Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Kuaishou Technology / Equity Capital Markets

<p><strong>Our base case valuation of Kuaishou Technology is US$90 billion (584 billion RMB). According to our valuation analysis, the valuation range of the company is from US$73 billion to US$109 billion. Our base case valuation of the company uses P/S multiple of 7.3x, which is 10% premium to the comps' average P/S multiple in 2021.</strong></p><p>This week, there have been some reports that the IPO could have initial valuation of about US$60 billion so our base case valuation of US$90 billion would represent about 50% upside from the base case. However, the base case valuation is subject to change in the coming days leading up to the IPO. </p><p>To value Kuaishou Technology, we used the following nine companies including Alibaba, JD.com, and iQiyi as comps. Among these nine companies, eight of them are based in China and Snap is the only company to be based in the United States.</p>

Our base case valuation of Kuaishou Technology is US$90 billion (584 billion RMB). According to our valuation analysis, the valuation range of the company is from US$73 billion to US$109 billion. Our base case valuation of the company uses P/S multiple of 7.3x, which is 10% premium to the comps' average P/S multiple in 2021.This week, there have been some reports that the IPO could have initial valuation of about US$60 billion so our base case valuation of US$90 billion would represent about 50% upside from the base case. However, the base case valuation is subject to change in the coming days leading up to the IPO. To value Kuaishou Technology, we used the following nine companies including Alibaba, JD.com, and iQiyi as comps. Among these nine companies, eight of them are based in China and Snap is the only company to be based in the United States.

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.

Event-Driven

<div><p>Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.</p></div><div><p>As of nine months ended Sep 2020, it had 305m daily active users (DAUs), who spent 86 mins on average on the app every day. It also had 769m monthly active users (MAUs) and total e-commerce GMV of RMB204.1bn. On an average 1.1bn short videos were uploaded on its app during 1H20.</p></div><div><p>As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.</p></div><div><p>I have covered various aspects of the company’s performance in my previous notes: </p></div><div><ul style="list-style-type: disc;">
<li> <a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-the-positives-hot-segment-fast-growth" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth</a>
</li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-the-negatives-ample-doubts-remain" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain</a></li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-peer-comparison-and-thoughts-on-valuation" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - Peer Comparison and Thoughts on Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-phip-updates-user-growth-has-been-slowing-down-post-covid" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - PHIP Updates - User Growth Has Been Slowing Down Post COVID</a></li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-updated-forecasts-and-valuation" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - Updated Forecasts and Valuation</a></li>
</ul></div><div><p>In this note, I’ll talk about the early inclusion in the indices.</p></div>

Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.As of nine months ended Sep 2020, it had 305m daily active users (DAUs), who spent 86 mins on average on the app every day. It also had 769m monthly active users (MAUs) and total e-commerce GMV of RMB204.1bn. On an average 1.1bn short videos were uploaded on its app during 1H20.As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.I have covered various aspects of the company’s performance in my previous notes: 
 Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain
Kuaishou Technology Pre-IPO - Peer Comparison and Thoughts on Valuation
Kuaishou Technology Pre-IPO - PHIP Updates - User Growth Has Been Slowing Down Post COVID
Kuaishou Technology Pre-IPO - Updated Forecasts and Valuation
In this note, I’ll talk about the early inclusion in the indices.

Kuaishou Technology Pre-IPO - Index Implications, MSCI, FTSE and HSI Indices

<div><p>Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.</p></div><div><p>As of nine months ended Sep 2020, it had 305m daily active users (DAUs), who spent 86 mins on average on the app every day. It also had 769m monthly active users (MAUs) and total e-commerce GMV of RMB204.1bn. On an average 1.1bn short videos were uploaded on its app during 1H20.</p></div><div><p>As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.</p></div><div><p>I have covered various aspects of the company’s performance in my previous notes: </p></div><div><ul style="list-style-type: disc;">
<li> <a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-the-positives-hot-segment-fast-growth" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth</a>
</li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-the-negatives-ample-doubts-remain" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain</a></li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-peer-comparison-and-thoughts-on-valuation" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - Peer Comparison and Thoughts on Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/kuaishou-technology-pre-ipo-phip-updates-user-growth-has-been-slowing-down-post-covid" target="_blank" rel="noopener">Kuaishou Technology Pre-IPO - PHIP Updates - User Growth Has Been Slowing Down Post COVID</a></li>
</ul></div><div><p>In this note, I’ll cover the updated earnings and forecast post the PHIP filing.</p></div>

Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.As of nine months ended Sep 2020, it had 305m daily active users (DAUs), who spent 86 mins on average on the app every day. It also had 769m monthly active users (MAUs) and total e-commerce GMV of RMB204.1bn. On an average 1.1bn short videos were uploaded on its app during 1H20.As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.I have covered various aspects of the company’s performance in my previous notes: 
 Kuaishou Technology Pre-IPO - The Positives - Hot Segment, fast growth

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain
Kuaishou Technology Pre-IPO - Peer Comparison and Thoughts on Valuation
Kuaishou Technology Pre-IPO - PHIP Updates - User Growth Has Been Slowing Down Post COVID
In this note, I’ll cover the updated earnings and forecast post the PHIP filing.

Kuaishou Technology Pre-IPO - Updated Forecasts and Valuation

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.

<p>The Chinese short video and live streaming platform, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Beijing Kuaishou Technology Co Ltd (1496219D CH)</a>  has filed for an IPO to list its shares on the Hong Kong Stock Exchange. The company aims to raise up to US$5bn at a rumoured valuation of around US$50-60bn.</p><p>In our previous insights on the company’s IPO, we examined the company’s business model, segments, financials and outlook. Refer the following extract from our previous insight:</p><div class="content-highlight"><p><em>As we discussed in our previous insights, we remain positive on the company’s growth prospects. Though the company’s live streaming revenues show a slight decline in 3Q2020 compared to the same quarter last year, as the company stated we believe it was due to changes in the customer spending habits. As we highlighted in our previous insights, it seems that the company’s monetisation strategy has worked in favour where revenues from online marketing services and other services have grown rapidly during the period. The huge increase in the e-commerce GMV in fact proves that the company’s e-commerce business is rapidly expanding thereby contributing to the growth in the company’s top line. Our cost and margin analysis also shows that Kuaishou should start generating stable profits over the next few quarters</em></p></div><p>Kuaishou’s closest peer is ByteDance-owned Douyin, however, given Douyin’s financial statements are not publicly available and the company is not listed, we would be comparing the company against its peer <a href="https://www.smartkarma.com/entities/momo-inc" target="_blank" data-smartkarma-citation="entities:26075:1" rel="noopener">Momo Inc (MOMO US)</a> . (Only the financials of Momo platform).</p>

The Chinese short video and live streaming platform, Beijing Kuaishou Technology Co Ltd (1496219D CH)  has filed for an IPO to list its shares on the Hong Kong Stock Exchange. The company aims to raise up to US$5bn at a rumoured valuation of around US$50-60bn.In our previous insights on the company’s IPO, we examined the company’s business model, segments, financials and outlook. Refer the following extract from our previous insight:As we discussed in our previous insights, we remain positive on the company’s growth prospects. Though the company’s live streaming revenues show a slight decline in 3Q2020 compared to the same quarter last year, as the company stated we believe it was due to changes in the customer spending habits. As we highlighted in our previous insights, it seems that the company’s monetisation strategy has worked in favour where revenues from online marketing services and other services have grown rapidly during the period. The huge increase in the e-commerce GMV in fact proves that the company’s e-commerce business is rapidly expanding thereby contributing to the growth in the company’s top line. Our cost and margin analysis also shows that Kuaishou should start generating stable profits over the next few quartersKuaishou’s closest peer is ByteDance-owned Douyin, however, given Douyin’s financial statements are not publicly available and the company is not listed, we would be comparing the company against its peer Momo Inc (MOMO US) . (Only the financials of Momo platform).

