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.

Equity Capital Markets

<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 Chinese mobility technology platform has announced the indicative price range for its US IPO. Didi plans to issue 288m ADSs at an indicative price range of US$13-14 per ADS. Each ordinary share of Didi represents four ADSs, and at the midpoint of the indicative IPO price range of US$13.5 per ADS, the company will raise US$3.8bn at a market capitalisation of US$64.5bn (excluding over-allotment) and a post-money enterprise value of US$53.4bn.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 183.0pt;"><p style="text-align: center;"><strong>Didi IPO Details</strong></p></td></tr>
<tr>
<td style="width: 133.0pt;"><p>No. of ADS Issued (m)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">288</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>IPO Price per ADS (US$)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">13-14</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>No. of ADS per Share</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">4</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>Offer as a % of Outstanding Shares</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">6.01%</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>Total Shares Outstanding (m)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">               1,199</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>Net Proceeds (US$m)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">               3,795</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>Market Capitalisation (US$m)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">64,726</p></td>
</tr>
<tr>
<td style="width: 133.0pt;"><p>Enterprise Value (US$m)</p></td>
<td style="width: 50.0pt;"><p style="text-align: right;">            53,377</p></td>
</tr>
</tbody></table><p><em>Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the indicative IPO price range)</em></p><p>Some of Didi’s existing and new investors have expressed their interest in subscribing for an aggregate of US$1.25bn worth of ADSs offered at the IPO, representing approx. 32.2% of the gross IPO proceeds at the midpoint of the indicative IPO price range. These investors include Morgan Stanley Investment Management (US$750m) and an indirect wholly-owned subsidiary of Temasek Holdings (US$500m).</p><p>Didi plans to use approx. 30% of the net IPO proceeds on enhancing its technological capabilities including shared mobility, EVs and autonomous technologies, another 30% of the proceeds on expanding into selected international markets (outside of China), approx. 20% on launching new products and expand its existing offerings and the remainder will be spent on working capital and general corporate purposes.</p>

DiDi Chuxing (DIDI US) , the Chinese mobility technology platform has announced the indicative price range for its US IPO. Didi plans to issue 288m ADSs at an indicative price range of US$13-14 per ADS. Each ordinary share of Didi represents four ADSs, and at the midpoint of the indicative IPO price range of US$13.5 per ADS, the company will raise US$3.8bn at a market capitalisation of US$64.5bn (excluding over-allotment) and a post-money enterprise value of US$53.4bn.
Didi IPO Details

No. of ADS Issued (m)
288


IPO Price per ADS (US$)
13-14


No. of ADS per Share
4


Offer as a % of Outstanding Shares
6.01%


Total Shares Outstanding (m)
               1,199


Net Proceeds (US$m)
               3,795


Market Capitalisation (US$m)
64,726


Enterprise Value (US$m)
            53,377

Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the indicative IPO price range)Some of Didi’s existing and new investors have expressed their interest in subscribing for an aggregate of US$1.25bn worth of ADSs offered at the IPO, representing approx. 32.2% of the gross IPO proceeds at the midpoint of the indicative IPO price range. These investors include Morgan Stanley Investment Management (US$750m) and an indirect wholly-owned subsidiary of Temasek Holdings (US$500m).Didi plans to use approx. 30% of the net IPO proceeds on enhancing its technological capabilities including shared mobility, EVs and autonomous technologies, another 30% of the proceeds on expanding into selected international markets (outside of China), approx. 20% on launching new products and expand its existing offerings and the remainder will be spent on working capital and general corporate purposes.

Didi IPO: Forecasts, Peer Comparison and Valuation

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.

<div>
<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> is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The <em>DiDi Chuxing</em> app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (12.8%), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (6.8%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> and <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>. </div><div></div><div><p>At the mid-point of the proposed IPO price range of $13.00-14.00 per ADS, Didi will have a fully diluted market cap of $67.7 billion, materially below the rumoured top-end valuation of $100 billion. At the mid-point of the IPO price range, the net proceeds are $3,795.4 million, below the rumoured $10 billion raise target. Didi has received $1,250 million indications of interest (32.2% of the ADSs being offered) from Morgan Stanley Investment Management ($750 million) and Temasek ($500 million). </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/didi-chuxing-xiaoju-kuaizhi-initiation-in-for-a-bumpy-ride" target="_blank" data-smartkarma-citation="insights:53014" rel="noopener">Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?</a>, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. </p>
<p>In <a href="https://www.smartkarma.com/insights/xiaoju-kuaizhi-didi-chuxing-ipo-growth-vs-margin" target="_blank" data-smartkarma-citation="insights:53232" rel="noopener">Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin</a>, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, <a href="https://www.smartkarma.com/entities/lyft-inc" target="_blank" data-smartkarma-citation="entities:24423:1" rel="noopener">Lyft Inc (LYFT US)</a> and <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a>. Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.</p>
</div><div><div><div class="content-highlight"><p>Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that Didi is fairly valued at the IPO price range.   </p></div></div></div>


