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 Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a> reported 3Q2021 results which saw revenues increase 61.4% YoY to RMB5.2bn while operating losses for the quarter increased to 36.1% of revenues vs 33.6% in 3Q2020. </li>
<li>Mobile games revenue declined YoY for the first time in 2Q2021, however, the segment has resumed growth with a 9.1% YoY increase in third quarter.</li>
<li>Except for mobile games, the other three segments saw strong growth in top line with advertising revenues growing more than 100% during the quarter</li>
</ul>



Bilibili Inc (BILI US) reported 3Q2021 results which saw revenues increase 61.4% YoY to RMB5.2bn while operating losses for the quarter increased to 36.1% of revenues vs 33.6% in 3Q2020. 
Mobile games revenue declined YoY for the first time in 2Q2021, however, the segment has resumed growth with a 9.1% YoY increase in third quarter.
Except for mobile games, the other three segments saw strong growth in top line with advertising revenues growing more than 100% during the quarter


Bilibili: Mobile Games Resumes Growth; Losses Widening in 3Q Is in Line with Peers

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Key macro developments and companies mentioned this week:
<ul>
<li>Mixed economic activity data points out of China, with mostly positive macro developments across the rest of Asia supports further earnings recovery for the Emerging Markets</li>
<li>Negative developments for <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>’s “Fortnite” ambitions in China and <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1439927D CH)</a> unveil their longer-term strategic thinking with a reorganisation of the group into 6 key segments, most notably distancing US-based TikTok further from the rest of the group.  </li>
</ul>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Key macro developments and companies mentioned this week:

Mixed economic activity data points out of China, with mostly positive macro developments across the rest of Asia supports further earnings recovery for the Emerging Markets
Negative developments for Tencent (700 HK)’s “Fortnite” ambitions in China and ByteDance (1439927D CH) unveil their longer-term strategic thinking with a reorganisation of the group into 6 key segments, most notably distancing US-based TikTok further from the rest of the group.  


Global Emerging Markets Weekly: 5 November 2021

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

<a href="https://www.smartkarma.com/entities/uju-holding" target="_blank" data-smartkarma-citation="entities:34824:1" rel="noopener">Uju Holding (1948 HK)</a> is looking to raise up to US$141m in its Hong Kong IPO.Uju Holding is a one-stop cross media online marketing solutions provider that works with media partners to market its advertiser customer’s products and/or services. Incorporated in 2018, the firm contributed approximately 1.1% of the total marketing gross billing of China’s online marketing market in 2020, as per iResearch. For FY20 and 4M21, the firm had worked with 1,028 and 651 advertiser customers and 32 and 21 media partners, respectively. During its track period, Uju Holding has recorded strong growth in its operating numbers and topline has followed closely as well. Its U-Engine platform, launched in 2020 could change the dynamics with its advertiser customers and improve efficiency. Cornerstones are also noteworthy and could aid sentiment but isn’t a large amount nonetheless. However, margins have been falling and the firm’s business model centers around a small number of participants. Combined with operating in a fragmented market, margins could be further compressed.

Uju Holding (1948 HK) is looking to raise up to US$141m in its Hong Kong IPO.Uju Holding is a one-stop cross media online marketing solutions provider that works with media partners to market its advertiser customer’s products and/or services. Incorporated in 2018, the firm contributed approximately 1.1% of the total marketing gross billing of China’s online marketing market in 2020, as per iResearch. For FY20 and 4M21, the firm had worked with 1,028 and 651 advertiser customers and 32 and 21 media partners, respectively. During its track period, Uju Holding has recorded strong growth in its operating numbers and topline has followed closely as well. Its U-Engine platform, launched in 2020 could change the dynamics with its advertiser customers and improve efficiency. Cornerstones are also noteworthy and could aid sentiment but isn’t a large amount nonetheless. However, margins have been falling and the firm’s business model centers around a small number of participants. Combined with operating in a fragmented market, margins could be further compressed. 

Uju Holding IPO - Margin Compression Looks to Persist

Telco/Internet specialist

Kirk Boodry

Redex Research

Shares of Didi Global appear to have stabilized after regulatory turmoil but whilst the stream of bad news has slowed, the lack of good news (an end to the app ban, any management comments) is also troubling. Even with a hopeful view on the end of regulatory pressure, the company appears less valuable as competition and higher pay for drivers shifts the economics and our new forecasts value the company at $9.74 versus our pre-IPO value of $15.8. We track Didi as part of our Softbank Group coverage.

Shares of Didi Global appear to have stabilized after regulatory turmoil but whilst the stream of bad news has slowed, the lack of good news (an end to the app ban, any management comments) is also troubling. Even with a hopeful view on the end of regulatory pressure, the company appears less valuable as competition and higher pay for drivers shifts the economics and our new forecasts value the company at $9.74 versus our pre-IPO value of $15.8. We track Didi as part of our Softbank Group coverage.

Didi Global - Regulatory Overhang Remains and Long-Term Value Is Falling

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.

