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

<div><p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its <em>BOSS Zhipin</em> mobile app connects job seekers and enterprise users. </p></div><div><p>Kanzhun has priced its IPO at $19.00 per ADS to raise gross proceeds of $912 million, <a href="https://www.ifre.com/story/2913154/kanzhun-prices-nasdaq-ipo-at-top-to-raise-us912m-smlgvfl3m3" target="_blank" rel="noopener">according to IFR</a>. At the final IPO price of $19 per share, Kanzhun will have a market cap of $7.6 billion. The IPO got off to a strong start due to indications of interest for $375 million worth of ADSs in the offering from existing investors (Sequoia Capital and Tiger Global) and new investors (UBS Asset Management, GIC and Mubadala Investment).</p></div><div><p>In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-initiation-search-and-employ" target="_blank" data-smartkarma-citation="insights:51969" rel="noopener">Kanzhun IPO Initiation: Search and Employ</a>, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-growth-margin-trade-off-vs-peers" target="_blank" data-smartkarma-citation="insights:52333" rel="noopener">Kanzhun IPO: Growth/Margin Trade-Off Vs Peers</a>, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:52575" rel="noopener">Kanzhun 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 $21.02 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 points to a meaningful upside based on achievable targets for market share and/or terminal EBIT margin. </p></div></div></div>

Kanzhun (BZ US) is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its BOSS Zhipin mobile app connects job seekers and enterprise users. Kanzhun has priced its IPO at $19.00 per ADS to raise gross proceeds of $912 million, according to IFR. At the final IPO price of $19 per share, Kanzhun will have a market cap of $7.6 billion. The IPO got off to a strong start due to indications of interest for $375 million worth of ADSs in the offering from existing investors (Sequoia Capital and Tiger Global) and new investors (UBS Asset Management, GIC and Mubadala Investment).In Kanzhun IPO Initiation: Search and Employ, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In Kanzhun IPO: Growth/Margin Trade-Off Vs Peers, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. In Kanzhun 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 $21.02 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 points to a meaningful upside based on achievable targets for market share and/or terminal EBIT margin. 

<div><p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its <em>BOSS Zhipin</em> mobile app connects job seekers and enterprise users. </p></div><div>
<p>At the mid-point of the proposed IPO price range of $17.00-19.00 per ADS, Kanzhun will have a market cap of $7.2 billion. At the mid-point of the IPO price range, the net proceeds are $817.2 million. New and existing shareholders have indicated a total of $375 million of the IPO (43.4% of the ADSs at the mid-point of the IPO price range). The indications of interest from new investors are from UBS Asset Management ($100 million), GIC ($100 million) and Mubadala Investment ($75 million). The indications of interest from existing investors are from Sequoia Capital and Tiger Global.</p>
<p>In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-initiation-search-and-employ" target="_blank" data-smartkarma-citation="insights:51969" rel="noopener">Kanzhun IPO Initiation: Search and Employ</a>, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-growth-margin-trade-off-vs-peers" target="_blank" data-smartkarma-citation="insights:52333" rel="noopener">Kanzhun IPO: Growth/Margin Trade-Off Vs Peers</a>, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. </p>
<div class="content-highlight"><p>In this note, we present our forecasts and valuation analysis. On a relative valuation basis and at the IPO price range, Kanzhun is fairly valued on growth adjusted EV/Sales multiples (an EV/Sales/Growth basis). Our base-case DCF value is $20.84 per ADS which is a 16% upside to the mid-point of the IPO price range. For investors willing to brave the risk that the current market selloff in high growth stocks persists, we think that the IPO price range is attractive. </p></div>
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Kanzhun (BZ US) is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its BOSS Zhipin mobile app connects job seekers and enterprise users. 
At the mid-point of the proposed IPO price range of $17.00-19.00 per ADS, Kanzhun will have a market cap of $7.2 billion. At the mid-point of the IPO price range, the net proceeds are $817.2 million. New and existing shareholders have indicated a total of $375 million of the IPO (43.4% of the ADSs at the mid-point of the IPO price range). The indications of interest from new investors are from UBS Asset Management ($100 million), GIC ($100 million) and Mubadala Investment ($75 million). The indications of interest from existing investors are from Sequoia Capital and Tiger Global.
In Kanzhun IPO Initiation: Search and Employ, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In Kanzhun IPO: Growth/Margin Trade-Off Vs Peers, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. 
In this note, we present our forecasts and valuation analysis. On a relative valuation basis and at the IPO price range, Kanzhun is fairly valued on growth adjusted EV/Sales multiples (an EV/Sales/Growth basis). Our base-case DCF value is $20.84 per ADS which is a 16% upside to the mid-point of the IPO price range. For investors willing to brave the risk that the current market selloff in high growth stocks persists, we think that the IPO price range is attractive. 


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.

<div><p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a>, an online recruitment platform in China, aims to raise up to US$912m in its US IPO. 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 (700 HK)</a>. Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.</p></div><div><p>Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.</p></div><div>
<p>The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020. There is nothing much to complain about the financial performance of the company, however, its disclosures are patchy. </p>
<p>We have covered the deal background in our earlier notes, <a href="https://www.smartkarma.com/insights/kanzhun-pre-ipo-bumble-meets-linkedin" target="_blank" rel="noopener">Kanzhun Pre-IPO -Bumble meets Linkedin . </a></p>
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Kanzhun (BZ US), an online recruitment platform in China, aims to raise up to US$912m in its US IPO. The company is backed by Tencent (700 HK). Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.
The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020. There is nothing much to complain about the financial performance of the company, however, its disclosures are patchy. 
We have covered the deal background in our earlier notes, Kanzhun Pre-IPO -Bumble meets Linkedin . 