Kuaishou IPO: Broadly Outperforming Peers; Profits Should Materialise as Sales and Marketing Falls

Private Capital Markets

Kuaishou Technology / Private Capital Markets

<p>Kuaishou Technology filed the PHIP papers last week as it is getting ready for an IPO in the next few weeks. The company plans to raise at least <strong>$5 billion</strong> that could value the company at about <strong>$60 billion.</strong> According to <a href="https://www.reuters.com/article/us-kuaishou-ipo/chinas-kuaishou-hong-kong-ipo-could-value-firm-at-about-60bln-sources-idUSKBN29N09M" target="_blank" rel="noopener">Reuters,</a> the exact valuation of the company will be determined after the meetings with the investors this week but the valuation could change before the deal is launched.</p><p>Our base case revenue estimate for the company is 58,249 million RMB in 2020 (up 48.9% YoY) and 79,463 million RMB in 2021 (up 36.4% YoY). If the IPO is priced at $60 billion in valuation, this would suggest P/S of 6.7x (2020E) and 4.9x (2021E), using our sales estimates.</p><div class="content-highlight">
<p>There are some important highlights in 3Q 2020 results of Kuaishou Technology:</p>
<ul>
<li>
<strong>Although the company's revenue increased by 50.7% YoY in 3Q 2020,</strong><strong>the revenue decline of 1.6% by the Live Streaming business in 3Q 2020 is very concerning. </strong>
</li>
<li>Despite the fact that the company's Live Streaming sales declined in 3Q 2020, its other business units including Online Marketing and Other Services experienced explosive growth. </li>
<li><strong>Despite the negative operating profits in 3Q 2020, the company was able to make significant improvements in operating margins (from -29.9% in 1H 2020 to -9.0% in 3Q 2020) without sacrificing revenue growth. </strong></li>
</ul>
</div>

Kuaishou Technology filed the PHIP papers last week as it is getting ready for an IPO in the next few weeks. The company plans to raise at least $5 billion that could value the company at about $60 billion. According to Reuters, the exact valuation of the company will be determined after the meetings with the investors this week but the valuation could change before the deal is launched.Our base case revenue estimate for the company is 58,249 million RMB in 2020 (up 48.9% YoY) and 79,463 million RMB in 2021 (up 36.4% YoY). If the IPO is priced at $60 billion in valuation, this would suggest P/S of 6.7x (2020E) and 4.9x (2021E), using our sales estimates.
There are some important highlights in 3Q 2020 results of Kuaishou Technology:


Although the company's revenue increased by 50.7% YoY in 3Q 2020,the revenue decline of 1.6% by the Live Streaming business in 3Q 2020 is very concerning. 

Despite the fact that the company's Live Streaming sales declined in 3Q 2020, its other business units including Online Marketing and Other Services experienced explosive growth. 
Despite the negative operating profits in 3Q 2020, the company was able to make significant improvements in operating margins (from -29.9% in 1H 2020 to -9.0% in 3Q 2020) without sacrificing revenue growth. 



Kuaishou IPO PHIP Update & Income Statement Forecast

China

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

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

Kuaishou Technology (1024 HK)

Kuaishou IPO Valuation Analysis

Our base case valuation of Kuaishou Technology is US$90 billion (584 billion RMB), based on P/S multiple of 7.3x, which is 10% premium to the...

Douglas Kim

Kuaishou Technology Pre-IPO - Index Implications, MSCI, FTSE and HSI Indices

Kuaishou Technology is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed...

Sumeet Singh

Kuaishou Technology Pre-IPO - Updated Forecasts and Valuation

Kuaishou Technology is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed...

Sumeet Singh

Kuaishou IPO: Broadly Outperforming Peers; Profits Should Materialise as Sales and Marketing Falls

In this insight, we compare Kuaishou's financials and key matrices against its peer Momo Inc. (Only the financials of Momo platform).

Shifara Samsudeen, ACMA, CGMA

Kuaishou IPO PHIP Update & Income Statement Forecast

Kuaishou Technology was able to make significant improvements in operating margins (from -29.9% in 1H 2020 to -9.0% in 3Q 2020) without sacrificing...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)