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

<a href="https://www.smartkarma.com/entities/netjoy" target="_blank" data-smartkarma-citation="entities:29729:1" rel="noopener">Netjoy (2131 HK)</a> is an ad tech company which connects advertising customers and media partners. It is the third-largest online marketing solutions provider in China as measured by gross billing generated from short video advertisements in 2019, with a market share of 3.4%, according to iResearch. Netjoy has launched a Hong Kong IPO to raise net proceeds of HK$1,166.6 million ($150 million), at the mid-point of the IPO price range. <div class="content-highlight">The IPO performance of Chinese ad tech companies has been mixed. Consequently, backing the winners is crucial to generate investment returns in the Chinese ad tech sector. For investors seeking Chinese adtech exposure, we think Netjoy’s fundamentals are attractive. We will discuss the IPO valuation in our next piece. </div>

Netjoy (2131 HK) is an ad tech company which connects advertising customers and media partners. It is the third-largest online marketing solutions provider in China as measured by gross billing generated from short video advertisements in 2019, with a market share of 3.4%, according to iResearch. Netjoy has launched a Hong Kong IPO to raise net proceeds of HK$1,166.6 million ($150 million), at the mid-point of the IPO price range. The IPO performance of Chinese ad tech companies has been mixed. Consequently, backing the winners is crucial to generate investment returns in the Chinese ad tech sector. For investors seeking Chinese adtech exposure, we think Netjoy’s fundamentals are attractive. We will discuss the IPO valuation in our next piece. 

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.

Event-Driven

<ul>
<li>On 16th November, <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  announced that it has entered into a definitive agreement with <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a>  to acquire its domestic video-based entertainment live streaming business in China (known as YY Live). JOYY will retain its overseas business.</li>
<li>The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6bn in cash and the transaction is expected to occur in 1H2021 subject to certain conditions.</li>
<li>According to Baidu, YY Live stands to benefit from the company’s large traffic and thriving mobile ecosystem while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as a creator network that will further strengthen Baidu's massive content provider network.</li>
<li>Baidu has been a late entrant to the thriving short video app market in China which is currently dominated by Douyin and Kuaishou. Baidu has been attempting to reduce its dependence on core advertising revenues, however, these efforts are yet to make any meaningful impact on the company’s top line and margins.</li>
</ul>


On 16th November, Baidu (BIDU US)  announced that it has entered into a definitive agreement with JOYY (YY US)  to acquire its domestic video-based entertainment live streaming business in China (known as YY Live). JOYY will retain its overseas business.
The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6bn in cash and the transaction is expected to occur in 1H2021 subject to certain conditions.
According to Baidu, YY Live stands to benefit from the company’s large traffic and thriving mobile ecosystem while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as a creator network that will further strengthen Baidu's massive content provider network.
Baidu has been a late entrant to the thriving short video app market in China which is currently dominated by Douyin and Kuaishou. Baidu has been attempting to reduce its dependence on core advertising revenues, however, these efforts are yet to make any meaningful impact on the company’s top line and margins.


Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu

Kuaishou Technology / Equity Capital Markets

ByteDance’s Chinese rival <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 ahead of its rival Douyin. The company aims to raise up to US$5bn at a rumoured valuation of over US$50bn.Kuaishou’s platform offers its users to create content through short videos and livestreams as well as sell and purchase products. On the other hand, it allows businesses to advertise and sell their products to the users of the platform.China has the world’s largest internet population which accounted for about 23% of mobile internet users globally. The internet users in China have been increasingly spending time on video-based social and entertainment platforms.These short video and live streaming platforms offer monetisation opportunities through virtual gifting and online marketing services. According to iResearch, both virtual gifting and mobile advertising through short videos and livestreaming will grow at a CAGR of 19.9% and 33.7% respectively through 2020-25E.The company generates a majority of its revenues from live streaming (through virtual gifting) however, online marketing services and other services (e-commerce and other services) have been growing at higher rates over the last two years which we believe should drive future growth for Kuaishou.In this insight, we examine the company’s business model, the industry and the revenue channels. We will be covering the company’s financials in detail in a follow-up insight.

