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.

Equity Capital Markets

Kuaishou Technology / Equity Capital Markets

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<p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Beijing Kuaishou Technology Co Ltd (1496219D CH)</a> is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising <em>Kuaishou Flagship, Kuaishou Express</em> and <em>Kuaishou Concept</em>, which is collectively referred to as the Kuaishou App.</p>
<p>Kuaishou is seeking to raise $5 billion at a $50 billion valuation as early as this month, according to press reports. The rumoured valuation is a significant increase to the January 2020 Series F round - a raise of $3 billion at a $28-30 billion valuation, according to press reports. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kuaishou-ipo-initiation-dancing-to-its-own-tune" target="_blank" data-smartkarma-citation="insights:45032" rel="noopener">Kuaishou IPO Initiation: Dancing to Its Own Tune</a>, we opined that Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive. In this note, we take a first look at Kuaishou's valuation. Overall, based on valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div></div></div>


Beijing Kuaishou Technology Co Ltd (1496219D CH) is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising Kuaishou Flagship, Kuaishou Express and Kuaishou Concept, which is collectively referred to as the Kuaishou App.
Kuaishou is seeking to raise $5 billion at a $50 billion valuation as early as this month, according to press reports. The rumoured valuation is a significant increase to the January 2020 Series F round - a raise of $3 billion at a $28-30 billion valuation, according to press reports. 
In Kuaishou IPO Initiation: Dancing to Its Own Tune, we opined that Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive. In this note, we take a first look at Kuaishou's valuation. Overall, based on valuation analysis, we think that the rumoured IPO valuation can be justified.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

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<p><strong>Kuaishou is getting ready to complete its IPO in the HK exchange on 5 <a href="https://pandaily.com/short-video-app-kuaishou-aims-for-february-ipo-in-hong-kong-report/" target="_blank" rel="noopener">February</a> 2021. Kuaishou will be one of the largest IPOs in the world in 2021. </strong></p>
<p>Kuaishou was last valued at <a href="https://www.scmp.com/business/companies/article/3114992/tencent-backed-video-platform-kuaishou-targets-january-ipo-hong" target="_blank" rel="noopener">US$30 billion</a> in the private market valuations in late 2019 and raised US$3 billion at this time. According to the Chinese media outlet 36KR, Kuaishou Technology is targeting a valuation of HK$390 billion (US$50 billion) and raise up to US$5 billion from the IPO. Tencent owns a 21.6% stake in Kuaishou, which plans to use the proceeds from the IPO on marketing, artificial intelligence and data analytics upgrade, and pursue M&amp;A opportunities. </p>
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<div>Kuaishou is the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV in China, all for the six months ended June 30, 2020.</div>
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<div>The company generated 39.1 billion RMB in revenue in 2019, up 92.7% YoY. From 2017 to 2019, Kuaishou's revenue increased at a CAGR of 117%. The company's gross margins improved from 28.6% in 2018 to 36.1% in 2019.  Its operating margin also improved from -2.6% in 2018 to 1.8% in 2019. The company's revenue growth slowed down in 1H 2020. Kuaishou generated revenue of 25.3 billion RMB in 1H 2020, up 48.3% YoY.</div>
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Kuaishou is getting ready to complete its IPO in the HK exchange on 5 February 2021. Kuaishou will be one of the largest IPOs in the world in 2021. 
Kuaishou was last valued at US$30 billion in the private market valuations in late 2019 and raised US$3 billion at this time. According to the Chinese media outlet 36KR, Kuaishou Technology is targeting a valuation of HK$390 billion (US$50 billion) and raise up to US$5 billion from the IPO. Tencent owns a 21.6% stake in Kuaishou, which plans to use the proceeds from the IPO on marketing, artificial intelligence and data analytics upgrade, and pursue M&amp;A opportunities. 

Kuaishou is the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV in China, all for the six months ended June 30, 2020.

The company generated 39.1 billion RMB in revenue in 2019, up 92.7% YoY. From 2017 to 2019, Kuaishou's revenue increased at a CAGR of 117%. The company's gross margins improved from 28.6% in 2018 to 36.1% in 2019.  Its operating margin also improved from -2.6% in 2018 to 1.8% in 2019. The company's revenue growth slowed down in 1H 2020. Kuaishou generated revenue of 25.3 billion RMB in 1H 2020, up 48.3% YoY.


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.

<p>The Chinese short-video and livestreaming platform <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Beijing Kuaishou Technology Co Ltd (1496219D CH)</a>  has filed for an IPO to list its shares on the Hong Kong Stock Exchange. The company aims to raise up to US$5bn at a rumoured valuation of over US$50bn.</p><p>In our previous insights on the company’s IPO, we examined Kuaishou’s business model, industry, segments and its revenues. Refer the extract below from our previous insight <em>on the company’s revenue analysis:</em></p><div class="content-highlight"><p><em>Given the livestreaming and video-based social platforms offer large monetisation opportunities for video content sharing platforms such as Kuaishou, we expect the company’s top line to continue benefit from the positive trend in the industry. The company has already ventured into several other areas to bring in revenues such as online games, e-commerce, creation of learning content, etc. We believe Kuaishou will continue to find new avenues to expand its revenue base and we expect online marketing services, e-commerce and other new businesses to drive Kuaishou’s future revenues.</em></p></div><p>In this insight, we take a look at the company’s cost structure and margins.</p>

The Chinese short-video and livestreaming platform Beijing Kuaishou Technology Co Ltd (1496219D CH)  has filed for an IPO to list its shares on the Hong Kong Stock Exchange. The company aims to raise up to US$5bn at a rumoured valuation of over US$50bn.In our previous insights on the company’s IPO, we examined Kuaishou’s business model, industry, segments and its revenues. Refer the extract below from our previous insight on the company’s revenue analysis:Given the livestreaming and video-based social platforms offer large monetisation opportunities for video content sharing platforms such as Kuaishou, we expect the company’s top line to continue benefit from the positive trend in the industry. The company has already ventured into several other areas to bring in revenues such as online games, e-commerce, creation of learning content, etc. We believe Kuaishou will continue to find new avenues to expand its revenue base and we expect online marketing services, e-commerce and other new businesses to drive Kuaishou’s future revenues.In this insight, we take a look at the company’s cost structure and margins.

