Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>On the 21 June, nine months after IR solutions provider <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> first announced it had received a preliminary non-binding <a href="https://sec.report/Document/0001104659-20-105912/" target="_blank" rel="noopener">Proposal</a> from DCP Capital Partners to acquire all of its shares for US$79.05/common share, 51job <a href="https://sec.report/Document/0001193125-21-195283/" target="_blank" rel="noopener">announced</a> it had entered into a definitive privatisation agreement, also at US$79.05/share. </p>
<p>What appeared to be the clincher for the deal was <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> - 51job's largest shareholder with 34.8% - joining the consortium, which also comprised DCP plus Ocean Link and CEO Rick Yan, both of whom joined following the non-binding proposal <a href="https://ir.51job.com/ir/php/2021/PreRelease20210504.php?0504" target="_blank" rel="noopener">announced</a> on the 4 May. All in, the continuing shareholders and their affiliates hold 56.1% in 51job. </p>
<p>Despite a low-balled Offer - and the prospects of dissension apparent - the deal appeared done. It was just a question of timing.</p>
<p>Then China's internet sector campaign kicked into gear, with 51job ostensibly finding itself lumped (rightly or otherwise) with other internet-related stocks being scrutinised. Or at least, 51job was perceived to be in the cross-hairs. </p>
<p>It doesn't help there has been a complete lack of newsflow on the transaction since the definitive agreement. No mention whatsoever in the 2Q21 results. The current gross spread of 30.8% - well below the undisturbed price - is the widest since the transaction was first floated. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/750/original/image_859790017111635317164110.png?1635317164" class="editor-image img-responsive" data-smartkarma-image-id="237750"></figure>
</div>
<div>This looks like the right price to get involved. </div>
<div></div>
<div>
<p>More below the fold</p>
</div>


On the 21 June, nine months after IR solutions provider 51 Job Inc Adr (JOBS US) first announced it had received a preliminary non-binding Proposal from DCP Capital Partners to acquire all of its shares for US$79.05/common share, 51job announced it had entered into a definitive privatisation agreement, also at US$79.05/share. 
What appeared to be the clincher for the deal was Recruit Holdings (6098 JP) - 51job's largest shareholder with 34.8% - joining the consortium, which also comprised DCP plus Ocean Link and CEO Rick Yan, both of whom joined following the non-binding proposal announced on the 4 May. All in, the continuing shareholders and their affiliates hold 56.1% in 51job. 
Despite a low-balled Offer - and the prospects of dissension apparent - the deal appeared done. It was just a question of timing.
Then China's internet sector campaign kicked into gear, with 51job ostensibly finding itself lumped (rightly or otherwise) with other internet-related stocks being scrutinised. Or at least, 51job was perceived to be in the cross-hairs. 
It doesn't help there has been a complete lack of newsflow on the transaction since the definitive agreement. No mention whatsoever in the 2Q21 results. The current gross spread of 30.8% - well below the undisturbed price - is the widest since the transaction was first floated. 


This looks like the right price to get involved. 


More below the fold


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.

<p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US) </a>raised around US$1.4bn in its US listing in Jan 2021. RLX was the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value. RLX only sells its e-vapor products in China.</p><p>While the company didn’t have cornerstone investors in the deal, it did have a lot of pre-IPO investors. The lock-up will expire over the next few days.</p><div><p>Links to our previous notes:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-peer-comparison-and-valuation" target="_blank" rel="noopener">RLX Technology Pre-IPO - Peer Comparison and Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-ipo-valuation-has-more-than-doubled-in-two-months" target="_blank" rel="noopener">RLX Technology IPO - Valuation Has More than Doubled in Two Months</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-tech-rlx-stock-down-48-after-amendment-to-tobacco-law" target="_blank" rel="noopener">RLX Tech (RLX): Stock Down 48% After Amendment to Tobacco Law</a></li>
</ul></div>

