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

<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. It is also the largest medical crowdfunding platform in China as measured by cumulative funds raised for 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> (22.1% of outstanding shares), <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> (5.7%) and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>. Waterdrop has filed for an NYSE IPO with a placeholder amount of $100 million. </p><p>Healthcare coverage in China is primarily paid by social medical insurance (29.4% of total healthcare spend), commercial insurance (3.4%) and medical crowdfunding and other social charities (0.2%), according to iResearch. The potential medical protection gap (67.0% out-of-pocket expense) is an opportunity. Driven by the significant medical protection gap and rising awareness for protection, the Chinese insurance market is expected to reach RMB7.8 trillion by 2024, representing a CAGR of 12.9% from 2019, according to iResearch. Third-party insurance brokers and agents is a key distribution channel and will account for 13.0% of the total life and health insurance premium in 2025 vs 2.5% in 2019. </p><div class="content-highlight"><p>As a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from these favourable trends. While the revenue growth rate is slowing it remains fast-paced and is accompanied by lower losses and cash burn. The key unknown is whether the changing regulations will throw a spanner in the works. <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a>, the key competitor, has seen its key CreditTech business bashed by regulations but its InsureTech business (the part that competes with Waterdrop) appears to be relatively unscathed. Notwithstanding the regulatory overhang, we believe that Waterdrop is worth a look.</p></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. It is also the largest medical crowdfunding platform in China as measured by cumulative funds raised for 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK) (22.1% of outstanding shares), Swiss Re AG (SREN SW) (5.7%) and Meituan (3690 HK). Waterdrop has filed for an NYSE IPO with a placeholder amount of $100 million. Healthcare coverage in China is primarily paid by social medical insurance (29.4% of total healthcare spend), commercial insurance (3.4%) and medical crowdfunding and other social charities (0.2%), according to iResearch. The potential medical protection gap (67.0% out-of-pocket expense) is an opportunity. Driven by the significant medical protection gap and rising awareness for protection, the Chinese insurance market is expected to reach RMB7.8 trillion by 2024, representing a CAGR of 12.9% from 2019, according to iResearch. Third-party insurance brokers and agents is a key distribution channel and will account for 13.0% of the total life and health insurance premium in 2025 vs 2.5% in 2019. As a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from these favourable trends. While the revenue growth rate is slowing it remains fast-paced and is accompanied by lower losses and cash burn. The key unknown is whether the changing regulations will throw a spanner in the works. Ant Financial Services Group (6688 HK), the key competitor, has seen its key CreditTech business bashed by regulations but its InsureTech business (the part that competes with Waterdrop) appears to be relatively unscathed. Notwithstanding the regulatory overhang, we believe that Waterdrop is worth a look.

Waterdrop IPO Initiation: Going for Brokers

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.

<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>, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. <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> owned 22.1% and <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> owned 5.7% of the company prior to its listing.</p></div><div><p>In our previous note, <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-positives-fast-growth-strong-backers" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers</a>, we spoke about the positive aspects of the deal. </p></div><div><p>In this note, we will talk about the not so flattering aspects</p></div>

Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.In our previous note, Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers, we spoke about the positive aspects of the deal. In this note, we will talk about the not so flattering aspects

Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation

China Gas Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK) </a>is looking to raise around US$1.5bn via a top-up placement. This is the fourth placement for the company since 2019.</p></div><div><p>We have covered the previous deals in our previous notes:</p></div><div><ul style="list-style-type: disc;">
<li>US$450m in Mar 2019: <a href="https://www.smartkarma.com/insights/china-gas-placement-larger-deals-traded-flat-but-good-track-record-should-help" target="_blank" rel="noopener">China Gas Placement - Larger Deals Traded Flat but Good Track Record Should Help</a>
</li>
<li>US$600m selldown in Sep 2019 by SK E&amp;S: <a href="https://www.smartkarma.com/insights/china-gas-placement-great-track-record-and-past-deals-have-done-well" target="_blank" rel="noopener">China Gas Placement - Great Track Record and Past Deals Have Done Well</a>
</li>
<li>US$1.5bn selldown in Apr 2020 by SK E&amp;S: <a href="https://www.smartkarma.com/insights/china-gas-placement-big-deal-to-digest-but-track-record-should-help" target="_blank" rel="noopener">China Gas Placement - Big Deal to Digest but Track Record Should Help</a>
</li>
</ul></div><div><p>In this note, we will run the deal through framework and talk about deal dynamics.</p></div>

