Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>In this insight, we discuss in detail our initial thoughts on the valuation range of <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> IPO. Didi was last valued at $65 billion in its latest fundingraising round in August 2020. The media have mentioned that the valuations of Didi Chuxing could be about <a href="https://techcrunch.com/2021/06/10/softbank-uber-tencent-set-to-reap-rewards-from-didi-ipo/?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAMj5A2PgL-33D8uIOLSUl0PGX8TWig2FrftAae5MrH0qB7Jm7ZwviMBR8Ca6R2uOSje6Ep9uNZNsMwEy3FYscaBJf7P9FQXuaOZ5NXJHihyhXCPjXlAjwL5gNJKBVC-zQSM2Z1oGfH5A7b8-JakCHOHtZDR9n3PhDYPB7Lv7s9og" target="_blank" rel="noopener">$70 billion to $100 billion. </a></p><div class="content-highlight">
<p>Our initial valuation analysis of Didi Chuxing suggests a base case market cap valuation of $138 billion. Our valuation ranges from $77 billion (low case) to $215 billion (high case). The IPO price range is not yet available from the bankers but we plan to narrow our valuation once the IPO price range becomes public. </p>
<p>Although we do not know how the bankers will price the deal, if the IPO is priced at about $100 billion, our base case valuation of $138 billion would be 38% higher and given the solid upside, we would be positive on the IPO. </p>
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In this insight, we discuss in detail our initial thoughts on the valuation range of DiDi Chuxing (DIDI US) IPO. Didi was last valued at $65 billion in its latest fundingraising round in August 2020. The media have mentioned that the valuations of Didi Chuxing could be about $70 billion to $100 billion. 
Our initial valuation analysis of Didi Chuxing suggests a base case market cap valuation of $138 billion. Our valuation ranges from $77 billion (low case) to $215 billion (high case). The IPO price range is not yet available from the bankers but we plan to narrow our valuation once the IPO price range becomes public. 
Although we do not know how the bankers will price the deal, if the IPO is priced at about $100 billion, our base case valuation of $138 billion would be 38% higher and given the solid upside, we would be positive on the IPO. 


Initial Thoughts on the Didi Chuxing Valuation

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

<p><a href="https://www.smartkarma.com/entities/aihuishou" target="_blank" data-smartkarma-citation="entities:33426:1" rel="noopener">Aihuishou (RERE US)</a> , the pre-owned consumer electronics transaction and services platform in China has announced the indicative price range for its IPO at US$13-15 per ADS. The company plans to issue 16.23m ADSs (18.7m shares including the over-allotment) and each ordinary share represents 1.5 ADSs of the company. At the midpoint of the IPO price range of US$14 per share, Aihuishou will raise net proceeds of US$205.7m at a market capitalisation of US$3.1bn and a post-money enterprise value of US$2.85bn.</p><p>In our previous insight, we examined Aihuishou’s business model and its financials and concluded that the company’s revenues will continue to see strong growth and at the same time, we expect the company’s profitability to improve going forward.</p>

Aihuishou (RERE US) , the pre-owned consumer electronics transaction and services platform in China has announced the indicative price range for its IPO at US$13-15 per ADS. The company plans to issue 16.23m ADSs (18.7m shares including the over-allotment) and each ordinary share represents 1.5 ADSs of the company. At the midpoint of the IPO price range of US$14 per share, Aihuishou will raise net proceeds of US$205.7m at a market capitalisation of US$3.1bn and a post-money enterprise value of US$2.85bn.In our previous insight, we examined Aihuishou’s business model and its financials and concluded that the company’s revenues will continue to see strong growth and at the same time, we expect the company’s profitability to improve going forward.

AiHuiShou IPO: Peer Comparison and Valuation

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<p>In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.</p><p>Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. </p><p>We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.</p><p>In this insight, we will highlight inflows into <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> , as well as outflows from <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</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>

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Geely Auto (175 HK) , as well as outflows from Xiaomi Corp (1810 HK) and Meituan (3690 HK) .

