed a meteoric rise of 170%, re-rating from 6.2x to 16.9x NTM EV/EBITDA.This has been driven by several catalysts, such as M&amp;A into live streaming, increased share buybacks, the continued prospect of a Hong Kong listing, and improved reported earnings, but most-of-all, by their announcement that they plan to start an intelligent electric vehicle company in strategic partnership with <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a>. Following their recent 4Q20 results, management also went to great lengths to highlight the revenue growth acceleration in their “Non-marketing Baidu Core” sub-segment, emphasising the shift away from their traditional Core Search Advertising, or mobile ecosystem, to diversify revenue streams. In this insight, I take a closer look at this sub-segment and analyse what the current market value implies for those operations, as well as their future “intelligent electric vehicle” venture.

Since my last detailed look at Baidu (BIDU US)’s valuation back in September last year (Baidu: Strategies for Operating in an Industry in Decline) Baidu’s share price has witnessed a meteoric rise of 170%, re-rating from 6.2x to 16.9x NTM EV/EBITDA.This has been driven by several catalysts, such as M&amp;A into live streaming, increased share buybacks, the continued prospect of a Hong Kong listing, and improved reported earnings, but most-of-all, by their announcement that they plan to start an intelligent electric vehicle company in strategic partnership with Geely Auto (175 HK). Following their recent 4Q20 results, management also went to great lengths to highlight the revenue growth acceleration in their “Non-marketing Baidu Core” sub-segment, emphasising the shift away from their traditional Core Search Advertising, or mobile ecosystem, to diversify revenue streams. In this insight, I take a closer look at this sub-segment and analyse what the current market value implies for those operations, as well as their future “intelligent electric vehicle” venture.

Baidu: A Closer Look at Non-Marketing Baidu Core. What Are We Paying for EV?

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOG US)

Tuya (涂鸦智能) Pre-IPO - Peer Comparison, Forecast, and Valuation

Tuya Inc (1869782D US) is looking to raise US$1bn in its upcoming U.S. IPO. In this note, we will take a look at comparable peers, share our...

Zhen Zhou, Toh

Tencent Holdings – Money to Burn

TENCENT HOLDINGS: Tencent's Afterpay expectedly reported FY 1H21 operating losses, but the numbers overall exhibited significant improvement as it...

Thomas J. Monaco

Coupang IPO and Softbank Group - A Vision Fund Jewel Emerges but It Is Pricey

Coupang's IPO is a win for the company and its largest holder Softbank but the max offer price of $30 is too pricey - we think it is worth closer...

Kirk Boodry

Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year

Baidu plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month.

Sumeet Singh

Baidu: A Closer Look at Non-Marketing Baidu Core. What Are We Paying for EV?

In this insight, I take a closer look at “Non-marketing Baidu Core” and analyse what the current market value implies for those operations, as well...

Wium Malan, CFA

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