China Gas Holdings (384 HK) is looking to raise around US$1.5bn via a top-up placement. This is the fourth placement for the company since 2019.We have covered the previous deals in our previous notes:
US$450m in Mar 2019: China Gas Placement - Larger Deals Traded Flat but Good Track Record Should Help

US$600m selldown in Sep 2019 by SK E&amp;S: China Gas Placement - Great Track Record and Past Deals Have Done Well

US$1.5bn selldown in Apr 2020 by SK E&amp;S: China Gas Placement - Big Deal to Digest but Track Record Should Help

In this note, we will run the deal through framework and talk about deal dynamics.

China Gas Placement - Deal Size Is Similar to Last Placement but Dynamics Are Different

<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>, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. <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> owned 22.1% and <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> owned 5.7% of the company prior to its listing.</p><p>Waterdrop was the largest independent third-party insurance distribution platform in China in terms of first year premium distributed in 2020, as per iResearch. As of Dec 2020, it had insured 79.4m consumers and generated RMB14.4bn of first year premiums. It was also the largest medical crowdfunding platform in China with 340m donors, as of Dec 2020, who had donated over RMB37bn to 1.7m patients.</p><p>In this note, we will talk about the positive aspects of the deal.</p>

Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.Waterdrop was the largest independent third-party insurance distribution platform in China in terms of first year premium distributed in 2020, as per iResearch. As of Dec 2020, it had insured 79.4m consumers and generated RMB14.4bn of first year premiums. It was also the largest medical crowdfunding platform in China with 340m donors, as of Dec 2020, who had donated over RMB37bn to 1.7m patients.In this note, we will talk about the positive aspects of the deal.

Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers

Anta Sports Products / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal through our framework and talk about deal dynamics. </p><p>We have covered one of the earlier placements in the stock in 2017, <a href="https://www.smartkarma.com/insights/anta-sports-raising-for-hopefully-a-good-acquisition-great-track-record-helps" target="_blank" rel="noopener">Anta Sports - Raising for Hopefully a Good Acquisition, Great Track Record Helps</a>.</p>

Anta Sports Products (2020 HK)'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal through our framework and talk about deal dynamics. We have covered one of the earlier placements in the stock in 2017, Anta Sports - Raising for Hopefully a Good Acquisition, Great Track Record Helps.

Anta Sports Placement - Has Been Doing Well but the Chairman Selling Will Be -Ve for Sentiment

China

Meituan operates as a web based shopping platform for locally found consumer products and retail services. The Company offers deals of the day by selling vouchers on local services and entertainment, dining, delivery, and other services. Meituan provides its services throughout China.

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Meituan (3690 HK)

Waterdrop IPO Initiation: Going for Brokers

Waterdrop has filed for an NYSE IPO with a placeholder amount of $100 million. Notwithstanding the regulatory overhang, we believe that Waterdrop...

Arun George

Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation

Waterdrop, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent owned 22.1%...

Sumeet Singh

China Gas Placement - Deal Size Is Similar to Last Placement but Dynamics Are Different

China Gas Holdings (384 HK) is looking to raise around US$1.5bn via a top-up placement. This is the fourth placement for the company since 2019.

Sumeet Singh

Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers

Waterdrop Inc, a technology platform for insurance and healthcare services in China, aims to raise around US$500m in its US IPO. Tencent owned...

Sumeet Singh

Anta Sports Placement - Has Been Doing Well but the Chairman Selling Will Be -Ve for Sentiment

Anta Sports Products (2020 HK)'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal...

Sumeet Singh

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