Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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 Chinese search giant <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  has set the terms for its IPO where it plans to issue 95m shares at a maximum indicative price of HK$295 per share. At the above price, Baidu will raise net proceeds of HK$27.6bn (approx. US$3.6bn). Each ADS represents eight ordinary shares of the company, and the maximum HK offer price implies approx. US$304.3 per ADS, about 12% premium to Baidu’s last close price of US$272.38 per ADS. The Hong Kong offering of 95m shares will constitute approx. 3.4% of the extended share capital of the company.In our previous insight on Baidu’s secondary listing, we discussed Baidu’s business segments and highlighted that the next phase of growth for the company will be driven by its AI Cloud business that includes self-driving and intelligent EVs. The top line from AI Cloud business has more than tripled over the past three years. Baidu plans to use 50% of its net IPO proceeds on investing in enhancing its AI and autonomous driving capabilities.

The Chinese search giant Baidu (BIDU US)  has set the terms for its IPO where it plans to issue 95m shares at a maximum indicative price of HK$295 per share. At the above price, Baidu will raise net proceeds of HK$27.6bn (approx. US$3.6bn). Each ADS represents eight ordinary shares of the company, and the maximum HK offer price implies approx. US$304.3 per ADS, about 12% premium to Baidu’s last close price of US$272.38 per ADS. The Hong Kong offering of 95m shares will constitute approx. 3.4% of the extended share capital of the company.In our previous insight on Baidu’s secondary listing, we discussed Baidu’s business segments and highlighted that the next phase of growth for the company will be driven by its AI Cloud business that includes self-driving and intelligent EVs. The top line from AI Cloud business has more than tripled over the past three years. Baidu plans to use 50% of its net IPO proceeds on investing in enhancing its AI and autonomous driving capabilities.

Baidu Secondary: SOTP Offers Decent Upside with Conservative Assumptions

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.

Event-Driven

Youzan Technology (YT) is looking to list by way of introduction, as its parent <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> aims to distribute its shares in YT and pay some cash on top and delist.
While we normally don't cover such listings, as there will be no bookbuild etc, in this insight, we take a quick look based on a special client's request.

Youzan Technology (YT) is looking to list by way of introduction, as its parent China Youzan Limited (8083 HK) aims to distribute its shares in YT and pay some cash on top and delist.
While we normally don't cover such listings, as there will be no bookbuild etc, in this insight, we take a quick look based on a special client's request.

Youzan Technology IPO Quick Look- Great Headline Numbers but Client Growth Is Slow and Churn Is High

The Chinese internet search giant <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  has passed its listing hearing for a secondary listing on the Hong Kong Stock Exchange. Baidu’s secondary listing document didn’t provide the terms of the IPO, however, according to news media outlets, Baidu could raise as much as US$4-5bn through its HKEX offering.Though Baidu has been known as a search engine for the past two decades, the company has finally been able to monetise its efforts in AI and related technologies. Baidu’s core online advertising business growth has slowed down (negative over the last two years), and at the same time, we remain concerned about the prospects of <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a> as well as recently acquired YY Live business from <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> . However, we believe Baidu’s next phase of growth will be driven by its AI Cloud business that includes self-driving and intelligent EVs. The top line from AI Cloud business has more than tripled over the past three years.We believe the motive behind Baidu’s secondary listing close to its home is far from raising funds to fuel its business growth as the company is rich in cash. Baidu reported cash and cash equivalents of US$5.5bn and short-term investments of US$19.3bn as at the end of December 2020. Cash and short-term investments together accounted for nearly 50% of the company’s total assets as of that date. On the other hand, Baidu’s total debt of around US$11.6bn accounted for about 60% of the cash and short-term investment balance.

The Chinese internet search giant Baidu (BIDU US)  has passed its listing hearing for a secondary listing on the Hong Kong Stock Exchange. Baidu’s secondary listing document didn’t provide the terms of the IPO, however, according to news media outlets, Baidu could raise as much as US$4-5bn through its HKEX offering.Though Baidu has been known as a search engine for the past two decades, the company has finally been able to monetise its efforts in AI and related technologies. Baidu’s core online advertising business growth has slowed down (negative over the last two years), and at the same time, we remain concerned about the prospects of iQIYI Inc (IQ US) as well as recently acquired YY Live business from JOYY (YY US) . However, we believe Baidu’s next phase of growth will be driven by its AI Cloud business that includes self-driving and intelligent EVs. The top line from AI Cloud business has more than tripled over the past three years.We believe the motive behind Baidu’s secondary listing close to its home is far from raising funds to fuel its business growth as the company is rich in cash. Baidu reported cash and cash equivalents of US$5.5bn and short-term investments of US$19.3bn as at the end of December 2020. Cash and short-term investments together accounted for nearly 50% of the company’s total assets as of that date. On the other hand, Baidu’s total debt of around US$11.6bn accounted for about 60% of the cash and short-term investment balance.

