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

RLX Technology Inc / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p></div><div><p>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</p></div><div>
<p>Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.</p>
<p>However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.</p>
<p>In my earlier insight, <a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a>, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. </p>
</div>

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.
Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.
However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.
In my earlier insight, RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. 


RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

Alibaba Group Holding  / Equity Capital Markets

<p>2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. </p><p>We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.</p><p>For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.</p>

2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for the first time since the WeWork debacle. The improvement comes despite weakness for Alibaba which has fallen 26% since late October on regulatory concerns. Holding the discounted value of Alibaba steady, the discount on the remaining assets has fallen to the mid-teens. With Q3 now in the books, quarterly results should be solid thanks to upside in the public share portfolio boosted by new listings like DoorDash and Opendoor. The next big event will be management comments at Q3 results in early February and absent a tech sell-off, the same positive Vision Fund sentiment and buyback support that helped shares get this far should keep the discount from widening. </p>

A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for the first time since the WeWork debacle. The improvement comes despite weakness for Alibaba which has fallen 26% since late October on regulatory concerns. Holding the discounted value of Alibaba steady, the discount on the remaining assets has fallen to the mid-teens. With Q3 now in the books, quarterly results should be solid thanks to upside in the public share portfolio boosted by new listings like DoorDash and Opendoor. The next big event will be management comments at Q3 results in early February and absent a tech sell-off, the same positive Vision Fund sentiment and buyback support that helped shares get this far should keep the discount from widening. 

Softbank Group -  Buybacks and New Listings Have Narrowed Discount to Two-Year Peak

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.

<ul>
<li>Singapore based internet company, <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>, benefitted from the COVID-19 pandemic as Sea’s three main businesses lines, mobile gaming platform called Garena, an e-commerce platform called Shopee and a fintech business called SeaMoney experienced a rapid acceleration of revenue growth following the COVID-19 outbreak. As a result, the company’s share price surged over 400% during 2020.</li>
<li>In two previous insights on Sea Ltd, we analysed the fundamentals and long-term prospects of the company’s main business lines. This insight focuses on Sea’s valuation.</li>
</ul>


Singapore based internet company, Sea Ltd (SE US), benefitted from the COVID-19 pandemic as Sea’s three main businesses lines, mobile gaming platform called Garena, an e-commerce platform called Shopee and a fintech business called SeaMoney experienced a rapid acceleration of revenue growth following the COVID-19 outbreak. As a result, the company’s share price surged over 400% during 2020.
In two previous insights on Sea Ltd, we analysed the fundamentals and long-term prospects of the company’s main business lines. This insight focuses on Sea’s valuation.


Sea Ltd Valuation: SOTP Suggests Over 40% Downside Risk

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Jack Ma’s internet empire has been in disarray recently. It began when Chinese regulators halted the $35 billion IPO of <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> spinoff, <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>, the world's largest financial technology company.</li>
<li>Earlier in the month, China’s top antitrust watchdog, The State Administration for Market Regulation (SAMR), fined Alibaba RMB 500,000 for not making adequate declarations to authorities about past acquisitions.</li>
<li>Last week, SAMR filled an investigation into Alibaba’s suspected monopolistic practices and The People's Bank of China ordered Ant group to formulate a rectification plan and an implementation timetable to comply with new regulatory and anti-monopoly requirements.</li>
</ul>


Jack Ma’s internet empire has been in disarray recently. It began when Chinese regulators halted the $35 billion IPO of Alibaba Group (9988 HK) spinoff, Ant Group (6688 HK), the world's largest financial technology company.
Earlier in the month, China’s top antitrust watchdog, The State Administration for Market Regulation (SAMR), fined Alibaba RMB 500,000 for not making adequate declarations to authorities about past acquisitions.
Last week, SAMR filled an investigation into Alibaba’s suspected monopolistic practices and The People's Bank of China ordered Ant group to formulate a rectification plan and an implementation timetable to comply with new regulatory and anti-monopoly requirements.


Jack Ma in Xi’s Crosshairs: Alibaba Could Be Collateral Damage

China

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

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Ant Group (6688 HK)

RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

RLX Technology (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

2020 marked our second year of operations as an Independent Research Company, and our fifth year covering ECM. In 2020 we had an accuracy rate of...

Sumeet Singh

Softbank Group - Buybacks and New Listings Have Narrowed Discount to Two-Year Peak

A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for...

Kirk Boodry

Sea Ltd Valuation: SOTP Suggests Over 40% Downside Risk

The total EV of Sea’s three main segments is US$ 57.6 billion compared to Sea’s current EV of US$ 100.4 billion. Our SOTP valuation implies 42%...

Oshadhi Kumarasiri

Jack Ma in Xi’s Crosshairs: Alibaba Could Be Collateral Damage

The growing discord between Jack Ma and the government makes us second guess an investment in any Jack Ma related business regardless of their...

Oshadhi Kumarasiri

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