Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>Recent developments highlighted the strategic significance of Wechat Channels (微信视频号) that Tencent’s management attached to the company’s future.</li>
<li>Counter-Intuitively, while backing of the social giant saves Wechat Channels’ efforts for traffic acquisition, it also limits the product's potential to develop into a content ecosystem rivaling Douyin.</li>
<li>Our base case values the product at $29 billion, or 6% of Tencent’s market cap as of January 20th.</li>
</ul>


Recent developments highlighted the strategic significance of Wechat Channels (微信视频号) that Tencent’s management attached to the company’s future.
Counter-Intuitively, while backing of the social giant saves Wechat Channels’ efforts for traffic acquisition, it also limits the product's potential to develop into a content ecosystem rivaling Douyin.
Our base case values the product at $29 billion, or 6% of Tencent’s market cap as of January 20th.


Tencent (700.HK): Valuing Wechat Channels

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.

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>Things are starting to pickup on the IPO front with the first somewhat sizeable US ADR filing done this week.</li>
<li>Placements deal flow continued to stay strong this week, even as the performance didn't.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Things are starting to pickup on the IPO front with the first somewhat sizeable US ADR filing done this week.
Placements deal flow continued to stay strong this week, even as the performance didn't.


ECM Weekly (20th Jan 23) - HK Brokers, Wuxi, IQIYI, Anycol, Adani, WM Mot, LG Ene, AIn, Oasis, Perta

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.

<ul>
<li>China’s gaming regulator granted publishing licenses to 88 video games including three licenses to Tencent (for Undawn, Alchemy Stars and Yuan Meng Zhi Xing) and one for NetEase (for Badlanders).</li>
<li>In December, NPPA gave approvals to 84 new domestic games and 44 imported games suggesting the 18-month long crackdown on the sector is nearing an end.</li>
<li>Tencent’s online games revenue declined YoY for three consecutive quarters with regulatory hurdles and drop in ranking of key titles but we expect an improvement going into 2023.</li>
</ul>


China’s gaming regulator granted publishing licenses to 88 video games including three licenses to Tencent (for Undawn, Alchemy Stars and Yuan Meng Zhi Xing) and one for NetEase (for Badlanders).
In December, NPPA gave approvals to 84 new domestic games and 44 imported games suggesting the 18-month long crackdown on the sector is nearing an end.
Tencent’s online games revenue declined YoY for three consecutive quarters with regulatory hurdles and drop in ranking of key titles but we expect an improvement going into 2023.


<ul>
<li>IQiyi announced a follow-on equity offering of 76.5m ADS priced at $5.90 per ADS (at a 11% discount to previous close) and will raise approx. $442.3m through the issuance.</li>
<li>Each ADS represents seven Class A ordinary shares and the new equity offering of 76.5m ADS will account for approx. 8.5% of iQiyi’s extended share capital post offering.</li>
<li>Following the announcement, the company’s shares fell 16.4% and we think the upside is limited here.</li>
</ul>


IQiyi announced a follow-on equity offering of 76.5m ADS priced at $5.90 per ADS (at a 11% discount to previous close) and will raise approx. $442.3m through the issuance.
Each ADS represents seven Class A ordinary shares and the new equity offering of 76.5m ADS will account for approx. 8.5% of iQiyi’s extended share capital post offering.
Following the announcement, the company’s shares fell 16.4% and we think the upside is limited here.


IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable

<ul>
<li>IQIYI aims to raise around US$500m via a follow-on ADS offering.</li>
<li>While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes</li>
<li>In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.</li>
</ul>


IQIYI aims to raise around US$500m via a follow-on ADS offering.
While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes
In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.


IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

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.

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Kuaishou Technology (1024 HK)

Tencent (700.HK): Valuing Wechat Channels

We value Wechat Channels at $29 billion, roughly 6% of Tencent's market cap. The social graph underpinning the product is a double-edge sword -...

Eric Chen

ECM Weekly (20th Jan 23) - HK Brokers, Wuxi, IQIYI, Anycol, Adani, WM Mot, LG Ene, AIn, Oasis, Perta

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Tencent: Gaming on the Road to Recovery

Tencent’s online games revenue declined YoY for three consecutive quarters with regulatory hurdles and drop in ranking of key titles, but we expect...

Shifara Samsudeen, ACMA, CGMA

IQiyi Follow-On Offer: Shifting Focus to Profits No Longer Sustainable

iQiyi announced a follow-on offer to raise $442.3m. Recent shift in focus on profits from growth was short-lived. Recent convertible notes to PAG...

Shifara Samsudeen, ACMA, CGMA

IQIYI Follow-On Offering - Might Be Expected but Its Track Record Is...

iQIYI aims to raise around US$500m via a follow-on ADS offering. While the deal might be expected, the stock's longer term track record doesn't...

Sumeet Singh

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