Baidu Secondary Listing: At the Crossroads

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Zhihu Technology / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC. Zhihu is acknowledged as the first choice among all online content communities in China where people look for information to make decisions or find answers, according to CIC.Zhihu is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (12.3% of outstanding shares, 7.1% of voting interest), <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> (8.3% of outstanding shares, 4.8% of voting interest) and <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> (5.0% of outstanding shares, 2.9% of voting interest). Zhihu has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Online content communities have a high level of user engagement, which enables them to pursue a wide variety of monetisation opportunities, resulting in more sustainable business models. Q&amp;A content by nature encourages a high level of user interaction and stirs sharing of knowledge, experience and insights. Crucially, users are progressively demanding quality online content and have shown a growing willingness to pay for them. Over 80% of surveyed users are willing to pay more for high-quality online content in the future, according to CIC. Also, merchants and brands in China increasingly use online content communities for marketing services to help develop a brand narrative that can appeal to customers and drive conversion.<div class="content-highlight">As the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from these favourable trends. Overall, we believe that Zhihu’s fundamentals are attractive.</div>

Zhihu Technology (ZH US) is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC. Zhihu is acknowledged as the first choice among all online content communities in China where people look for information to make decisions or find answers, according to CIC.Zhihu is backed by Tencent Holdings (700 HK) (12.3% of outstanding shares, 7.1% of voting interest), Kuaishou Technology (1024 HK) (8.3% of outstanding shares, 4.8% of voting interest) and Baidu (BIDU US) (5.0% of outstanding shares, 2.9% of voting interest). Zhihu has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Online content communities have a high level of user engagement, which enables them to pursue a wide variety of monetisation opportunities, resulting in more sustainable business models. Q&amp;A content by nature encourages a high level of user interaction and stirs sharing of knowledge, experience and insights. Crucially, users are progressively demanding quality online content and have shown a growing willingness to pay for them. Over 80% of surveyed users are willing to pay more for high-quality online content in the future, according to CIC. Also, merchants and brands in China increasingly use online content communities for marketing services to help develop a brand narrative that can appeal to customers and drive conversion.As the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from these favourable trends. Overall, we believe that Zhihu’s fundamentals are attractive.

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>BILI encourages users to upload videos different from game live broadcasting and anime.</li>
<li>BILI does not have strong ability in independent research and development of game.</li>
<li>Tencent aims to contain BILI’s game live broadcasting.</li>
<li>BILI will continue the financing and growing game.</li>
</ul>


BILI encourages users to upload videos different from game live broadcasting and anime.
BILI does not have strong ability in independent research and development of game.
Tencent aims to contain BILI’s game live broadcasting.
BILI will continue the financing and growing game.


Bilibili (BILI): Business Breakout, An Story of What BILI Was and Will Be

China

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

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Kuaishou Technology (1024 HK)

Baidu Secondary: SOTP Offers Decent Upside with Conservative Assumptions

Our SOTP Valuation implies HK$303.7 per ordinary share outstanding, a 3% premium to the company’s maximum HK offer price of HK$295 per share and we...

Shifara Samsudeen, ACMA, CGMA

Youzan Technology IPO Quick Look- Great Headline Numbers but Client Growth Is Slow and Churn Is High

Youzan Technology (YT) is looking to list by way of introduction, as its parent China Youzan Limited (8083 HK) aims to distribute its shares in YT...

Sumeet Singh

Baidu Secondary Listing: At the Crossroads

Baidu’s core online advertising business growth has been slowing down, however, Baidu's efforts in AI and advanced technologies have begun to bear...

Shifara Samsudeen, ACMA, CGMA

Zhihu IPO Initiation: Question Time

Zhihu has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Overall, we believe that Zhihu’s fundamentals are...

Arun George

Bilibili (BILI): Business Breakout, An Story of What BILI Was and Will Be

BILI encourages users to upload videos different from game live broadcasting and anime. There are two reasons that BILI has to. The financing and...

Ming Lu

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