RLX Technology Inc (RLX US) raised around US$1.4bn in its US listing in Jan 2021. RLX was the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value. RLX only sells its e-vapor products in China.While the company didn’t have cornerstone investors in the deal, it did have a lot of pre-IPO investors. The lock-up will expire over the next few days.Links to our previous notes:

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
RLX Technology Pre-IPO - Peer Comparison and Valuation
RLX Technology IPO - Valuation Has More than Doubled in Two Months
RLX Tech (RLX): Stock Down 48% After Amendment to Tobacco Law


RLX Lock-Up Expiry- Stung by Regulation, What Early Investors Do Will Be Telling, >US$1bn Comes Free

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

<p>For our next Webinar, we are excited to host Insight Provider <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a>, Head of IPOs &amp; Placements for Aequitas Research, to give us an overview of Equity Capital Markets activity during busy 1H21 and take us through the 2H21 pipeline, highlighting IPOs to look out for.</p><div><h3>The webinar will be hosted on Wednesday, 28 July 2021, 17:00 SGT/HKT.</h3></div><div>
<div><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=83136671874" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div></div>
<p>Sumeet Singh is Head of IPOs &amp; Placements for Aequitas Research. Aequitas covers all IPOs and Placements across Asia-Pacific with a deal size of at least US$100m. As of June 2021, the team had covered 581 IPOs with a hit rate of 73.8% and 752 placements with a hit rate of 67.6%. Prior to Aequitas, Sumeet was heading Content Strategy for Smartkarma, along with covering IPOs &amp; Placements, and in an earlier life covered ASEAN property and the banking space in India.</p>
</div>

For our next Webinar, we are excited to host Insight Provider Sumeet Singh, Head of IPOs &amp; Placements for Aequitas Research, to give us an overview of Equity Capital Markets activity during busy 1H21 and take us through the 2H21 pipeline, highlighting IPOs to look out for.The webinar will be hosted on Wednesday, 28 July 2021, 17:00 SGT/HKT.
Register for the Webinar here
Sumeet Singh is Head of IPOs &amp; Placements for Aequitas Research. Aequitas covers all IPOs and Placements across Asia-Pacific with a deal size of at least US$100m. As of June 2021, the team had covered 581 IPOs with a hit rate of 73.8% and 752 placements with a hit rate of 67.6%. Prior to Aequitas, Sumeet was heading Content Strategy for Smartkarma, along with covering IPOs &amp; Placements, and in an earlier life covered ASEAN property and the banking space in India.


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.

<div>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>  shares closed at HK$528 per share as at the end of Thursday’s trading, only 5.2% higher than the company’s 12-month low of HK$502 per share. The company’s shares have been on a downward trend on the back of increased regulatory scrutiny over Chinese internet stocks. As Chinese regulators have broadened their crackdown on the country’s internet tech platforms during the past few days, Tencent’s shares dropped almost 10% over the last one week (since the beginning of July).</div><div></div><div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/580/original/image_22041245221625797905092.png?1625797914" class="editor-image img-responsive" data-smartkarma-image-id="217580"></figure></div><div>There is no sign that China is slowing down with its antitrust crackdown on the country’s tech platforms, rather the regulators have broadened their investigation to include cybersecurity violations such as on the recently listed <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> , <a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> and <a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a> .</div><div></div><div>According to the CNN, the People’s Bank of China has said that it would further regulate the countries’ payments companies after its massive overhaul of Ant Group. The Chinese online payment market is largely dominated by Alipay and WeChat Pay.</div>


Tencent (700 HK)  shares closed at HK$528 per share as at the end of Thursday’s trading, only 5.2% higher than the company’s 12-month low of HK$502 per share. The company’s shares have been on a downward trend on the back of increased regulatory scrutiny over Chinese internet stocks. As Chinese regulators have broadened their crackdown on the country’s internet tech platforms during the past few days, Tencent’s shares dropped almost 10% over the last one week (since the beginning of July).There is no sign that China is slowing down with its antitrust crackdown on the country’s tech platforms, rather the regulators have broadened their investigation to include cybersecurity violations such as on the recently listed DiDi Chuxing (DIDI US) , Kanzhun (BZ US) and Full Truck Alliance (YMM US) .According to the CNN, the People’s Bank of China has said that it would further regulate the countries’ payments companies after its massive overhaul of Ant Group. The Chinese online payment market is largely dominated by Alipay and WeChat Pay.

