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

<div><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> is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by <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>, <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> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.</p></div><div><div><div class="content-highlight"><p>Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In <a href="https://www.smartkarma.com/insights/waterdrop-ipo-initiation-going-for-brokers" target="_blank" data-smartkarma-citation="insights:50610" rel="noopener">Waterdrop IPO Initiation: Going for Brokers</a>, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. In this note, we present our forecasts and take the first look at Waterdrop's potential valuation range. </p></div></div></div>

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. In this note, we present our forecasts and take the first look at Waterdrop's potential valuation range. 

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

Equity Bottom-Up

ZhongAn Online P&C Insurance C / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhongan-online-p-c-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:23681:1" rel="noopener">ZhongAn Online P&amp;C Insurance (6060 HK)</a> and <a href="https://www.smartkarma.com/entities/lemonade-inc" target="_blank" data-smartkarma-citation="entities:29163:1" rel="noopener">Lemonade Inc (LMND US)</a> are two widely known Insurtech companies in the world's two largest property &amp; casualty (P&amp;C) insurance markets</li>
<li>Based on the comparison in the following article, ZhongAn is preferred to Lemonade, both in terms of the valuation and company development</li>
<li>ZhongAn further showed encouraging signs in 2020 as it shifted the product mix towards the health segment, thanks to the pandemic, and its combined ratio was at the lowest since it started operations  </li>
</ul>



ZhongAn Online P&amp;C Insurance (6060 HK) and Lemonade Inc (LMND US) are two widely known Insurtech companies in the world's two largest property &amp; casualty (P&amp;C) insurance markets
Based on the comparison in the following article, ZhongAn is preferred to Lemonade, both in terms of the valuation and company development
ZhongAn further showed encouraging signs in 2020 as it shifted the product mix towards the health segment, thanks to the pandemic, and its combined ratio was at the lowest since it started operations  


ZhongAn Vs. Lemonade: Which One Is a Better Insurtech Bet?

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

<p><a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a> is technology-driven and consumer-focused health insurer with the best-in-class in-house built technology and customer service. VC-backed insurtech unicorn wants to disrupt and transform health insurance through engagement technology. <a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  helps to save money and optimize spending for its members using the personalized data to drive real-time actionable insights and recommendations.</p><p>Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the IPO. <a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  raised ~$1.6 billion in funding over 10 rounds, according to Pitchbook and Crunchbase. The expected price range on the IPO of 31 million shares was raised to $36-38 per share and today Oscar Health sold shares at IPO price of $39 per share implying valuation of ~$8 billion.</p>

Oscar Health (OSCR US) is technology-driven and consumer-focused health insurer with the best-in-class in-house built technology and customer service. VC-backed insurtech unicorn wants to disrupt and transform health insurance through engagement technology. Oscar Health (OSCR US)  helps to save money and optimize spending for its members using the personalized data to drive real-time actionable insights and recommendations.Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the IPO. Oscar Health (OSCR US)  raised ~$1.6 billion in funding over 10 rounds, according to Pitchbook and Crunchbase. The expected price range on the IPO of 31 million shares was raised to $36-38 per share and today Oscar Health sold shares at IPO price of $39 per share implying valuation of ~$8 billion.

Oscar Health IPO. Reinventing Health Insurance

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Upstart Holdings  / Equity Capital Markets

<p>Our base case valuation of Upstart Holdings is EV of $3,153 million, implied market cap of $3,236 million, and implied price of $35.8 per share, which would be 63% higher than the high end of the IPO price range of $22. Given the attractive upside, we have a positive view of the Upstart IPO. Our base case valuation uses our estimated sales of $321 million in 2021 and a 9.8x EV/S multiple. The 9.8x EV/S multiple was derived from the average of the comps' 2021 EV/Sales average and median multiples. </p><p>Upstart's core business uses the cloud-based artificial intelligence lending platform and aims to provide lower interest rates, higher approval rates, and a smoother digital experience. Since the company's inception, its bank partners have originated more than 0.62 million personal loans that have generated over 9 million repayments. As of the end of September 2020, about 70% of the Upstart-powered loans were entirely automated. </p>

Our base case valuation of Upstart Holdings is EV of $3,153 million, implied market cap of $3,236 million, and implied price of $35.8 per share, which would be 63% higher than the high end of the IPO price range of $22. Given the attractive upside, we have a positive view of the Upstart IPO. Our base case valuation uses our estimated sales of $321 million in 2021 and a 9.8x EV/S multiple. The 9.8x EV/S multiple was derived from the average of the comps' 2021 EV/Sales average and median multiples. Upstart's core business uses the cloud-based artificial intelligence lending platform and aims to provide lower interest rates, higher approval rates, and a smoother digital experience. Since the company's inception, its bank partners have originated more than 0.62 million personal loans that have generated over 9 million repayments. As of the end of September 2020, about 70% of the Upstart-powered loans were entirely automated. 

