Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

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

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<p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>’s in-house logistics department in 2007.</p>
<p>JD Logistics is seeking to raise up to $3-4 billion at a $40 billion valuation, according to press reports. Merrill Lynch and Haitong, which are part of the syndicate, have valued JD Logistics at $30.0-45.4 billion and $42.4-44.3 billion, respectively, <a href="https://www.thestandard.com.hk/section-news/section/2/229859/JD-Logistics-gets-ball-rolling-for-US%244b-IPO" target="_blank" rel="noopener">according to press reports</a>. </p>
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<p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-initiation-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:48279" rel="noopener">JD Logistics IPO Initiation: The Flow of Things</a>, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.</p>
<p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-prioritizing-market-share-gains-over-margins" target="_blank" data-smartkarma-citation="insights:50976" rel="noopener">JD Logistics IPO: Prioritizing Market Share Gains over Margins</a>,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. </p>
</div><div><div><div class="content-highlight"><p>In this note, we update our forecasts and valuation presented in <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:48384" rel="noopener">JD Logistics IPO: Valuation First Look</a> for the latest set of results and the margin guidance. Overall, based on valuation analysis, we think that the rumoured $40 billion valuation target is fair, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. </p></div></div></div>


JD Logistics (JDL HK) is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of JD.com Inc (ADR) (JD US)’s in-house logistics department in 2007.
JD Logistics is seeking to raise up to $3-4 billion at a $40 billion valuation, according to press reports. Merrill Lynch and Haitong, which are part of the syndicate, have valued JD Logistics at $30.0-45.4 billion and $42.4-44.3 billion, respectively, according to press reports. 

In JD Logistics IPO Initiation: The Flow of Things, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.
In JD Logistics IPO: Prioritizing Market Share Gains over Margins,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. 
In this note, we update our forecasts and valuation presented in JD Logistics IPO: Valuation First Look for the latest set of results and the margin guidance. Overall, based on valuation analysis, we think that the rumoured $40 billion valuation target is fair, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. 

JD Logistics IPO: Valuation and Forecast Update

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.

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<p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a>, a technology platform for insurance and healthcare services in China, raised around US$360m in its US IPO. <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> owned 22.1% and <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> owned 5.7% of the company prior to its listing.</p>
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<p>We have covered various aspects of the deal in our previous notes, <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-positives-fast-growth-strong-backers" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers</a>, <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-negatives-scandals-shutdowns-competing-with-giants-regulation" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation</a> and <a href="https://www.smartkarma.com/insights/waterdrop-ipo-valuation-has-nearly-tripled-over-the-past-year" target="_blank" rel="noopener">Waterdrop IPO - Valuation Has Nearly Tripled over the past Year</a>.</p>
<p>In this note, we look at deal dynamics and provide an update on valuation.  </p>
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Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, raised around US$360m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.


We have covered various aspects of the deal in our previous notes, Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers, Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation and Waterdrop IPO - Valuation Has Nearly Tripled over the past Year.
In this note, we look at deal dynamics and provide an update on valuation.  


Waterdrop IPO Trading - Ant's Mutual Aid Admissions Showcase the Regulatory Overhang

<p><a href="https://www.smartkarma.com/entities/ximalaya-inc" target="_blank" data-smartkarma-citation="entities:33232:1" rel="noopener">Ximalaya (XIMA US)</a> is the largest online audio platform in China as measured by average MAUs (monthly active users), total mobile listening time, and total revenues in 2020, according to CIC. Ximalaya also has the largest audio content library and the most audio content creators in China. <br>Ximalaya 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> (5.4% of outstanding shares), <a href="https://www.smartkarma.com/entities/tal-education-group" target="_blank" data-smartkarma-citation="entities:1124:1" rel="noopener">TAL Education (TAL US)</a> and Sony Music Entertainment. Ximalaya has filed for an NYSE IPO to raise proceeds of $0.5-1.0 billion, according to press reports. </p><p>China is the world’s largest online audio market in terms of the number of online audio users. However, the number of mobile online audio MAUs (monthly active users) in China accounted for only 16.1% of total mobile Internet MAUs in 2020, according to CIC. China’s online audio market in terms of revenue is forecasted to grow from RMB13.1 billion in 2020 to RMB120.1 billion by 2025, representing a CAGR of 55.8%, according to CIC.</p><div class="content-highlight">
<p>At first glance, Ximalaya is well-positioned to benefit from this sizeable market opportunity. The strong user engagement, fast-paced revenue growth and declining loss margin suggest that Ximalaya is heading in the right direction. However, a closer look reveals concerning developments on several fronts.</p>
<p><a href="https://www.smartkarma.com/entities/lizhi-inc" target="_blank" data-smartkarma-citation="entities:28396:1" rel="noopener">Lizhi Inc (LIZI US)</a>, a peer, is trading around 50% below its IPO price which suggests that investors are not overly enthused by plays on the China online audio market. With sentiment on Chinese US listings weakening, we think that the negatives in the Ximalaya story warrant a pass.  </p>
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Ximalaya (XIMA US) is the largest online audio platform in China as measured by average MAUs (monthly active users), total mobile listening time, and total revenues in 2020, according to CIC. Ximalaya also has the largest audio content library and the most audio content creators in China.  Ximalaya is backed by Tencent (700 HK) (5.4% of outstanding shares), TAL Education (TAL US) and Sony Music Entertainment. Ximalaya has filed for an NYSE IPO to raise proceeds of $0.5-1.0 billion, according to press reports. China is the world’s largest online audio market in terms of the number of online audio users. However, the number of mobile online audio MAUs (monthly active users) in China accounted for only 16.1% of total mobile Internet MAUs in 2020, according to CIC. China’s online audio market in terms of revenue is forecasted to grow from RMB13.1 billion in 2020 to RMB120.1 billion by 2025, representing a CAGR of 55.8%, according to CIC.
At first glance, Ximalaya is well-positioned to benefit from this sizeable market opportunity. The strong user engagement, fast-paced revenue growth and declining loss margin suggest that Ximalaya is heading in the right direction. However, a closer look reveals concerning developments on several fronts.
Lizhi Inc (LIZI US), a peer, is trading around 50% below its IPO price which suggests that investors are not overly enthused by plays on the China online audio market. With sentiment on Chinese US listings weakening, we think that the negatives in the Ximalaya story warrant a pass.  