Kuaishou IPO: Stable Profits Seem Possible with Cost Discipline and Expanding Revenues

<p><a href="https://www.smartkarma.com/entities/yidu-tech-inc" target="_blank" data-smartkarma-citation="entities:29245:1" rel="noopener">Yidu Tech Inc (YID HK)</a>  is a big data and AI solutions provider for healthcare sector and the company was ranked no. 1 in terms of revenue among all healthcare big data solution providers in China in 2019.</p><p>The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange to raise about US$500m.</p><p>In our previous insight on the company’s IPO, we examined Yidu Tech’s business model, business segments, pricing, industry and a quick look at the company’s revenue and margins. In this insight, we deep dive into business segments and key performance drivers.</p><p>Read our previous insight on the company's IPO:</p><p><a href="https://www.smartkarma.com/insights/yidu-tech-pre-ipo-first-look" target="_blank" data-smartkarma-citation="insights:46340" rel="noopener">Yidu Tech Pre-IPO: First Look</a> </p>

Yidu Tech Inc (YID HK)  is a big data and AI solutions provider for healthcare sector and the company was ranked no. 1 in terms of revenue among all healthcare big data solution providers in China in 2019.The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange to raise about US$500m.In our previous insight on the company’s IPO, we examined Yidu Tech’s business model, business segments, pricing, industry and a quick look at the company’s revenue and margins. In this insight, we deep dive into business segments and key performance drivers.Read our previous insight on the company's IPO:Yidu Tech Pre-IPO: First Look 

Yidu Tech IPO: Strong Top Line Growth; New Markets and Offerings Should Support Further Growth

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Hang Seng Indexes Company Limited (HSIL) should announce the results of the March 2021 review of the Hang Seng Family of Indexes on 19 February. The constituent changes will be effective after the close of trading on 5 March.</p><p>We expect the March 21 review for the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> to have only 1 deletion, though there is a low probability of another set of changes. Post <a href="https://www.smartkarma.com/entities/jd-health-international" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>'s Fast Entry into the index, there needs to be one deletion at the March review. At the current time, the lowest ranked index constituent is <a href="https://www.smartkarma.com/entities/petrochina-co-ltd-h" target="_blank" data-smartkarma-citation="entities:262:1" rel="noopener">Petrochina Co Ltd H (857 HK)</a> and the stock should be deleted at the March review.</p><p>There was a medium probability of <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> being included in the index. That has now become a low probability event post <a href="https://www.smartkarma.com/entities/jd-health-international" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>'s inclusion in the index. If <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> is included in the index, then <a href="https://www.smartkarma.com/entities/hengan-intl-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan Intl Group (1044 HK)</a> could be deleted.</p><p>The potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> over the next 6 months will also have serious implications for the dividend futures expiring in 2021, 2022 and beyond.</p>

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the March 2021 review of the Hang Seng Family of Indexes on 19 February. The constituent changes will be effective after the close of trading on 5 March.We expect the March 21 review for the Hang Seng China Enterprises Index (HSCEI INDEX) to have only 1 deletion, though there is a low probability of another set of changes. Post JD Health (6618 HK)'s Fast Entry into the index, there needs to be one deletion at the March review. At the current time, the lowest ranked index constituent is Petrochina Co Ltd H (857 HK) and the stock should be deleted at the March review.There was a medium probability of Country Garden Services Holdings (6098 HK) being included in the index. That has now become a low probability event post JD Health (6618 HK)'s inclusion in the index. If Country Garden Services Holdings (6098 HK) is included in the index, then Hengan Intl Group (1044 HK) could be deleted.The potential changes to the Hang Seng China Enterprises Index (HSCEI INDEX) over the next 6 months will also have serious implications for the dividend futures expiring in 2021, 2022 and beyond.

HSCEI Index Rebalance Preview: One Deletion For Sure, Could Be One More Change

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)

Kuaishou IPO: Valuation First Look

Kuaishou is seeking to raise $5 billion at a $50 billion valuation as early as this month. Overall, based on valuation analysis, we think that the...

Arun George

Kuaishou Technology IPO Preview

Kuaishou is getting ready to complete its IPO in the HK exchange on 5 February 2021. Kuaishou will be one of the largest IPOs in the world in 2021.

Douglas Kim

Kuaishou IPO: Stable Profits Seem Possible with Cost Discipline and Expanding Revenues

In this insight, we take a look at the Chinese short-video and livestreaming platform Kuaishou's cost structure and margins.

Shifara Samsudeen, ACMA, CGMA

Yidu Tech IPO: Strong Top Line Growth; New Markets and Offerings Should Support Further Growth

Yidu Tech has filed for an IPO to list its shares on the Hong Kong Stock Exchange to raise about US$500m. In this insight, we deep dive into...

Shifara Samsudeen, ACMA, CGMA

HSCEI Index Rebalance Preview: One Deletion For Sure, Could Be One More Change

Following JD Health's Fast Entry into the HSCEI, PetroChina is a high probability deletion in March. There is a low probability of Country Garden...

Brian Freitas

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