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

Lianlian DigiTech / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lianlian-digitech" target="_blank" data-smartkarma-citation="entities:39940:1" rel="noopener">Lianlian DigiTech (2104619D CH)</a>, a digital payment services provider in China, has begun pre-marketing an HKEx IPO. It previously targeted a US$500 million raise.</li>
<li>We previously discussed the IPO in <strong><em><a href="https://www.smartkarma.com/insights/lianlian-digitech-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:108793" rel="noopener">LianLian DigiTech IPO: The Bull Case</a></em></strong> and <strong><em><a href="https://www.smartkarma.com/insights/lianlian-digitech-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:109009" rel="noopener">LianLian DigiTech IPO: The Bear Case</a></em></strong>. </li>
<li>The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.</li>
</ul>



Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has begun pre-marketing an HKEx IPO. It previously targeted a US$500 million raise.
We previously discussed the IPO in LianLian DigiTech IPO: The Bull Case and LianLian DigiTech IPO: The Bear Case. 
The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/lianlian-digitech" target="_blank" data-smartkarma-citation="entities:39940:1" rel="noopener">Lianlian DigiTech (2104619D CH)</a>, a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.  </li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/lianlian-digitech-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:108793" rel="noopener">LianLian DigiTech IPO: The Bull Case</a></strong></em>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The key elements of the bear case rest on margin pressure on the fastest-growing business, operating losses, an unconvincing path to profitability, FCF burn with a weak balance sheet.</li>
</ul>



Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.  
In LianLian DigiTech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on margin pressure on the fastest-growing business, operating losses, an unconvincing path to profitability, FCF burn with a weak balance sheet.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/lianlian-digitech" target="_blank" data-smartkarma-citation="entities:39940:1" rel="noopener">Lianlian DigiTech (2104619D CH)</a>, a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.   </li>
<li>Lianlian ranked first among the independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost &amp; Sullivan.   </li>
<li>The key elements of the bull case rest on rising market share, doubling of active customers, resilient core business growth and rapidly growing additional revenue streams.</li>
</ul>



Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.   
Lianlian ranked first among the independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost &amp; Sullivan.   
The key elements of the bull case rest on rising market share, doubling of active customers, resilient core business growth and rapidly growing additional revenue streams.


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<p>Headquartered in Shenzhen, <a href="https://www.smartkarma.com/entities/pax-global-technology-ltd" target="_blank" data-smartkarma-citation="entities:7514:1" rel="noopener">Pax Global Technology (327 HK)</a> is a Chinese company with more than 60 million point-of-sale terminals that are used in nearly 120 countries around the world. On 26 October, there was news that the U.S. <a href="https://krebsonsecurity.com/2021/10/fbi-raids-chinese-point-of-sale-giant-pax-technology/" target="_blank" rel="noopener">FBI raided</a> the Florida offices of Pax Global. </p><p>We would not Buy the dip on <a href="https://www.smartkarma.com/entities/pax-global-technology-ltd" target="_blank" data-smartkarma-citation="entities:7514:1" rel="noopener">Pax Global Technology (327 HK) </a>due to three main reasons:</p><ul>
<li>First, the U.S. FBI would not have raided the company's offices unless it had significant amounts of evidence that suggested that something very wrong was occurring at the company. </li>
<li>Second, the legal fight will likely get prolonged. </li>
<li>Third, while this legal fight gets prolonged, this will likely result in many existing customers around the world stop using the company's point-of-sale terminals and new potential customers using other suppliers. </li>
</ul>

Headquartered in Shenzhen, Pax Global Technology (327 HK) is a Chinese company with more than 60 million point-of-sale terminals that are used in nearly 120 countries around the world. On 26 October, there was news that the U.S. FBI raided the Florida offices of Pax Global. We would not Buy the dip on Pax Global Technology (327 HK) due to three main reasons:
First, the U.S. FBI would not have raided the company's offices unless it had significant amounts of evidence that suggested that something very wrong was occurring at the company. 
Second, the legal fight will likely get prolonged. 
Third, while this legal fight gets prolonged, this will likely result in many existing customers around the world stop using the company's point-of-sale terminals and new potential customers using other suppliers. 


PAX Global Technology Gets Raided by the US FBI - Is This The Tip of the Cybersecurity Iceberg?

Cloopen Group Holding Ltd / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/cloopen-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:31315:1" rel="noopener">Cloopen Group Holding Ltd (RAAS US)</a> is the largest multi-capability cloud-based communications solution provider in China, as measured by revenues in 2019, according to CIC. Cloopen raised gross proceeds of $320 million at $16 per ADS, above the marketed range of $13-15 per ADS, <a href="https://www.ifre.com/story/2730083/cloopen-raises-us320m-from-nyse-ipo-jnkv2cr0my" target="_blank" rel="noopener">according to IFR</a>.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/cloopen-group-ipo-initiation-busy-signals" target="_blank" data-smartkarma-citation="insights:47285" rel="noopener">Cloopen Group IPO Initiation: Busy Signals</a> we noted that the IPO pitch is muddied by the temporary impact of the COVID-19 outbreak which negatively influenced growth rates and the cash burn. While the fundamentals are not perfect, Cloopen offers enough to warrant a closer look. In <a href="https://www.smartkarma.com/insights/cloopen-group-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:47805" rel="noopener">Cloopen Group IPO: Valuation Insights</a>, we noted that the IPO price range is attractive.</p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of $18.54 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the IPO price is attractive.</p></div></div></div>

Cloopen Group Holding Ltd (RAAS US) is the largest multi-capability cloud-based communications solution provider in China, as measured by revenues in 2019, according to CIC. Cloopen raised gross proceeds of $320 million at $16 per ADS, above the marketed range of $13-15 per ADS, according to IFR.In Cloopen Group IPO Initiation: Busy Signals we noted that the IPO pitch is muddied by the temporary impact of the COVID-19 outbreak which negatively influenced growth rates and the cash burn. While the fundamentals are not perfect, Cloopen offers enough to warrant a closer look. In Cloopen Group IPO: Valuation Insights, we noted that the IPO price range is attractive.Updating for the final IPO net raise, our base-case DCF derived price target of $18.54 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the IPO price is attractive.

Hong Kong

Hi Sun Technology (China) Limited provides business and technology consulting services and solutions.  The Company delivers a range of specialized services and solutions to its banking, insurance, securities, telecommunications, and utilities clients.  In addition, Hi Sun, through its subsidiaries, provides consulting and information technology outsourcing services and payment solution.

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Hi Sun Technology China (818 HK)

Lianlian DigiTech IPO: PHIP Updates

The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.

Arun George

LianLian DigiTech IPO: The Bear Case

The key elements of the bear case rest on margin pressure on the fastest-growing business, operating losses, an unconvincing path to profitability,...

Arun George

LianLian DigiTech IPO: The Bull Case

The key elements of the bull case rest on rising market share, doubling of active customers, resilient core business growth and rapidly growing...

Arun George

PAX Global Technology Gets Raided by the US FBI - Is This The Tip of the Cybersecurity Iceberg?

In this insight, we discuss about a company called Pax Global Technology (327 HK). On 26 October, there was news that the U.S. FBI raided the...

Douglas Kim

Cloopen Group IPO: Trading Debut

Cloopen raised gross proceeds of $320 million at $16 per ADS. Our DCF sensitivity analysis shows that the IPO price is attractive.

Arun George

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