Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

In the September quarter, revenue growth at <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>'s logistics arm CaiNiao Network accelerated sharply, as the unit continued to grow faster than Alibaba, total eCommerce sales, and China's express market.How has CaiNiao Network managed to grow so much faster than eCommerce and associated logistics spending, and what does it mean for China's listed express companies?In this note we identify likely drivers of CaiNiao's superior sales momentum. We also explain the threat CaiNiao's strength poses to the five express companies in which Alibaba has invested.In our view, CaiNiao's growth will make it tougher for commodity-type express companies to breathe. These companies are already under pressure from declining margins and rising CapEx requirements. <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>, which operates mostly outside of Alibaba's orbit and is thus insulated from many of these problems, remains the most attractive name in Chinese express, in our opinion, but <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> is an interesting play on potential M&amp;A in the sector.

In the September quarter, revenue growth at Alibaba Group (BABA US)'s logistics arm CaiNiao Network accelerated sharply, as the unit continued to grow faster than Alibaba, total eCommerce sales, and China's express market.How has CaiNiao Network managed to grow so much faster than eCommerce and associated logistics spending, and what does it mean for China's listed express companies?In this note we identify likely drivers of CaiNiao's superior sales momentum. We also explain the threat CaiNiao's strength poses to the five express companies in which Alibaba has invested.In our view, CaiNiao's growth will make it tougher for commodity-type express companies to breathe. These companies are already under pressure from declining margins and rising CapEx requirements. S.F. Holding (002352 CH), which operates mostly outside of Alibaba's orbit and is thus insulated from many of these problems, remains the most attractive name in Chinese express, in our opinion, but BEST Inc (BEST US) is an interesting play on potential M&amp;A in the sector. 

As Growth Accelerates, Alibaba's CaiNiao Network Is Pushing Aside Commodity-Type Express Firms

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

Malaysian home improvement retailer Mr D.I.Y. has filed for an IPO which will raise approximately RM1.5bn (US$362m), the largest listing in three years in Malaysia. The company has set the pricing at RM1.60 per share and is expected to price the IPO on the 14th of October.The company is the largest home improvement retailer in the country with a store count of 640 as at the end of June 2020. The home improvement market in Malaysia is forecasted to grow over the next few years driven by the creation of new townships due to urbanisation and growing disposable income that should support growth in demand for home improvement goods and services in the country.In this insight, we examine the company’s business model, expansion plans and the company’s financials. We will be discussing the company’s valuation in a follow-up insight.

Malaysian home improvement retailer Mr D.I.Y. has filed for an IPO which will raise approximately RM1.5bn (US$362m), the largest listing in three years in Malaysia. The company has set the pricing at RM1.60 per share and is expected to price the IPO on the 14th of October.The company is the largest home improvement retailer in the country with a store count of 640 as at the end of June 2020. The home improvement market in Malaysia is forecasted to grow over the next few years driven by the creation of new townships due to urbanisation and growing disposable income that should support growth in demand for home improvement goods and services in the country.In this insight, we examine the company’s business model, expansion plans and the company’s financials. We will be discussing the company’s valuation in a follow-up insight.

Chindata Group is the leading carrier-neutral hyperscale data center solution provider in Asia-Pacific emerging markets and the company has filed for an IPO in the US to raise about US$500m (at the midpoint of the IPO price of US$12.5 per share). Concurrent to the IPO, the company will also raise US$135m from Joyful Phoenix Limited, SCEP Master Fund and Shiying Finance Limited.In our previous insight on the company’s IPO (#), we examined the company’s business model and segments, its financials and also compared the company’s margins against its closest peers GDS and 21Vianet.In this insight, we take a look at the company’s valuation and how attractive it is compared to its peer valuations.

Chindata Group is the leading carrier-neutral hyperscale data center solution provider in Asia-Pacific emerging markets and the company has filed for an IPO in the US to raise about US$500m (at the midpoint of the IPO price of US$12.5 per share). Concurrent to the IPO, the company will also raise US$135m from Joyful Phoenix Limited, SCEP Master Fund and Shiying Finance Limited.In our previous insight on the company’s IPO (#), we examined the company’s business model and segments, its financials and also compared the company’s margins against its closest peers GDS and 21Vianet.In this insight, we take a look at the company’s valuation and how attractive it is compared to its peer valuations.