APAC IPOs & Placements

Zhen Zhou, Toh

<p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> is looking to raise US$4bn in its upcoming Hong Kong IPO and JD.com holds an 81% stake in the company prior to the IPO.</p><p>In this note, we will look at the impact of JD Logistics’ IPO on JD.com’s valuation.</p><p>We had previously covered JD Logistics IPO in:</p><ul style="list-style-type: disc;">
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-peer-comparison-shielded-from-price-war" target="_blank" data-smartkarma-citation="insights:50575" rel="noopener">JD Logistics (京东物流) Pre-IPO - Peer Comparison - Shielded from Price War</a> </li>
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-tethered-to-jd-group-and-looking-beyond" target="_blank" data-smartkarma-citation="insights:48396" rel="noopener">JD Logistics (京东物流) Pre-IPO - Tethered to JD Group and Looking Beyond</a> </li>
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-thoughts-on-valuation" target="_blank" data-smartkarma-citation="insights:50953" rel="noopener">JD Logistics (京东物流) Pre-IPO - Thoughts on Valuation</a> </li>
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-phip-updates-and-fine-tuning-valuation" target="_blank" data-smartkarma-citation="insights:51008" rel="noopener">JD Logistics (京东物流) Pre-IPO - PHIP Updates and Fine-Tuning Valuation</a> </li>
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-index-implications-it-will-cut-close" target="_blank" data-smartkarma-citation="insights:51054" rel="noopener">JD Logistics (京东物流) Pre-IPO - Index Implications - It Will Cut Close</a> </li>
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<a href="https://www.smartkarma.com/insights/jd-logistics-pre-ipo-bull-bear-case-valuation-sensitivity" target="_blank" data-smartkarma-citation="insights:51105" rel="noopener">JD Logistics (京东物流) Pre-IPO - Bull/Bear Case + Valuation Sensitivity</a> </li>
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JD Logistics (JDL HK) is looking to raise US$4bn in its upcoming Hong Kong IPO and JD.com holds an 81% stake in the company prior to the IPO.In this note, we will look at the impact of JD Logistics’ IPO on JD.com’s valuation.We had previously covered JD Logistics IPO in:

JD Logistics (京东物流) Pre-IPO - Peer Comparison - Shielded from Price War 

JD Logistics (京东物流) Pre-IPO - Tethered to JD Group and Looking Beyond 

JD Logistics (京东物流) Pre-IPO - Thoughts on Valuation 

JD Logistics (京东物流) Pre-IPO - PHIP Updates and Fine-Tuning Valuation 

JD Logistics (京东物流) Pre-IPO - Index Implications - It Will Cut Close 

JD Logistics (京东物流) Pre-IPO - Bull/Bear Case + Valuation Sensitivity 


JD.com (京东) HoldCo Valuation Quick Note - Impact of JD Logistics (京东物流) IPO

China

JD.com, Inc. is an online direct sales company in China. The Company offers a wide selection of products through its website and mobile applications. JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com (9618 HK)

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

JD Logistics IPO: Valuation and Forecast Update

JD Logistics is set to launch its IPO to raise $3-4 bn in May. The rumoured $40 bn valuation is fair, particularly in the context of its...

Arun George

Waterdrop IPO Trading - Ant's Mutual Aid Admissions Showcase the Regulatory Overhang

Waterdrop, a technology platform for insurance and healthcare services in China, raised around US$360m in its US IPO. Tencent owned 22.1% and Swiss...

Sumeet Singh

Ximalaya IPO Initiation: Out of Tune

At first glance, Ximalaya is well-positioned to benefit from the sizeable China online audio market opportunity. However, a closer look reveals...

Arun George

JD.com (京东) HoldCo Valuation Quick Note - Impact of JD Logistics (京东物流) IPO

JD Logistics (JDL HK) is looking to raise US$4bn in its upcoming Hong Kong IPO and JD.com holds an 81% stake in the company prior to the IPO.

Zhen Zhou, Toh

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