Kanzhun IPO - Fast Growth, Strong Investor Support, Cash Flow Positive...

<p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> is the largest online recruitment platform in China, as measured by the average monthly active users (MAU) in 2020, according to CIC. Its <em>BOSS Zhipin</em> mobile app connects job seekers and enterprise users as is positioned in the mid-to-high-end segment (white and gold-collar users) compared to local peers.</p><p>Kanzhun is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (12.2% of outstanding shares), Banyan Partners (9.4%), Coatue Management (7.8%), <a href="https://www.smartkarma.com/entities/goldman-sachs-group-inc" target="_blank" data-smartkarma-citation="entities:785:1" rel="noopener">Goldman Sachs Group (GS US)</a> (7.3%), Sequoia Capital and Tiger Global. Kanzhun has filed for a Nasdaq IPO to raise proceeds of $800 million, according to press reports.  </p><p>Kanzhun is a play on the gradual shift of the China recruitment service market to online platforms. China’s online recruitment market size as measured by revenue is forecasted to increase from RMB55.1 billion in 2020 to RMB223.4 billion in 2025 (CAGR of 32.3%), according to CIC. The penetration rate of online recruitment to the total market is forecasted to increase from 32% in 2020 to 50% in 2025, according to CIC.</p><div class="content-highlight">
<p>Kanzhun is well-positioned to benefit from this sizeable market opportunity, in our view. At first sight, the strong growth in users and fast-paced revenue growth but ongoing losses suggests another “growth at all costs” strategy. In comparison, local listed peers such as <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> and <a href="https://www.smartkarma.com/entities/wise-talent-information-tech" target="_blank" data-smartkarma-citation="entities:27177:1" rel="noopener">Wise Talent Information Tech (6100 HK)</a> are growing much slower but are profitable.</p>
<p>Encouragingly, Kanzhun's high revenue visibility and declining loss margin suggest that Kanzhun can eventually deliver high growth with profits. The upfront payment model of the online recruitment market means that like its peers, Kanzhun is cash generative. For investors willing to brave the current market selloff in high growth stocks, we think that the Kanzhun story warrants a closer look.  </p>
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Kanzhun (BZ US) is the largest online recruitment platform in China, as measured by the average monthly active users (MAU) in 2020, according to CIC. Its BOSS Zhipin mobile app connects job seekers and enterprise users as is positioned in the mid-to-high-end segment (white and gold-collar users) compared to local peers.Kanzhun is backed by Tencent (700 HK) (12.2% of outstanding shares), Banyan Partners (9.4%), Coatue Management (7.8%), Goldman Sachs Group (GS US) (7.3%), Sequoia Capital and Tiger Global. Kanzhun has filed for a Nasdaq IPO to raise proceeds of $800 million, according to press reports.  Kanzhun is a play on the gradual shift of the China recruitment service market to online platforms. China’s online recruitment market size as measured by revenue is forecasted to increase from RMB55.1 billion in 2020 to RMB223.4 billion in 2025 (CAGR of 32.3%), according to CIC. The penetration rate of online recruitment to the total market is forecasted to increase from 32% in 2020 to 50% in 2025, according to CIC.
Kanzhun is well-positioned to benefit from this sizeable market opportunity, in our view. At first sight, the strong growth in users and fast-paced revenue growth but ongoing losses suggests another “growth at all costs” strategy. In comparison, local listed peers such as 51 Job Inc Adr (JOBS US) and Wise Talent Information Tech (6100 HK) are growing much slower but are profitable.
Encouragingly, Kanzhun's high revenue visibility and declining loss margin suggest that Kanzhun can eventually deliver high growth with profits. The upfront payment model of the online recruitment market means that like its peers, Kanzhun is cash generative. For investors willing to brave the current market selloff in high growth stocks, we think that the Kanzhun story warrants a closer look.  


Kanzhun IPO Initiation: Search and Employ

<div><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.</p></div><div>
<p>Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.</p>
<p>We covered a little bit of the the company's history in <a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps</a>.</p>
<p>In this note, we will talk about the financials.</p>
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Zomato (ZOM IN)  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.
Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.
We covered a little bit of the the company's history in Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps.
In this note, we will talk about the financials.


Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

India

Info Edge (India) Limited operates an online job posting website. The website offers services for recruiters, job seekers, and employers. The Company also operates  an online matrimonial website for prospective brides, grooms, and relatives.

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Info Edge India (INFOE IN)

Kanzhun IPO: Trading Debut

Kanzhun has priced its IPO at $19 per ADS to raise $912 m. Our DCF sensitivity analysis points to a meaningful upside based on achievable targets...

Arun George

Kanzhun IPO: Valuation Insights

At the mid-point, Kanzhun will raise net proceeds of $817.2 m. For investors willing to brave the risk that the market selloff in high growth...

Arun George

Kanzhun IPO - Fast Growth, Strong Investor Support, Cash Flow Positive...

Kanzhun (BZ US), an online recruitment platform in China, aims to raise up to US$912m in its US IPO. The company is backed by Tencent (700 HK).

Sumeet Singh

Kanzhun IPO Initiation: Search and Employ

Kanzhun has filed for an $800 m raise, according to press reports. For investors willing to brave the current market selloff in high growth stocks,...

Arun George

Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

Zomato aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.

Sumeet Singh

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