China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>CPCA reported China’s 2022 EV sales of 6.49mn units, + 96.1% YoY, primarily driven by better market acceptance of EVs and favourable EV policies. </li>
<li>We think the fiercer competition will lead to divergence, which is already proven by Tesla’s price war. The followers such as Xpeng, could only be price takers and sacrifice margin.</li>
<li>We reiterate Li Auto as our top pick, as 1) better profitability; 2) positive growth outlook in 2023. We cut NIO’s TP to US$ 18.</li>
</ul>


CPCA reported China’s 2022 EV sales of 6.49mn units, + 96.1% YoY, primarily driven by better market acceptance of EVs and favourable EV policies. 
We think the fiercer competition will lead to divergence, which is already proven by Tesla’s price war. The followers such as Xpeng, could only be price takers and sacrifice margin.
We reiterate Li Auto as our top pick, as 1) better profitability; 2) positive growth outlook in 2023. We cut NIO’s TP to US$ 18.


China EV Outlook: 2023 Will Be a Year of Divergence

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

WM Motor Technology Co Ltd / Event-Driven

<ul>
<li>On 11th Jan 2023, <a href="https://www.smartkarma.com/entities/wm-motor-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29225:1" rel="noopener">WM Motor Technology Co Ltd </a>announced its intention to merge with <a href="https://www.smartkarma.com/entities/we-solutions-ltd" target="_blank" data-smartkarma-citation="entities:9818:1" rel="noopener">Apollo Future Mobility (860 HK)</a> .</li>
<li>WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.</li>
<li>In this note, we will talk about the deal dynamics and  take an early look at its implications.</li>
</ul>


On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
In this note, we will talk about the deal dynamics and  take an early look at its implications.


WM Motor Reverse Merger and Placement - The US$2bn Merger and US$500m Planned Placement

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

Equity Capital Markets

REPT BATTERO Energy / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rept-battero-energy" target="_blank" data-smartkarma-citation="entities:36626:1" rel="noopener">REPT BATTERO Energy (REPT HK)</a> is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic Securities.</li>
<li>REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&amp;D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. </li>
<li>As per F&amp;S, it was amongst the top ten lithium-ion battery manufacturers in China as per installations for new energy application in 2021.</li>
</ul>



REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic Securities.
REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&amp;D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
As per F&amp;S, it was amongst the top ten lithium-ion battery manufacturers in China as per installations for new energy application in 2021.


<ul>
<li>Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history.</li>
<li>This was on back of the Aug 2022 agreement between PCAOB, CSRC and MOF, which was followed up with a Hong Kong visit by PCAOB officials over Sep-Nov 2022.</li>
<li>We wrote about this on 14th Dec 2022 and expected the results to be out on Friday (16th Dec), they have come out a day earlier than we expected.</li>
</ul>


Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history.
This was on back of the Aug 2022 agreement between PCAOB, CSRC and MOF, which was followed up with a Hong Kong visit by PCAOB officials over Sep-Nov 2022.
We wrote about this on 14th Dec 2022 and expected the results to be out on Friday (16th Dec), they have come out a day earlier than we expected.


China ADRs Delisting - Christmas Came a Day Earlier than We Expected - No Delisting Risk for Now

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Despite its 3Q22 earnings miss amid the unexpected inventory provision, Li Auto’s stronger-than-expected 4Q22 guidance could make the automaker finish the year with the highest sales volume among the NEV trio with only two models.</li><li>We believe Li Auto is still best positioned among the NEV trio to be a long-term winner, in terms of sales and profitability.</li><li>We expect Li Auto to continue leading FY23E sales volume among the NEV trio, although we are a bit more conservative than management amid the overall industry headwinds.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Despite its 3Q22 earnings miss amid the unexpected inventory provision, Li Auto’s stronger-than-expected 4Q22 guidance could make the automaker finish the year with the highest sales volume among the NEV trio with only two models.We believe Li Auto is still best positioned among the NEV trio to be a long-term winner, in terms of sales and profitability.We expect Li Auto to continue leading FY23E sales volume among the NEV trio, although we are a bit more conservative than management amid the overall industry headwinds.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Li Auto Inc. (LI US) – Still best positioned among NEV trio

China

Li Auto Inc. manufactures automobiles. The Company designs, develops, and sells smart new energy electric sport utility vehicles. Li Auto conducts businesses in China.

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Li Auto (LI US)

China EV Outlook: 2023 Will Be a Year of Divergence

We think the fiercer competition in 2023 will inevitably lead to divergence. The followers such as Xpeng, could only sacrifice margin. We reiterate...

Blue Lotus Research Institute

WM Motor Reverse Merger and Placement - The US$2bn Merger and US$500m Planned Placement

On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) . In this note, we talk about...

Sumeet Singh

REPT BATTERO Energy Pre-IPO Tearsheet

REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic...

Clarence Chu

China ADRs Delisting - Christmas Came a Day Earlier than We Expected - No Delisting Risk for Now

Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history. This removes...

Sumeet Singh

Li Auto Inc. (LI US) – Still best positioned among NEV trio

We believe Li Auto is still best positioned among the NEV trio to be a long-term winner, in terms of sales and profitability.

CMB International

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