<p><a href="https://www.smartkarma.com/entities/manycore-tech-inc-adr" target="_blank" data-smartkarma-citation="entities:33517:1" rel="noopener">Manycore Tech (KOOL US)</a>  operates a design software platform in China which offers 3D interior design, decoration and construction for residential, commercial and industrial spaces. According to iResearch, Manycore was the world’s largest platform for 3D interior design, decoration and construction in terms of the number of average monthly active users (MAUs) in 1Q2021.</p><p>The company has filed for an IPO to list its shares in the US and has a placeholder indication to raise about US$ 100m.</p><p>The interior DDC (design, decoration and construction) software market is forecasted to see rapid growth in China and in overseas markets driven by increasing trend for digital transformation and growing penetration of cloud-based software. Manycore’s revenues have continued to see strong growth over the last three years driven by increase in the number of paid subscribers, the enterprise customers in particular. The company also has expanded its operations outside of China and revenue from overseas markets have seen rapid growth. The company has not yet been able to generate any profits, however, we expect the company’s profitability to gradually improve with better pricing and stable costs.</p>

Manycore Tech (KOOL US)  operates a design software platform in China which offers 3D interior design, decoration and construction for residential, commercial and industrial spaces. According to iResearch, Manycore was the world’s largest platform for 3D interior design, decoration and construction in terms of the number of average monthly active users (MAUs) in 1Q2021.The company has filed for an IPO to list its shares in the US and has a placeholder indication to raise about US$ 100m.The interior DDC (design, decoration and construction) software market is forecasted to see rapid growth in China and in overseas markets driven by increasing trend for digital transformation and growing penetration of cloud-based software. Manycore’s revenues have continued to see strong growth over the last three years driven by increase in the number of paid subscribers, the enterprise customers in particular. The company also has expanded its operations outside of China and revenue from overseas markets have seen rapid growth. The company has not yet been able to generate any profits, however, we expect the company’s profitability to gradually improve with better pricing and stable costs.

Manycore IPO: Overshadowed by the Chinese Regulatory Crackdown

China

Kanzhun Limited provides online recruitment services. The Company connects job seekers and enterprise users through its mobile application. Kanzhun offers a mobile-native product that promotes instant direct chats between enterprise users and job seekers.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Kanzhun (BZ US)

51job (JOB US): Searching For Answers

Trading at a gross/annualised spread of 30.8%/88.3%, assuming completion 1Q22-end. Despite China's ongoing scrutiny of the internet industry, I've...

David Blennerhassett

RLX Lock-Up Expiry- Stung by Regulation, What Early Investors Do Will Be Telling, >US$1bn Comes Free

RLX Technology Inc (RLX US) raised around US$1.4bn in its US listing in Jan 2021.RLX sells e-vapor products in China. The lock-up will expire over...

Sumeet Singh

Smartkarma Webinar | 2021 IPO Pipeline

On July 28, 5PM SGT, join us and Sumeet Singh, Head of IPOs & Placements for Aequitas Research, for an overview of 2021's IPO pipeline with an...

Smartkarma Research

Tencent: Are We There Yet?

Compared to Alibaba, it has only been bits and pieces for Tencent so far when comes to regulatory crackdown. It seems obvious that Tencent will...

Shifara Samsudeen, ACMA, CGMA

Manycore IPO: Overshadowed by the Chinese Regulatory Crackdown

The ongoing cybersecurity and antitrust crackdown will make it more difficult for Chinese companies to list in the US and is a warning signal to...

Shifara Samsudeen, ACMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)