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.

Event-Driven

<a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (6608 HK)</a> is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan.Bairong was listed on the HKEx on 31 March 2021 and raised net proceeds of HK$3,759.0 million at HK$31.80 per share. The shares currently trade 62% below their IPO price. Bairong priced its IPO at the market peak and the shares have collapsed in part due to China’s regulatory reset. <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> fell 15% on 5 August after a lockup expiry, as early backers headed for the exit amid fears of China’s widening online crackdown. The ongoing regulatory crackdown has alerted investors to the risk of upcoming expiring lockups.  <div class="content-highlight">Bairong’s pre-IPO investors’ lock-up period expires on 20 September. The cornerstones investors lock-up period expires on 30 September. In this note, we look at the returns of the pre-IPO investors and potential share sales post-lockup expiry.</div>

Bairong (6608 HK) is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan.Bairong was listed on the HKEx on 31 March 2021 and raised net proceeds of HK$3,759.0 million at HK$31.80 per share. The shares currently trade 62% below their IPO price. Bairong priced its IPO at the market peak and the shares have collapsed in part due to China’s regulatory reset. Kuaishou Technology (1024 HK) fell 15% on 5 August after a lockup expiry, as early backers headed for the exit amid fears of China’s widening online crackdown. The ongoing regulatory crackdown has alerted investors to the risk of upcoming expiring lockups.  Bairong’s pre-IPO investors’ lock-up period expires on 20 September. The cornerstones investors lock-up period expires on 30 September. In this note, we look at the returns of the pre-IPO investors and potential share sales post-lockup expiry.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Capitaland, Boral, Milton/WHSP, Santos/Oil Search, Education Profit Ban

China and US Equity Analyst

Roger Xie

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> June ADT (Average Daily Turnover) has been cooled off from recent high growth, delivering 16% year-over-year growth in the month. This is partially due to the high base from last year and the renewed worry about Beijing's crackdown of big tech in China. For the 1st half in 2021, HKEx ADT has grown an amazing 60% year-over-year. But the volume on derivative market is more muted than investors expect. We expect HKEx will deliver an in-line interim  result on upcoming August 11th.</li>
<li>On the IPO market, HKEx has completed 14 IPO deals in Q2 2021 and raised HK$ 76 billion. The new economy companies have accounted more than 70% of the IPO deals. The significant ones include <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> , <a href="https://www.smartkarma.com/entities/nayuki-holdings" target="_blank" data-smartkarma-citation="entities:32149:1" rel="noopener">Nayuki Holdings (2150 HK)</a> , <a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK) </a> and Trip.com (9961 HK). We are the believer that HKEx will play a key role on offshore China listings. Ongoing regulatory uncertainty is likely to accelerate the Chinese ADS' to diversify their listing risk and to benefit HKEx as a preferred offshore listing venue. </li>
<li>On the technology front, HKEx has introduced the new digital platform FINI ( Fast Interface for New Issuance) to speed up the IPO process. The new initiative will shorten the time-consuming paper subscriptions and cut IPO process from pricing to listing from T+5 to T+2. This will improve efficiency of pricing and capital usage. And FINI will likely be rolled out in Q4 2022. We remain bullish on <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> and have TP HKD 550. </li>
</ul>



HKEX (388 HK) June ADT (Average Daily Turnover) has been cooled off from recent high growth, delivering 16% year-over-year growth in the month. This is partially due to the high base from last year and the renewed worry about Beijing's crackdown of big tech in China. For the 1st half in 2021, HKEx ADT has grown an amazing 60% year-over-year. But the volume on derivative market is more muted than investors expect. We expect HKEx will deliver an in-line interim  result on upcoming August 11th.
On the IPO market, HKEx has completed 14 IPO deals in Q2 2021 and raised HK$ 76 billion. The new economy companies have accounted more than 70% of the IPO deals. The significant ones include JD Logistics (2618 HK) , Nayuki Holdings (2150 HK) , Linklogis (9959 HK)  and Trip.com (9961 HK). We are the believer that HKEx will play a key role on offshore China listings. Ongoing regulatory uncertainty is likely to accelerate the Chinese ADS' to diversify their listing risk and to benefit HKEx as a preferred offshore listing venue. 
On the technology front, HKEx has introduced the new digital platform FINI ( Fast Interface for New Issuance) to speed up the IPO process. The new initiative will shorten the time-consuming paper subscriptions and cut IPO process from pricing to listing from T+5 to T+2. This will improve efficiency of pricing and capital usage. And FINI will likely be rolled out in Q4 2022. We remain bullish on HKEX (388 HK) and have TP HKD 550. 