ByteDance’s Chinese rival Beijing Kuaishou Technology Co Ltd (1496219D CH)  has filed for an IPO to list its shares on the Hong Kong Stock Exchange ahead of its rival Douyin. The company aims to raise up to US$5bn at a rumoured valuation of over US$50bn.Kuaishou’s platform offers its users to create content through short videos and livestreams as well as sell and purchase products. On the other hand, it allows businesses to advertise and sell their products to the users of the platform.China has the world’s largest internet population which accounted for about 23% of mobile internet users globally. The internet users in China have been increasingly spending time on video-based social and entertainment platforms.These short video and live streaming platforms offer monetisation opportunities through virtual gifting and online marketing services. According to iResearch, both virtual gifting and mobile advertising through short videos and livestreaming will grow at a CAGR of 19.9% and 33.7% respectively through 2020-25E.The company generates a majority of its revenues from live streaming (through virtual gifting) however, online marketing services and other services (e-commerce and other services) have been growing at higher rates over the last two years which we believe should drive future growth for Kuaishou.In this insight, we examine the company’s business model, the industry and the revenue channels. We will be covering the company’s financials in detail in a follow-up insight.

Kuaishou IPO: Advertising and E-Commerce Businesses to Drive Future Growth

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.

<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> (KT) is a content community and social platform. The company 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>, Sequoia China, <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>, DST Global, Boyu Capital, Temasek and others. As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20. As per iResearch, Kuaishou was globally 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, over six months ended June 30, 2020.In my earlier note, <a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-the-positives-hot-segment-fast-growth" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth</a>, I spoke about the positive aspects of the deal. In this note, I'll talk about the not so flattering aspects.

Beijing Kuaishou Technology Co Ltd (1496219D CH) (KT) is a content community and social platform. The company is backed by Tencent Holdings (700 HK), Sequoia China, Baidu (BIDU US), DST Global, Boyu Capital, Temasek and others. As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20. As per iResearch, Kuaishou was globally 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, over six months ended June 30, 2020.In my earlier note, Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth, I spoke about the positive aspects of the deal. In this note, I'll talk about the not so flattering aspects.

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain

<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> (KT) is a content community and social platform. The company 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>, Sequoia China, <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>, DST Global, Boyu Capital, Temasek and others. As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20. As per iResearch, Kuaishou was globally 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, over six months ended June 30, 2020.In this note, I'll talk about the positive aspects of the deal.

Beijing Kuaishou Technology Co Ltd (1496219D CH) (KT) is a content community and social platform. The company is backed by Tencent Holdings (700 HK), Sequoia China, Baidu (BIDU US), DST Global, Boyu Capital, Temasek and others. As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20. As per iResearch, Kuaishou was globally 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, over six months ended June 30, 2020.In this note, I'll talk about the positive aspects of the deal.

Kuaishou Technology Pre-IPO - The Positives - Hot Segment, Fast Growth

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)

Netjoy IPO Initiation: Joy Divisions

Netjoy has launched an HK IPO to raise net proceeds of HK$1,166.6 million ($150 million), at the mid-point. For investors seeking Chinese adtech...

Arun George

Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu

Baidu announced that it has entered into a definitive agreement with JOYY to acquire its domestic video-based entertainment live streaming business...

Shifara Samsudeen, ACMA, CGMA

Kuaishou IPO: Advertising and E-Commerce Businesses to Drive Future Growth

ByteDance’s Chinese rival Kuaishou Technology has filed for an IPO to list its shares on the HKEX at a rumoured valuation of over US$50bn.

Shifara Samsudeen, ACMA, CGMA

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain

Kuaishou Technology is a content community and social platform. The company is backed by Tencent Holdings (700 HK), Sequoia China, Baidu (BIDU US),...

Sumeet Singh

Kuaishou Technology Pre-IPO - The Positives - Hot Segment, Fast Growth

Kuaishou Technology is a content community and social platform. The company is backed by Tencent Holdings (700 HK), Sequoia China, Baidu (BIDU US),...

Sumeet Singh

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