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

<p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> plans to raise up to USD 30bn (now said to be US$35bn) via a dual listing on both Hong Kong Exchange and Shanghai STAR board. </p>
<p>Ant Group is not only the largest third-party payment player in China, it is also the no.1 independent player in each of the three non-payment segments by key operating metrics. </p>
<p>We have provided our thoughts on Ant Group from as early as 2018. We have since looked at the company’s past performance, individual segments and some of the regulatory issues. In this note, I’ll compare the company with some of its peers in the payments segment. </p>
<p></p>
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<h3>Our previous coverage on Ant Group</h3>
</div>
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<ul>
<li dir="ltr">
<p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-what-s-new-about-the-listing-news" target="_blank" rel="noopener">Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors</a></p>
</li>
<li dir="ltr">
<p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-understand-the-fintech-empire-growth-and-risk-factors" target="_blank" rel="noopener">Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News</a></p>
</li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-first-take-no-1-fintech-from-all-angles" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-numbers-suggest-it-s-more-tech-than-financials" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-things-to-clarify-questions-to-ask-falling-fees-margins-cash-flow" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-dual-listing-makes-early-index-inclusion-tricky" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky</a></li>
<li><a href="https://www.smartkarma.com/insights/alipay-s-advantage-over-wechat-pay-in-physical-stores" target="_blank" rel="noopener">AliPay’s Advantage over WeChat Pay in Physical Stores</a></li>
</ul>
</div>
<ul>
<li><a href="https://www.smartkarma.com/insights/ant-group-running-neck-and-neck-with-tencent-in-direct-financial-services" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-impact-assessment-of-the-new-rule-for-financial-holding-companies" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies</a></li>
</ul>

Ant Financial (1051260D CH) plans to raise up to USD 30bn (now said to be US$35bn) via a dual listing on both Hong Kong Exchange and Shanghai STAR board. 
Ant Group is not only the largest third-party payment player in China, it is also the no.1 independent player in each of the three non-payment segments by key operating metrics. 
We have provided our thoughts on Ant Group from as early as 2018. We have since looked at the company’s past performance, individual segments and some of the regulatory issues. In this note, I’ll compare the company with some of its peers in the payments segment. 



Our previous coverage on Ant Group





Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors


Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News

Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles
Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials
Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow
Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky
AliPay’s Advantage over WeChat Pay in Physical Stores



Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services
Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies


Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits

<div>
<p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> plans to raise up to USD 30bn via a dual listing in both Hong Kong Exchange and Shanghai STAR board. </p>
<p>We have provided our early thoughts of Ant Group as early as 2018. The details provided in the prospectus give investors a much more comprehensive understanding of the company, particularly the non-payment business. </p>
<p>In our previous notes, links to which are below, we have covered the company's background and its performance.</p>
<p>In this note, we will focus on some of the finer points of the financial statements. </p>
<p><strong><em>I have labelled this insight bearish because I'll talk about some of the not so pleasant aspects of the deal and not because I'm bearish on the deal.</em></strong></p>
</div><div><div><h3>Our previous coverage on Ant Group</h3></div></div><div><ul style="list-style-type: disc;">
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-what-s-new-about-the-listing-news" target="_blank" rel="noopener">Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors</a></p></li>
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-understand-the-fintech-empire-growth-and-risk-factors" target="_blank" rel="noopener">Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News</a></p></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-first-take-no-1-fintech-from-all-angles" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-numbers-suggest-it-s-more-tech-than-financials" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials</a></li>
</ul></div>


Ant Financial (1051260D CH) plans to raise up to USD 30bn via a dual listing in both Hong Kong Exchange and Shanghai STAR board. 
We have provided our early thoughts of Ant Group as early as 2018. The details provided in the prospectus give investors a much more comprehensive understanding of the company, particularly the non-payment business. 
In our previous notes, links to which are below, we have covered the company's background and its performance.
In this note, we will focus on some of the finer points of the financial statements. 
I have labelled this insight bearish because I'll talk about some of the not so pleasant aspects of the deal and not because I'm bearish on the deal.
Our previous coverage on Ant Group
Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors
Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News
Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles
Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials


Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask - Falling Fees, Margins, Cash Flow

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.