HKEx(388.HK): Expect Slower Q2 Trading Volume, HKEx to Benefit As Offshore Venue for China Listings

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

<a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK)</a> debunked the allegations of the short seller Valiant Varriors, stating that the allegations are groundless and contains various misrepresentations, false allegations, and obvious factual errors. However, we believe the company’s statement fails to address the main point laid out by the short seller’s report which states that the company is nothing but a glorified mortgage broker trading at tech multiple.

Linklogis (9959 HK) debunked the allegations of the short seller Valiant Varriors, stating that the allegations are groundless and contains various misrepresentations, false allegations, and obvious factual errors. However, we believe the company’s statement fails to address the main point laid out by the short seller’s report which states that the company is nothing but a glorified mortgage broker trading at tech multiple.

Linklogis Responds to Valiant Varriors: Valiant Effort But Fails to Address the Elephant in the Room

Short seller Valiant Varriors may not have hard facts to accuse <a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK)</a> of clear fraud apart from minor violations of the law by some of the subsidiaries. However, the underlying factor that the short seller highlight is that Linklogis is nothing but a glorified mortgage broker (not a tech-enabled cloud software as a service platform), relying on cheap human labour instead of AI to do the work.Linklogis fooled many investors, including the biggest investment managers and technology companies like Tencent, portraying itself as a technology company when it was really a mortgage broker. The Chinese government is currently on high alert about these issues in overseas listings and it is possible that Linklogis might result in an extension of crackdowns to Hong Kong and the domestic exchanges.Valiant Varriors also highlights that Linklogis has consistently lied about its large exposure to the risky real estate market, violated laws related to factoring companies, exaggerated technology capabilities, evaded tax and misled investors by overstating revenues.We believe all these are very series allegations, and it is hard to refute the basis of the short seller’s arguments and some of the evidence presented.

Short seller Valiant Varriors may not have hard facts to accuse Linklogis (9959 HK) of clear fraud apart from minor violations of the law by some of the subsidiaries. However, the underlying factor that the short seller highlight is that Linklogis is nothing but a glorified mortgage broker (not a tech-enabled cloud software as a service platform), relying on cheap human labour instead of AI to do the work.Linklogis fooled many investors, including the biggest investment managers and technology companies like Tencent, portraying itself as a technology company when it was really a mortgage broker. The Chinese government is currently on high alert about these issues in overseas listings and it is possible that Linklogis might result in an extension of crackdowns to Hong Kong and the domestic exchanges.Valiant Varriors also highlights that Linklogis has consistently lied about its large exposure to the risky real estate market, violated laws related to factoring companies, exaggerated technology capabilities, evaded tax and misled investors by overstating revenues.We believe all these are very series allegations, and it is hard to refute the basis of the short seller’s arguments and some of the evidence presented.

Short Seller, Valiant Varriors Says Linklogis Is a Glorified Mortgage Broker

Hong Kong

Linklogis Inc operates as a technology solution provider. The company develops cloud native solutions and supply chain finance technology solutions which optimize the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis provides its services throughout Hong Kong.

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

Linklogis (9959 HK)

Bairong: Upcoming Lock-Up Expiry

Bairong’s pre-IPO investors’ lock-up period expires on 20 September. In this note, we look at the returns of the pre-IPO investors and potential...

Arun George

Last Week in Event SPACE: Capitaland, Boral, Milton/WHSP, Santos/Oil Search, Education Profit Ban

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

HKEx(388.HK): Expect Slower Q2 Trading Volume, HKEx to Benefit As Offshore Venue for China Listings

For the 1st half in 2021, HKEx ADT has grown an amazing 60% year-over-year. But the volume on derivative market is more muted. We expect HKEx will...

Roger Xie

Linklogis Responds to Valiant Varriors: Valiant Effort But Fails to Address the Elephant in the Room

As an investor/analyst, we are less worried about factual errors which are somewhat immaterial, especially given that the short seller has to work...

Oshadhi Kumarasiri

Short Seller, Valiant Varriors Says Linklogis Is a Glorified Mortgage Broker

The findings of Valiant Varriors are not necessarily new, but many investors/analysts, including us, failed to notice them and fell right into a...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)