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

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<p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> plans to raise up to USD 30bn via a dual listing in both Hong Kong Exchange and Shanghai STAR board. </p>
<p>We have provided our early thoughts of Ant Group as early as 2018. The details provided in the prospectus give investors a much more comprehensive understanding of the company, particularly the non-payment business. </p>
<p>In our previous notes, links to which are below, we have covered the company's background and its performance.</p>
<p>In this note, we will focus on some of the finer points of the financial statements. </p>
<p><strong><em>I have labelled this insight bearish because I'll talk about some of the not so pleasant aspects of the deal and not because I'm bearish on the deal.</em></strong></p>
</div><div><div><h3>Our previous coverage on Ant Group</h3></div></div><div><ul style="list-style-type: disc;">
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-what-s-new-about-the-listing-news" target="_blank" rel="noopener">Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors</a></p></li>
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-understand-the-fintech-empire-growth-and-risk-factors" target="_blank" rel="noopener">Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News</a></p></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-first-take-no-1-fintech-from-all-angles" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-numbers-suggest-it-s-more-tech-than-financials" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials</a></li>
</ul></div>


Ant Financial (1051260D CH) plans to raise up to USD 30bn via a dual listing in both Hong Kong Exchange and Shanghai STAR board. 
We have provided our early thoughts of Ant Group as early as 2018. The details provided in the prospectus give investors a much more comprehensive understanding of the company, particularly the non-payment business. 
In our previous notes, links to which are below, we have covered the company's background and its performance.
In this note, we will focus on some of the finer points of the financial statements. 
I have labelled this insight bearish because I'll talk about some of the not so pleasant aspects of the deal and not because I'm bearish on the deal.
Our previous coverage on Ant Group
Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors
Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News
Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles
Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials


Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask - Falling Fees, Margins, Cash Flow

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>Ant Group, the leading Chinese FinTech, has announced that it is preparing for its IPO which could come as soon as October</li>
<li>Press reports suggest a company valuation in the range of USD200-300bn, with management aiming to raise approximately USD30bn</li>
<li>In this report, we look at comparable listed FinTechs and financials and their valuations to construct a Sum Of The Parts (SOTP) valuation for Ant Group</li>
<li>We explore conservative, ambitious and base case valuation scenarios to arrive at a range of SOTP valuations; we see wealth management (InvestmentTech) as the biggest contributor to Ant Group’s over-all value</li>
<li>We then “sanity check” these SOTP scenarios against our initial Ant group financial forecasts, which we believe reflect the growth opportunity</li>
<li>Our SOTP metrics indicate that an IPO valuation of USD200-260bn should be very attractive to investors, in our view, given the relatively low PEG ratio; and an IPO valuation in the range USD260-300bn – although less compelling – would still be attractive, in our view</li>
<li>Risks to our positive view on Ant Group include a worsening of political tensions between the US and China which could act adversely impact US institutional investor appetite at the IPO, especially public employee pension funds; a key fundamental risk would be a slower-than-expected growth in digital payments, wealth asset gathering and consumer and SMB loan growth</li>
</ul>


Ant Group, the leading Chinese FinTech, has announced that it is preparing for its IPO which could come as soon as October
Press reports suggest a company valuation in the range of USD200-300bn, with management aiming to raise approximately USD30bn
In this report, we look at comparable listed FinTechs and financials and their valuations to construct a Sum Of The Parts (SOTP) valuation for Ant Group
We explore conservative, ambitious and base case valuation scenarios to arrive at a range of SOTP valuations; we see wealth management (InvestmentTech) as the biggest contributor to Ant Group’s over-all value
We then “sanity check” these SOTP scenarios against our initial Ant group financial forecasts, which we believe reflect the growth opportunity
Our SOTP metrics indicate that an IPO valuation of USD200-260bn should be very attractive to investors, in our view, given the relatively low PEG ratio; and an IPO valuation in the range USD260-300bn – although less compelling – would still be attractive, in our view
Risks to our positive view on Ant Group include a worsening of political tensions between the US and China which could act adversely impact US institutional investor appetite at the IPO, especially public employee pension funds; a key fundamental risk would be a slower-than-expected growth in digital payments, wealth asset gathering and consumer and SMB loan growth


Ant Group: SOTP Scenarios on Potential IPO Valuation

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>We have always enjoyed following IAC because we share a worldview with management about investing behind THE major secular trend in the world today…offline to online transition of massive TAMs. Even the largest TAMs in the world – groceries, entertainment, autos, commerce, finance, real estate, etc. are still incredibly early in the long term replatforming of how the global economy functions.</p><p>COVID has turbocharged these trends, which may be why we’ve seen such massive outperformance by the stocks at the forefront of these trends.</p><div><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We have always enjoyed following IAC because we share a worldview with management about investing behind THE major secular trend in the world today…offline to online transition of massive TAMs. Even the largest TAMs in the world – groceries, entertainment, autos, commerce, finance, real estate, etc. are still incredibly early in the long term replatforming of how the global economy functions.COVID has turbocharged these trends, which may be why we’ve seen such massive outperformance by the stocks at the forefront of these trends.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

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.

