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

Kuaishou Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> is the second-largest short video platform by average DAUs (daily active users) in 9M20, according to iResearch. Kuaishou will commence trading on Friday, 05 February. Kuaishou priced its IPO at HK$115 and <a href="http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1074361/ipo-news" target="_blank" rel="noopener">opened 1x higher</a> at HK$230 in the grey market and last stood at HK$278.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/kuaishou-ipo-initiation-dancing-to-its-own-tune" target="_blank" data-smartkarma-citation="insights:45032" rel="noopener">Kuaishou IPO Initiation: Dancing to Its Own Tune</a>, we stated that while Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/kuaishou-ipo-thrill-seekers" target="_blank" data-smartkarma-citation="insights:47104" rel="noopener">Kuaishou IPO: Thrill Seekers</a>, we noted that the PHIP which discloses 9M20 results and key operating data for 11M20 reinforces our view that Kuaishou is worth a look. In <a href="https://www.smartkarma.com/insights/kuaishou-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:47381" rel="noopener">Kuaishou 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 HK$137.42 per share. 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 but the grey market price is fully priced. </p></div></div></div>

Kuaishou Technology (1024 HK) is the second-largest short video platform by average DAUs (daily active users) in 9M20, according to iResearch. Kuaishou will commence trading on Friday, 05 February. Kuaishou priced its IPO at HK$115 and opened 1x higher at HK$230 in the grey market and last stood at HK$278.In Kuaishou IPO Initiation: Dancing to Its Own Tune, we stated that while Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive. In Kuaishou IPO: Thrill Seekers, we noted that the PHIP which discloses 9M20 results and key operating data for 11M20 reinforces our view that Kuaishou is worth a look. In Kuaishou 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 HK$137.42 per share. 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 but the grey market price is fully priced. 

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>There are a lot of changes expected to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> over the next 6 months.</p><p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> lists on 5 February and we expect the stock to get Fast Entry to the index with the change implemented at the close of trading on 22 February.</p><p>The Hang Seng Indexes Company Limited (HSIL) will announce the results of the March 2021 review of the Hang Seng Family of Indexes on 26 February. The constituent changes will be effective after the close of trading on 12 March. We expect 1 inclusion and 3 exclusions at the review.</p><p>At the current time, we expect 3 changes at the June 2021 review. There are a few stocks that are close adds and deletes and the actual number of changes could be higher.</p><p>There are a few large IPOs that could take place this year that could get those stocks Fast Entry/ regular entry into the index. The main ones are <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (1284375D CH)</a>, JD Logistics, <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a>'s Douyin and a possible revival of the shelved <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> IPO.</p><p>Then there is the possibility of some large 'homecoming' listings getting included in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> over the next few reviews. <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> is rumored to have picked banks and is said to plan a listing in Hong Kong in the first half of the year, with <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> and <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a> as other names on the list.</p><p>In this Insight, we lay out the potential roadmap of upcoming changes to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> along with the impact on the stocks.</p>

There are a lot of changes expected to the Hang Seng China Enterprises Index (HSCEI INDEX) over the next 6 months.Kuaishou Technology (1024 HK) lists on 5 February and we expect the stock to get Fast Entry to the index with the change implemented at the close of trading on 22 February.The Hang Seng Indexes Company Limited (HSIL) will announce the results of the March 2021 review of the Hang Seng Family of Indexes on 26 February. The constituent changes will be effective after the close of trading on 12 March. We expect 1 inclusion and 3 exclusions at the review.At the current time, we expect 3 changes at the June 2021 review. There are a few stocks that are close adds and deletes and the actual number of changes could be higher.There are a few large IPOs that could take place this year that could get those stocks Fast Entry/ regular entry into the index. The main ones are DiDi Chuxing (1284375D CH), JD Logistics, ByteDance (1460967D CH)'s Douyin and a possible revival of the shelved Ant Group (6688 HK) IPO.Then there is the possibility of some large 'homecoming' listings getting included in the Hang Seng China Enterprises Index (HSCEI INDEX) over the next few reviews. Baidu (BIDU US) is rumored to have picked banks and is said to plan a listing in Hong Kong in the first half of the year, with Pinduoduo (PDD US) and Bilibili Inc (BILI US) as other names on the list.In this Insight, we lay out the potential roadmap of upcoming changes to the Hang Seng China Enterprises Index (HSCEI INDEX) along with the impact on the stocks.

