Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>Softbank will be able to report a positive Q1 contribution from public companies in the Vision Fund portfolio thanks to five new listings and some amazing quarter-end moves for Dingdong Maicai, Full Truck Alliance and Coupang. All in, we estimate public VF companies ended the quarter up $1.1bn after mid-quarter losses that had been as high as $12bn. New listings were a big help surfacing almost $6bn in value, enough to offset c. $5bn in valuation losses for the existing portfolio. It is worth noting that the underlying value of Softbank shares is at all-time highs as VF liquidity offsets recent Alibaba weakness. That is less apparent in the share price as the discount has expanded to 45% from &lt;30% when the company announced its full-year results in May.</p>

Softbank will be able to report a positive Q1 contribution from public companies in the Vision Fund portfolio thanks to five new listings and some amazing quarter-end moves for Dingdong Maicai, Full Truck Alliance and Coupang. All in, we estimate public VF companies ended the quarter up $1.1bn after mid-quarter losses that had been as high as $12bn. New listings were a big help surfacing almost $6bn in value, enough to offset c. $5bn in valuation losses for the existing portfolio. It is worth noting that the underlying value of Softbank shares is at all-time highs as VF liquidity offsets recent Alibaba weakness. That is less apparent in the share price as the discount has expanded to 45% from &lt;30% when the company announced its full-year results in May.

Softbank Group - Vision Fund’s Public Companies on Wild Ride to End Quarter in the Black

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<p>Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week by Intellia Therapeutics (NTLA) which saw the company’s share price surge 55%.  What this means is that we can now send precision therapeutics (based on CRISPR technology) to “seek and destroy” problematic genes.</p>

Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week by Intellia Therapeutics (NTLA) which saw the company’s share price surge 55%.  What this means is that we can now send precision therapeutics (based on CRISPR technology) to “seek and destroy” problematic genes.

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

<p><a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (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. The <em>DiDi Chuxing</em> app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (12.8%), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (6.8%), <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> and <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>. </p><p>Didi has priced its IPO at $14.00 per ADS, which is at the top-end of the IPO price range of $13.00-14.00 per ADS, <a href="https://www.reuters.com/business/chinas-didi-raises-4-billion-us-ipo-source-2021-06-29/" target="_blank" rel="noopener">according to Reuters</a>. Reuters also noted that Didi sold a higher 317 million ADS versus the planned 288 million ADS (10% more), resulting in a fully-diluted market cap of $73 billion ($67.5 billion on a non-diluted basis).</p><div><p>In <a href="https://www.smartkarma.com/insights/didi-chuxing-xiaoju-kuaizhi-initiation-in-for-a-bumpy-ride" target="_blank" data-smartkarma-citation="insights:53014" rel="noopener">Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?</a>, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/xiaoju-kuaizhi-didi-chuxing-ipo-growth-vs-margin" target="_blank" data-smartkarma-citation="insights:53232" rel="noopener">Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin</a>, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, <a href="https://www.smartkarma.com/entities/lyft-inc" target="_blank" data-smartkarma-citation="entities:24423:1" rel="noopener">Lyft Inc (LYFT US)</a> and <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a>. Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.</p>
<p>In <a href="https://www.smartkarma.com/insights/didi-global-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:53626" rel="noopener">DiDi Global IPO: Valuation Insights</a>, we noted that the proposed IPO valuation is materially below the previously rumoured top-end valuation of $100 billion. In combination with our SoTP valuation, we opined that Didi is fairly valued at the IPO price range.   </p>
<div class="content-highlight"><p>Our relative valuation suggests that the IPO price is full. Updating for the final IPO raise and the latest peer multiples, our SoTP valuation is $13.54 per ADS, which is marginally below the IPO price of $14 per ADS. Consequently, we would take profits on any meaningful first day IPO pop.</p></div>
</div>

DiDi Chuxing (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. The DiDi Chuxing app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), Uber (UBER US) (12.8%), Tencent (700 HK) (6.8%), Alibaba Group (BABA US) and Toyota Motor (7203 JP). Didi has priced its IPO at $14.00 per ADS, which is at the top-end of the IPO price range of $13.00-14.00 per ADS, according to Reuters. Reuters also noted that Didi sold a higher 317 million ADS versus the planned 288 million ADS (10% more), resulting in a fully-diluted market cap of $73 billion ($67.5 billion on a non-diluted basis).In Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. 
In Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, Lyft Inc (LYFT US) and Grab (0967655D SP). Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.
In DiDi Global IPO: Valuation Insights, we noted that the proposed IPO valuation is materially below the previously rumoured top-end valuation of $100 billion. In combination with our SoTP valuation, we opined that Didi is fairly valued at the IPO price range.   
Our relative valuation suggests that the IPO price is full. Updating for the final IPO raise and the latest peer multiples, our SoTP valuation is $13.54 per ADS, which is marginally below the IPO price of $14 per ADS. Consequently, we would take profits on any meaningful first day IPO pop.


Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

<p><a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> raised USD4.4 billion today, pricing the IPO at the top of its indicated range and selling more shares than initially planned, according to Reuters.  This constitutes a USD67.5 billion valuation on a non-diluted basis and USD73 billion fully diluted. </p><p>While this IPO was well oversubscribed, there are 3 reasons why I would be cautious on the stock:</p><ol>
<li>Why should I be overjoyed at receiving my IPO allotment when I am paying a 31% premium to Uber and 47% to Lyft on FY21 EV/Sales even though they are expected to grow faster than Didi?  </li>
<li>Didi appears to be cheap by using EV/sales, but not so if platform revenue is used.  Uber and Lyft’s revenues are net of payments to drivers.  Using Didi's platform revenue multiple, its IPO price is not so cheap.  </li>
<li>Didi’s gross transaction value (GTV) per transaction is only 27% of Uber’s. Why?  Because taxi fare in Beijing is 75% cheaper than NYC’s rate.  Uber’s GTV in 1Q21 was USD19.5 bn, Didi’s USD1.2 bn. <strong>Didi’s market cap on a fully diluted basis is USD73 bn, Uber USD95 bn</strong>.</li>
</ol>

DiDi Chuxing (DIDI US) raised USD4.4 billion today, pricing the IPO at the top of its indicated range and selling more shares than initially planned, according to Reuters.  This constitutes a USD67.5 billion valuation on a non-diluted basis and USD73 billion fully diluted. While this IPO was well oversubscribed, there are 3 reasons why I would be cautious on the stock:
Why should I be overjoyed at receiving my IPO allotment when I am paying a 31% premium to Uber and 47% to Lyft on FY21 EV/Sales even though they are expected to grow faster than Didi?  
Didi appears to be cheap by using EV/sales, but not so if platform revenue is used.  Uber and Lyft’s revenues are net of payments to drivers.  Using Didi's platform revenue multiple, its IPO price is not so cheap.  
Didi’s gross transaction value (GTV) per transaction is only 27% of Uber’s. Why?  Because taxi fare in Beijing is 75% cheaper than NYC’s rate.  Uber’s GTV in 1Q21 was USD19.5 bn, Didi’s USD1.2 bn. Didi’s market cap on a fully diluted basis is USD73 bn, Uber USD95 bn.


Didi Chuxing (DIDI US): Avoid Buyers' Remorse - Do an Apples to Apples Comparison

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 ride hailing giant <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a>  has priced its IPO at US$14 per ADS, at the upper end of the IPO price range of US$13-14 per ADS. Didi will raise approx. US$4.0bn at the above price of US$14 per ADS at a market capitalisation of US$67.0bn and a post-money enterprise value of US$56.0bn. According to Reuters and Bloomberg, Didi has upsized its deal to 317m ADSs from the original plan of selling 288m ADSs which would raise approx. US$4.4bn.</p><p>In our previous insights on the company's IPO, we examined Didi’s business model, financials, outlook and valuation. We have also discussed in detail the ongoing Chinese regulatory probe on Didi and how it could impact its IPO and valuation.</p>

The Chinese ride hailing giant DiDi Chuxing (DIDI US)  has priced its IPO at US$14 per ADS, at the upper end of the IPO price range of US$13-14 per ADS. Didi will raise approx. US$4.0bn at the above price of US$14 per ADS at a market capitalisation of US$67.0bn and a post-money enterprise value of US$56.0bn. According to Reuters and Bloomberg, Didi has upsized its deal to 317m ADSs from the original plan of selling 288m ADSs which would raise approx. US$4.4bn.In our previous insights on the company's IPO, we examined Didi’s business model, financials, outlook and valuation. We have also discussed in detail the ongoing Chinese regulatory probe on Didi and how it could impact its IPO and valuation.

Didi Chuxing IPO: Thoughts on First Day Trading

China

DiDi Chuxing Incorporated operates passenger transportation platforms. The Company provides mobility solutions, cloud computing and other application based services. DiDi Chuxing serves customers worldwide.

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DiDi Global (DIDI US)

Softbank Group - Vision Fund’s Public Companies on Wild Ride to End Quarter in the Black

Vision Fund's portfolio moved into the black for Q1 thanks to IPOs and some amazing qtr-end moves by a few VF stocks. Report includes updated...

Kirk Boodry

Weekly Innovation Review (WIRE) #38

Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week

Granite Bay Capital

DiDi Global IPO: Trading Debut

Didi has priced its IPO at $14 per ADS and sold 10% more ADSs than planned. Our relative valuation and SoTP valuation suggests a full price. We...

Arun George

Didi Chuxing (DIDI US): Avoid Buyers' Remorse - Do an Apples to Apples Comparison

DiDi IPO raised USD4.4 bn today, pricing at the top of its indicated range and selling more shares than initially planned. I offer three reasons...

Mitchell Kim

Didi Chuxing IPO: Thoughts on First Day Trading

The attractive IPO pricing and oversubscription by multiple times suggest that Didi’s shares are set for a strong open at its debut. Investors who...

Shifara Samsudeen, ACMA, CGMA

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