Equity Bottom-Up

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<p>On 23rd June, <a href="https://www.smartkarma.com/entities/base-inc" target="_blank" rel="noopener">BASE (4477 JP)</a>’s e-commerce platform began handling cross-border e-commerce delivery services covering 150 countries. The company has teamed up with Neowing, an e-commerce platform for digital content to integrate the “NEOlogi App” into "BASE" to enable member stores to handle deliveries to customers who purchase products from overseas vendors.</p>
<p>BASE was listed on 25th October 2019 at ¥1,300 - the higher end of the proposed price range. At the time we <a href="https://www.smartkarma.com/insights/base-inc-ipo-excellent-customer-retention-justifies-high-promo-costs" target="_blank" rel="noopener">wrote</a>:- </p>
<blockquote>
<p>“BASE Inc’s IPO provides an opportunity to enter into the fast-growing Japanese payment processing space at a more than reasonable multiple”</p>
</blockquote>
<p>After an initial subdued performance, the share price has increased by 356% in the last three months. Most of the gains came after the first quarter results announcement when the company issued operating and net income guidance for the first time.</p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/142/208/original/image_98872529421593080490603.png?1593080486" class="editor-image img-responsive" data-smartkarma-image-id="142208"></figure>
Source: Cap IQ</div>
<div>BASE has benefited from investor demand for COVID-resistant stocks and the company’s valuation multiples have stretched beyond those of even ‘pure-play’ payment processing companies. Although we maintain our positive long-term, the current valuation is unjustified and we recommend selling or reducing holdings.</div>



On 23rd June, BASE (4477 JP)’s e-commerce platform began handling cross-border e-commerce delivery services covering 150 countries. The company has teamed up with Neowing, an e-commerce platform for digital content to integrate the “NEOlogi App” into "BASE" to enable member stores to handle deliveries to customers who purchase products from overseas vendors.
BASE was listed on 25th October 2019 at ¥1,300 - the higher end of the proposed price range. At the time we wrote:- 

“BASE Inc’s IPO provides an opportunity to enter into the fast-growing Japanese payment processing space at a more than reasonable multiple”

After an initial subdued performance, the share price has increased by 356% in the last three months. Most of the gains came after the first quarter results announcement when the company issued operating and net income guidance for the first time.




Source: Cap IQ
BASE has benefited from investor demand for COVID-resistant stocks and the company’s valuation multiples have stretched beyond those of even ‘pure-play’ payment processing companies. Although we maintain our positive long-term, the current valuation is unjustified and we recommend selling or reducing holdings.

BASE: Robust Growth Through Collaboration with NEOlogi - Expensive @ 12.5x EV/​Sales

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<p><strong><em>*Insolvency Filing:</em></strong> Wirecard’s (WDR.GY) ongoing last minute negotiations with lenders (including the purported debt for equity swap and asset sales) fell apart, as the management board filed a surprise application for the opening of insolvency proceedings with the district court of Munich;</p><p><strong><em>*Risk Exposures Identified: </em></strong>The financial media has widely reported that the EUR 1.75 bn revolver has been almost fully drawn upon at approximately EUR 1.6 bn; and  </p><p><strong><em>*Sad Chapter Draws To A Close:</em></strong> Another sad chapter in European banking has now come to an abrupt close. Regulatory reform remains a political hot potato but there is zero evidence of resolve given the conflicted rating agencies, auditing business models, feckless regulators et al.  </p>

*Insolvency Filing: Wirecard’s (WDR.GY) ongoing last minute negotiations with lenders (including the purported debt for equity swap and asset sales) fell apart, as the management board filed a surprise application for the opening of insolvency proceedings with the district court of Munich;*Risk Exposures Identified: The financial media has widely reported that the EUR 1.75 bn revolver has been almost fully drawn upon at approximately EUR 1.6 bn; and  *Sad Chapter Draws To A Close: Another sad chapter in European banking has now come to an abrupt close. Regulatory reform remains a political hot potato but there is zero evidence of resolve given the conflicted rating agencies, auditing business models, feckless regulators et al.  