HSCEI Index Rebalances - The Year of the Ox and of More Change

<p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> is the second-largest short video platform by average DAUs (daily active users) in 9M20, according to iResearch. Helped by a strong reception by both institutional and retail investors, Kuaishou is likely to price at the top-end of the IPO price range of HK$105-115 per share, according to press reports. The shares will start trading on 5 February.</p><div class="content-highlight"><p>The stage seems set for Kuaishou to follow the strong post-listing performance of recent tech listings in Hong Kong and the US. Early indications suggest that Kuaishou's grey market price has hit HK$250 per share, slightly more than twice the rumoured IPO price, <a href="http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1073287/ipo-news" target="_blank" rel="noopener">according to Chinese media</a>. Our analysis suggests that a valuation of 2x the rumoured IPO price of HK$115 per share can be justified on stretched but plausible assumptions.</p></div>

Kuaishou Technology (1024 HK) is the second-largest short video platform by average DAUs (daily active users) in 9M20, according to iResearch. Helped by a strong reception by both institutional and retail investors, Kuaishou is likely to price at the top-end of the IPO price range of HK$105-115 per share, according to press reports. The shares will start trading on 5 February.The stage seems set for Kuaishou to follow the strong post-listing performance of recent tech listings in Hong Kong and the US. Early indications suggest that Kuaishou's grey market price has hit HK$250 per share, slightly more than twice the rumoured IPO price, according to Chinese media. Our analysis suggests that a valuation of 2x the rumoured IPO price of HK$115 per share can be justified on stretched but plausible assumptions.

Kuaishou IPO: Is It Worth Twice the IPO Price?

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 Bottom-Up

<p><a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a>  reported its 3QFY03/2021 results on Friday (29<sup>th</sup> January 2021) which saw both revenues and OP increasing at 40.1% and 78.5% YoY during the quarter. The reported revenues and OP both beat consensus estimates by 8.6% and 20.5% respectively.</p><p>We discuss the details below.</p>

M3 Inc (2413 JP)  reported its 3QFY03/2021 results on Friday (29th January 2021) which saw both revenues and OP increasing at 40.1% and 78.5% YoY during the quarter. The reported revenues and OP both beat consensus estimates by 8.6% and 20.5% respectively.We discuss the details below.

M3 3Q Results: Strong Growth in Earnings Driven by Medical and Overseas Businesses

APAC IPOs & Placements

Zhen Zhou, Toh

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.

Alibaba Health Information Tec / Equity Capital Markets

<p>Yunfeng Capital is looking to selling about US$509m worth of shares in <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a> (Ali Health). Post-sell down, Yunfeng Capital will still have 30% stake in the company.</p><p>We have earlier covered Ali Health's 2020 placement and 1H results read-through (for <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>'s IPO) in:</p><ul>
<li>
<a href="https://www.smartkarma.com/insights/alibaba-health-placement-a-few-headwinds-but-multiple-tailwinds" target="_blank" data-smartkarma-citation="insights:41866" rel="noopener">Alibaba Health Placement - A Few Headwinds but Multiple Tailwinds</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/jd-health-ipo-ali-health-1h-results-read-through-and-index-inclusions" target="_blank" data-smartkarma-citation="insights:45773" rel="noopener">JD Health (京东健康) IPO - Ali Health 1H Results Read Through and Index Inclusions</a> </li>
</ul>

Yunfeng Capital is looking to selling about US$509m worth of shares in Alibaba Health Information Technology (241 HK) (Ali Health). Post-sell down, Yunfeng Capital will still have 30% stake in the company.We have earlier covered Ali Health's 2020 placement and 1H results read-through (for JD Health (6618 HK)'s IPO) in:

Alibaba Health Placement - A Few Headwinds but Multiple Tailwinds 

JD Health (京东健康) IPO - Ali Health 1H Results Read Through and Index Inclusions 


Alibaba Health Placement - Another Round of Selldown by Yunfeng

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

Kuaishou IPO: Trading Debut

Kuaishou priced its IPO at HK$115 and the grey market price last stood at HK$278. Our DCF sensitivity analysis shows that the grey market price is...

Arun George

HSCEI Index Rebalances - The Year of the Ox and of More Change

There will be a lot of changes to the HSCEI this year that will impact the sectoral composition and open up trading opportunities on the stocks and...

Brian Freitas

Kuaishou IPO: Is It Worth Twice the IPO Price?

Kuaishou's grey market price has hit HK$250 per share, slightly more than 2x the IPO price of HK$115. Our analysis suggests that this valuation can...

Arun George

M3 3Q Results: Strong Growth in Earnings Driven by Medical and Overseas Businesses

M3 Inc. reported its 3QFY03/2021 results on Friday (29th January 2021) which saw both revenues and OP increasing at 40.1% and 78.5% YoY during the...

Shifara Samsudeen, ACMA, CGMA

Alibaba Health Placement - Another Round of Selldown by Yunfeng

Yunfeng Capital is looking to selling about US$509m worth of shares in Alibaba Health Information Technology (241 HK) (Ali Health).

Zhen Zhou, Toh

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