<a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a> is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. DiDi has endured a torrid time since its listing on 30 June to raise net proceeds of $4,331.6 million at $14.00 per ADS. The shares are trading 40% below its IPO price as days after its listing, DiDi’s apps were taken down from app stores in China by the Cyberspace Administration of China (CAC). DiDi ran afoul of CAC when it pressed ahead with its listing, despite CAC asking it to put the listing on hold while it conducted a cybersecurity review of its collection and use of personal information. Subsequently, the official Xinhua news agency on 10 October claimed that the CAC probe was aimed at “effectively preventing potential national security risks relating to procurement, data processing and overseas listings.”DIDi has been ensnared by regulatory probes into its pricing mechanisms and the way it treats its drivers. DiDi also been subject to rumours in the press that the Chinese government is weighing asserting state control by taking a stake in the company. Press reports have also suggested that DiDi is planning to delist from the US which was later confirmed by DiDi to be false.Since the regulatory clampdown, DiDi has not released its 2Q21 results or provided any financial guidance. However, due to the regulatory restrictions, DiDi is losing market share and pricing power to competitors in China. On 6 September, Cao Cao Mobility, a peer, raised RMB3.8 billion ($588 million) from Chinese state-owned funds to accelerate its expansion. DiDi’s average daily user count declined 30% to 10.9 million in August from 15.6 million in June, according to <a href="https://www.smartkarma.com/entities/aurora-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27264:1" rel="noopener">Aurora Mobile Ltd (JG US)</a>.DiDi continues to polarise opinions with some investors suggesting that the stock can double from current levels while others are wary due to unpredictable regulatory risks. Due to the number of unknowns, we examine DiDi's outlook through scenarios analysis. A key difference between the bull and bear case is the timing for the reinstatement of DiDi’s apps on the app stores which will once again enable DiDi to grow market share and regain pricing power. <div class="content-highlight">Our bull-case SoTP valuation points to a 22% upside while our bear-case SoTP valuation points to a -19% downside to the last close price of $8.56 per ADS. Consequently, the shares seem fairly valued and may appeal to investors with a higher risk appetite.  </div>

DiDi Global (DIDI US) is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. DiDi has endured a torrid time since its listing on 30 June to raise net proceeds of $4,331.6 million at $14.00 per ADS. The shares are trading 40% below its IPO price as days after its listing, DiDi’s apps were taken down from app stores in China by the Cyberspace Administration of China (CAC). DiDi ran afoul of CAC when it pressed ahead with its listing, despite CAC asking it to put the listing on hold while it conducted a cybersecurity review of its collection and use of personal information. Subsequently, the official Xinhua news agency on 10 October claimed that the CAC probe was aimed at “effectively preventing potential national security risks relating to procurement, data processing and overseas listings.”DIDi has been ensnared by regulatory probes into its pricing mechanisms and the way it treats its drivers. DiDi also been subject to rumours in the press that the Chinese government is weighing asserting state control by taking a stake in the company. Press reports have also suggested that DiDi is planning to delist from the US which was later confirmed by DiDi to be false.Since the regulatory clampdown, DiDi has not released its 2Q21 results or provided any financial guidance. However, due to the regulatory restrictions, DiDi is losing market share and pricing power to competitors in China. On 6 September, Cao Cao Mobility, a peer, raised RMB3.8 billion ($588 million) from Chinese state-owned funds to accelerate its expansion. DiDi’s average daily user count declined 30% to 10.9 million in August from 15.6 million in June, according to Aurora Mobile Ltd (JG US).DiDi continues to polarise opinions with some investors suggesting that the stock can double from current levels while others are wary due to unpredictable regulatory risks. Due to the number of unknowns, we examine DiDi's outlook through scenarios analysis. A key difference between the bull and bear case is the timing for the reinstatement of DiDi’s apps on the app stores which will once again enable DiDi to grow market share and regain pricing power. Our bull-case SoTP valuation points to a 22% upside while our bear-case SoTP valuation points to a -19% downside to the last close price of $8.56 per ADS. Consequently, the shares seem fairly valued and may appeal to investors with a higher risk appetite.  

China

Beijing Douyin Information Service Co. Ltd. provides online information and contents. The Company develops and operates short video platform, original short video community, news platform, and other related products. Beijing Douyin Information Service offers services worldwide.

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ByteDance (1439927D CH)

Bilibili: Mobile Games Resumes Growth; Losses Widening in 3Q Is in Line with Peers

Bilibili's operating losses widened during 3Q2021. We have observed that Huya's profit margins declined during the quarter while Douyu's paying...

Shifara Samsudeen, ACMA, CGMA

Global Emerging Markets Weekly: 5 November 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Uju Holding IPO - Margin Compression Looks to Persist

Uju Holding (1948 HK) is looking to raise up to US$141m in its Hong Kong IPO. The firm is a one-stop cross media online marketing solutions...

Clarence Chu

Didi Global - Regulatory Overhang Remains and Long-Term Value Is Falling

Volatility in Didi shares appear has stabilized after regulatory turmoil but whilst the stream of bad news has slowed, a lack of good news is also...

Kirk Boodry

DiDi Global: Time to Book a Ride?

Our bull-case SoTP valuation points to a 22% upside while our bear-case SoTP valuation points to a -19% downside. The shares seem fairly valued and...

Arun George

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