Chindata IPO Valuation: Fairly Priced; Should Ride a Wave of Investor Interest

Event-Driven

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:
<ol>
<li>How things used to work in China's express sector</li>
<li>How the sector has begun changing in ways that may force consolidation</li>
<li>The 'Why?' &amp; 'How?' of Chinese express sector consolidation</li>
<li>Alibaba's critical role in potential M&amp;A activity</li>
<li>Some thoughts about the timing of expected changes</li>
<li>Conclusions</li>
</ol>

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:

How things used to work in China's express sector
How the sector has begun changing in ways that may force consolidation
The 'Why?' &amp; 'How?' of Chinese express sector consolidation
Alibaba's critical role in potential M&amp;A activity
Some thoughts about the timing of expected changes
Conclusions


Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

Supun Walpola

Chinese e-commerce “service provider”, <a href="https://www.smartkarma.com/entities/baozun-inc" target="_blank" data-smartkarma-citation="entities:24184:1" rel="noopener">Baozun Inc. (BZUN US)</a>, is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we take a quick look at Baozun’s fundamentals ahead of its HKEX offer.Baozun’s HKEX offer will have two tranches; a HongKong offer and an international offer. The maximum offer price for the HongKong offer is set at HKD103.90. Baozun is expected to set the international offer price by September 23, 2020 (Wednesday). The final HongKong offer price will the lower of the international offer price and the maximum offer price above.Baozun will issue 40m new shares equivalent to around 17.5% of the company’s ordinary shares outstanding (after the HKEX listing). At the maximum offer price above (for the HongKong tranche), Baozun is expected to raise around HKD 4,156m (USD 536m).

Chinese e-commerce “service provider”, Baozun Inc. (BZUN US), is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we take a quick look at Baozun’s fundamentals ahead of its HKEX offer.Baozun’s HKEX offer will have two tranches; a HongKong offer and an international offer. The maximum offer price for the HongKong offer is set at HKD103.90. Baozun is expected to set the international offer price by September 23, 2020 (Wednesday). The final HongKong offer price will the lower of the international offer price and the maximum offer price above.Baozun will issue 40m new shares equivalent to around 17.5% of the company’s ordinary shares outstanding (after the HKEX listing). At the maximum offer price above (for the HongKong tranche), Baozun is expected to raise around HKD 4,156m (USD 536m).

Baozun: A Quick Look at Fundamentals Ahead of the HKEX Listing

China

Dada Nexus Limited operates a platform for local on-demand retail and delivery. The Company provides a digital solution leveraging the crowdsourcing model to address the challenge of frequent fluctuations brought forward by the nature of on-demand orders and to match the surging demand for delivery capacity with efficient supply. Dada Nexus serves customers in China.

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Dada Nexus (DADA US)

As Growth Accelerates, Alibaba's CaiNiao Network Is Pushing Aside Commodity-Type Express Firms

Amid a price war in China's express sector, the dramatic growth of Alibaba's logistics arm CaiNiao Network is adding to existing pressure on most...

Tracking Traffic

MR DIY IPO: Quality Homes

Malaysian home improvement retailer Mr D.I.Y. has filed for an IPO which will raise approximately RM1.5bn (US$362m), the largest listing in three...

Shifara Samsudeen, ACMA, CGMA

Chindata IPO Valuation: Fairly Priced; Should Ride a Wave of Investor Interest

Chindata Group is the leading carrier-neutral hyperscale data center solution provider in Asia-Pacific emerging markets and the company has filed...

Shifara Samsudeen, ACMA, CGMA

Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

Objective of this note: How things used to work How the sector has begun changing

Tracking Traffic

Baozun: A Quick Look at Fundamentals Ahead of the HKEX Listing

Chinese e-commerce “service provider”, $baoz, is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we...

Supun Walpola

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