<p style="text-align: justify;">In October VC-backed app-based car insurance unicorn Root announced pricing of its IPO and sold ~27 million shares of Class A common stock at IPO price of $27 a share (above its initial target range of $22-25). Columbus insurtech startup raised more than $1 billion dollars and funds affiliated with Dragoneer Investment Group and Silver Lake Technology agreed to purchase an aggregate of up to $500 million worth of shares in private placements. We saw solid demand for Root Insurance IPO. However, Root shares fell ~16% below IPO price and we believe this is a great buying opportunity for long-term investors.</p><p style="text-align: justify;">Root is a fully licensed insurance carrier with a scaled proprietary telematics solution and operates on fast growing Pay-How-You-Drive (PHYD) segment of insurance telematics market. Under PHYD model driver may control the cost of insurance premium. Furthermore, company offers such products as Root Renters and Root Home cross-selling non-auto products across its customer base. At 14x and 11x forward EV/Revenue on our CY20 and CY21 estimates, which is a significant ~60% discount to its closest publicly listed peer Lemonade, Root valuations look attractive under our base case scenario. If we look at forward adjusted gross profit multiples, Root shares trade at 49x EV/Adj. Gross Profit on our CY21 estimates. This is a modest discount to insurtech peer Lemonade.</p>

In October VC-backed app-based car insurance unicorn Root announced pricing of its IPO and sold ~27 million shares of Class A common stock at IPO price of $27 a share (above its initial target range of $22-25). Columbus insurtech startup raised more than $1 billion dollars and funds affiliated with Dragoneer Investment Group and Silver Lake Technology agreed to purchase an aggregate of up to $500 million worth of shares in private placements. We saw solid demand for Root Insurance IPO. However, Root shares fell ~16% below IPO price and we believe this is a great buying opportunity for long-term investors.Root is a fully licensed insurance carrier with a scaled proprietary telematics solution and operates on fast growing Pay-How-You-Drive (PHYD) segment of insurance telematics market. Under PHYD model driver may control the cost of insurance premium. Furthermore, company offers such products as Root Renters and Root Home cross-selling non-auto products across its customer base. At 14x and 11x forward EV/Revenue on our CY20 and CY21 estimates, which is a significant ~60% discount to its closest publicly listed peer Lemonade, Root valuations look attractive under our base case scenario. If we look at forward adjusted gross profit multiples, Root shares trade at 49x EV/Adj. Gross Profit on our CY21 estimates. This is a modest discount to insurtech peer Lemonade.

Root Insurance. Leader And Innovator In Pay-How-You-Drive (PHYD) Segment

United States

Lemonade, Inc. operates as an insurance company. The Company offers artificial intelligence (AI) based technology for fire, property, liability, and other related insurance policy issuing and claim settlements. Lemonade serves customers in the United States.

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Lemonade Inc (LMND US)

Waterdrop IPO: Valuation First Look

Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In this note, we present our forecasts and take the first look at...

Arun George

ZhongAn Vs. Lemonade: Which One Is a Better Insurtech Bet?

With encouraging signs shown in 2020, ZhongAn Online is preferred to Lemonade, both from the perspectives of the valuation and company development.

Alec Tseung

Oscar Health IPO. Reinventing Health Insurance

We have positive view on Oscar Health IPO and believe that Oscar Health is a technology company and not traditional insurer making health care more...

Andrei Zakharov

Upstart IPO Valuation Analysis

Our base case valuation of Upstart Holdings is implied market cap of $3,236 million and implied price of $35.8 per share, which would be 63% higher...

Douglas Kim

Root Insurance. Leader And Innovator In Pay-How-You-Drive (PHYD) Segment

Root Insurance is going to disrupt $260B+ U.S. auto insurance market and revolutionize personal auto insurance through technology and data science...

Andrei Zakharov

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