<p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a>/Ant Group is a technology company that provides digital payment services and digital financial services to consumers and small and micro businesses (SMBs) in China and across the world. Ant said last week it would pursue a simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. The Hong Kong share sale alone could raise about $10 billion at a $200 billion valuation, according to press reports. </p><div class="content-highlight"><p>In this note, we take a first look at Ant and run through its history, industry and operating segments. We then take a closer look at the rumoured $200 billion valuation in the context of Ant’s financial performance. Based on available disclosure, our estimates and peer group multiples, the $200 billion valuation is justifiable, in our view.  </p></div>

Ant Financial (1051260D CH)/Ant Group is a technology company that provides digital payment services and digital financial services to consumers and small and micro businesses (SMBs) in China and across the world. Ant said last week it would pursue a simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. The Hong Kong share sale alone could raise about $10 billion at a $200 billion valuation, according to press reports. In this note, we take a first look at Ant and run through its history, industry and operating segments. We then take a closer look at the rumoured $200 billion valuation in the context of Ant’s financial performance. Based on available disclosure, our estimates and peer group multiples, the $200 billion valuation is justifiable, in our view.  

Ant Group IPO First Look: Swarming to Market

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

BigCommerce Holdings / Equity Capital Markets

<p><strong>BigCommerce Holdings (BIGC US)</strong> is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it is preparing to complete an IPO on the NASDAQ exchange in the next few weeks.</p><p>Similar to Shopify, BigCommerce's e-commerce platform helps customers to launch and expand their e-commerce stores and connect to popular online marketplaces and social networks. As of June 1, 2020, BuiltWith.com ranked BigCommerce the world’s second most-used SaaS ecommerce platform and top five overall among the top one million sites globally by traffic.</p><p>Major investors of BigCommerce include SoftBank, Goldman Sachs, Revolution, General Catalyst, and GGV Capital.</p><p>The company had sales of $112.1 million (up 22% YoY) in 2019 and $33.2 million (up 29.7% YoY) in 1Q 2020. The COVID-19 has helped the company's business to pick up in 1Q 2020 as more people spend more time at home and many of them try to start new e-commerce businesses using BigCommerce's platform. Operating losses increased slightly from $38 million in 2018 to $41 million in 2019. Operating loss as a percentage of revenue declined from -41.3% in 2018 to -36.6% in 2019. <strong>Operating loss as a percentage of revenue improved materially from -40.3% in 1Q 2019 to -22.5% in 1Q 2020. </strong></p>

BigCommerce Holdings (BIGC US) is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it is preparing to complete an IPO on the NASDAQ exchange in the next few weeks.Similar to Shopify, BigCommerce's e-commerce platform helps customers to launch and expand their e-commerce stores and connect to popular online marketplaces and social networks. As of June 1, 2020, BuiltWith.com ranked BigCommerce the world’s second most-used SaaS ecommerce platform and top five overall among the top one million sites globally by traffic.Major investors of BigCommerce include SoftBank, Goldman Sachs, Revolution, General Catalyst, and GGV Capital.The company had sales of $112.1 million (up 22% YoY) in 2019 and $33.2 million (up 29.7% YoY) in 1Q 2020. The COVID-19 has helped the company's business to pick up in 1Q 2020 as more people spend more time at home and many of them try to start new e-commerce businesses using BigCommerce's platform. Operating losses increased slightly from $38 million in 2018 to $41 million in 2019. Operating loss as a percentage of revenue declined from -41.3% in 2018 to -36.6% in 2019. Operating loss as a percentage of revenue improved materially from -40.3% in 1Q 2019 to -22.5% in 1Q 2020. 

BigCommerce IPO Preview (A SaaS Competitor to Shopify)

United States

Block, Inc. operates as a financial services and digital payments company. The Company develops a payments platform aimed at small and medium businesses that allows them to accept credit card payments and use tablet computers as payment registers for a point-of-sale system. Block also provides financial and marketing services.

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Block (SQ US)

Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask - Falling Fees, Margins, Cash Flow

Ant Group filed its prospectus and kick-started its IPO to raise up to USD 30 billion to list on both Hong Kong Exchange and Shanghai STAR...

Sumeet Singh

Ant Group: SOTP Scenarios on Potential IPO Valuation

Ant Group, the leading Chinese FinTech, has announced that it is preparing for its IPO which could come as soon as October Press reports suggest a...

Victor Galliano

IAC / ANGI 2Q20: Doubling Down

We have always enjoyed following IAC because we share a worldview with management about investing behind THE major secular trend in the world...

Aaron Gabin

Ant Group IPO First Look: Swarming to Market

Ant Financial (1051260D CH)/Ant Group is a technology company that provides digital payment services and digital financial services to consumers...

Arun George

BigCommerce IPO Preview (A SaaS Competitor to Shopify)

BigCommerce Holdings (BIGC US) is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it...

Douglas Kim

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