Hong Kong Connect Flows: Geely Inflows, and Xiaomi Meituan Outflows

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<div><p><a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a>, the world’s largest mobility technology platform, aims to raise around US$10bn in its US listing. It is backed by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, along with other investors.</p></div><div><p>It is present in over 4,000 cities, counties and towns across 15 countries. As of twelve months ending (LTM) 1Q21, it had 493m annual active users and 15m drivers, who participated in 41m average daily transactions. It generated a gross transaction value of RMB341bn over LTM1Q21.  </p></div><div><p>We provided a brief background and financials overview in our previous note,<a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-one-of-asia-s-largest-ipos-this-year-tearsheet" target="_blank" rel="noopener"> DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet</a>.</p></div><p>In this note, we will look at the financials and talk about the rumoured valuation.</p>

DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, aims to raise around US$10bn in its US listing. It is backed by Softbank Group (9984 JP) and Tencent (700 HK), along with other investors.It is present in over 4,000 cities, counties and towns across 15 countries. As of twelve months ending (LTM) 1Q21, it had 493m annual active users and 15m drivers, who participated in 41m average daily transactions. It generated a gross transaction value of RMB341bn over LTM1Q21.  We provided a brief background and financials overview in our previous note, DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet.In this note, we will look at the financials and talk about the rumoured valuation.

DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch

<div><p><a href="https://www.smartkarma.com/entities/aihuishou" target="_blank" data-smartkarma-citation="entities:33426:1" rel="noopener">Aihuishou (RERE US)</a> (AHS), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise up to US$243m via a US listing. It is backed by <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>, Morningside and Tiger Global.</p></div><div>
<p>We covered some aspects of the deal in our earlier notes:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/aihuishou-pre-ipo-mostly-positive-pre-owned-but-well-loved" target="_blank" rel="noopener">AiHuiShou Pre-IPO - Mostly Positive - Pre-Owned but Well Loved</a>. </li>
<li><a href="https://www.smartkarma.com/insights/aihuishou-pre-ipo-first-stab-at-valuation" target="_blank" rel="noopener">AiHuiShou Pre-IPO - First Stab at Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/aihuishou-pre-ipo-pricing-my-mobile-handset-at-physical-stores" target="_blank" rel="noopener">Aihuishou (爱回收) Pre-IPO: Pricing My Mobile Handset at Physical Stores</a></li>
</ul>
<p>In this note, we will talk about the deal dynamics and run the deal through our ECM Framework.</p>
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Aihuishou (RERE US) (AHS), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise up to US$243m via a US listing. It is backed by JD.com Inc (ADR) (JD US), Morningside and Tiger Global.
We covered some aspects of the deal in our earlier notes:


AiHuiShou Pre-IPO - Mostly Positive - Pre-Owned but Well Loved. 
AiHuiShou Pre-IPO - First Stab at Valuation
Aihuishou (爱回收) Pre-IPO: Pricing My Mobile Handset at Physical Stores

In this note, we will talk about the deal dynamics and run the deal through our ECM Framework.


AiHuiShou IPO - Priced to Go but Won't Do a Kanzhun

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)

Initial Thoughts on the Didi Chuxing Valuation

Our initial valuation analysis of Didi Chuxing suggests a base case market cap valuation of $138 billion. Our valuation ranges from $77 billion...

Douglas Kim

AiHuiShou IPO: Peer Comparison and Valuation

We believe there will be limited upside to the company’s indicative IPO price range and would be inclined to buy only if the company sets the final...

Shifara Samsudeen, ACMA, CGMA

Hong Kong Connect Flows: Geely Inflows, and Xiaomi Meituan Outflows

We highlight weekly Hong Kong Connect inflows into Geely (175 HK) and outflows from Xiaomi (1810 HK) and Meituan (3690 HK).

Ke Yan, CFA, FRM

DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch

DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, aims to raise around US$10bn in its US listing. It is backed by Softbank...

Sumeet Singh

AiHuiShou IPO - Priced to Go but Won't Do a Kanzhun

Aihuishou (RERE US), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise up to US$243m via a US...

Sumeet Singh

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