<p><strong><em>*Deal Already Paying Dividends: </em></strong>Afterpay (APT.AU) gave an update on its US business where it has surpassed 5 mn active customers  - with at least least 9 mn individuals in the US already downloading the app or made an initial purchase within the past two years – which is ahead of schedule. Afterpay is accelerating its growth rate with daily new users up 30-40% over the past ten weeks versus what was experienced in January and February (before the COVID-19 impacts were felt). Afterpay remains committed to enter Canada later this year;  and</p><p><strong><em>* Worth The Price?: </em></strong>While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Given Tencent’s P/E of 37x and the willingness of Afterpay management to have Tencent as a stakeholder, it probably would have been a far better use of its currency as a share swap.</p>

*Deal Already Paying Dividends: Afterpay (APT.AU) gave an update on its US business where it has surpassed 5 mn active customers  - with at least least 9 mn individuals in the US already downloading the app or made an initial purchase within the past two years – which is ahead of schedule. Afterpay is accelerating its growth rate with daily new users up 30-40% over the past ten weeks versus what was experienced in January and February (before the COVID-19 impacts were felt). Afterpay remains committed to enter Canada later this year;  and* Worth The Price?: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Given Tencent’s P/E of 37x and the willingness of Afterpay management to have Tencent as a stakeholder, it probably would have been a far better use of its currency as a share swap.

United States

MasterCard, Inc. is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of financial institutions. The Company offers transaction processing services for credit and debit cards, electronic cash, automated teller machines, and travelers checks.

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Mastercard (MA US)

Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits

Our previous coverage on Ant Group Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors Ant Financial...

Sumeet Singh

Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask - Falling Fees, Margins, Cash Flow

Ant Group filed its prospectus and kick-started its IPO to raise up to USD 30 billion to list on both Hong Kong Exchange and Shanghai STAR...

Sumeet Singh

BASE: Robust Growth Through Collaboration with NEOlogi - Expensive @ 12.5x EV/Sales

On 23rd June, BASE (4477 JP)’s e-commerce platform began handling cross-border e-commerce delivery services covering 150 countries. The company...

Oshadhi Kumarasiri

Tencent – No After-Taste

*Deal Already Paying Dividends: Afterpay (APT.AU) gave an update on its US business where it has surpassed 5 mn active customers - with at least...

Thomas J. Monaco

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52-week Range

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Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits

Our previous coverage on Ant Group Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors Ant Financial...

Sumeet Singh

Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/Questions to Ask - Falling Fees, Margins, Cash Flow

Ant Group filed its prospectus and kick-started its IPO to raise up to USD 30 billion to list on both Hong Kong Exchange and Shanghai STAR...

Sumeet Singh

BASE: Robust Growth Through Collaboration with NEOlogi - Expensive @ 12.5x EV/​Sales

On 23rd June, BASE (4477 JP)’s e-commerce platform began handling cross-border e-commerce delivery services covering 150 countries. The company...

Oshadhi Kumarasiri

Wirecard – The Cookie Crumbles

*Insolvency Filing: Wirecard’s (WDR.GY) ongoing last minute negotiations with lenders (including the purported debt for equity swap and asset...

Thomas J. Monaco

Tencent – No After-Taste

*Deal Already Paying Dividends: Afterpay (APT.AU) gave an update on its US business where it has surpassed 5 mn active customers - with at least...

Thomas J. Monaco

BASE: Robust Growth Through Collaboration with NEOlogi - Expensive @ 12.5x EV/Sales