DiDi Chuxing (DIDI US) is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The DiDi Chuxing app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), Uber (UBER US) (12.8%), Tencent (700 HK) (6.8%), Alibaba Group (BABA US) and Toyota Motor (7203 JP). At the mid-point of the proposed IPO price range of $13.00-14.00 per ADS, Didi will have a fully diluted market cap of $67.7 billion, materially below the rumoured top-end valuation of $100 billion. At the mid-point of the IPO price range, the net proceeds are $3,795.4 million, below the rumoured $10 billion raise target. Didi has received $1,250 million indications of interest (32.2% of the ADSs being offered) from Morgan Stanley Investment Management ($750 million) and Temasek ($500 million). 
In Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. 
In Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, Lyft Inc (LYFT US) and Grab (0967655D SP). Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.
Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that Didi is fairly valued at the IPO price range.   

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price range of $25.5 per share. </p><p>In our base case valuation, we used 2.0x EV/S multiple, using our estimated sales of 21.9 billion RMB in 2022. Our base case valuation multiple of 2.0x is at a 69% discount to the median EV/S multiple of the comps. The comps such as Meituan and Pinduoduo are much larger companies with greater economies of scale of better profitability.</p><p>However, we do believe that Dingdong should be given some credit since it generated a tremendous sales growth in 2020 (only DoorDash generated higher sales growth in 2020). In addition, despite some slowing sales growth in 1Q 2021, we expect its sales growth in 2022 (34%) to be relatively close to the comps' sales growth (36%). </p>

Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price range of $25.5 per share. In our base case valuation, we used 2.0x EV/S multiple, using our estimated sales of 21.9 billion RMB in 2022. Our base case valuation multiple of 2.0x is at a 69% discount to the median EV/S multiple of the comps. The comps such as Meituan and Pinduoduo are much larger companies with greater economies of scale of better profitability.However, we do believe that Dingdong should be given some credit since it generated a tremendous sales growth in 2020 (only DoorDash generated higher sales growth in 2020). In addition, despite some slowing sales growth in 1Q 2021, we expect its sales growth in 2022 (34%) to be relatively close to the comps' sales growth (36%). 

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/xpeng-motors" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng Motors (XPEV US)</a> is looking to raise about US$1.7bn via a listing in Hong Kong. We have covered the stocks since IPO, including its previous deal. In this note, we will talk about the updates since then and the deal dynamics.</p></div><div><p>We have covered the IPO in:</p></div><div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/xpeng-motors-pre-ipo-lots-to-like-with-solid-backing-from-investors" target="_blank" data-smartkarma-citation="insights:42126" rel="noopener">Xpeng Motors (小鹏汽车) Pre-IPO - Lots to like with Solid Backing from Investors</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/xpeng-motors-visited-a-store-fairly-priced-but-with-recharging-problem" target="_blank" data-smartkarma-citation="insights:42283" rel="noopener">Xpeng Motors (小鹏汽车): Visited a Store, Fairly Priced, But with Recharging Problem</a> </li>
<li><a href="https://www.smartkarma.com/insights/xpeng-motors-pre-ipo-car-comparison-and-p7-performance-test" target="_blank" data-smartkarma-citation="insights:42386" rel="noopener">Xpeng Motors (小鹏汽车) Pre-IPO - Car Comparison and P7 Performance Test</a></li>
<li>
<a href="https://www.smartkarma.com/insights/xpeng-motors-pre-ipo-peer-comparison-and-valuation" target="_blank" data-smartkarma-citation="insights:42389" rel="noopener">Xpeng Motors (小鹏汽车) Pre-IPO - Peer Comparison and Valuation</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/xpeng-ipo-riding-the-momentum" target="_blank" data-smartkarma-citation="insights:42503" rel="noopener">Xpeng Motors (小鹏汽车) IPO - Riding the Momentum</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/xpeng-motors-trading-nio-leading-the-charge" target="_blank" data-smartkarma-citation="insights:42616" rel="noopener">Xpeng Motors (小鹏汽车) Trading - NIO Leading the Charge</a> </li>
</ul>
<p>And the previous placement in:</p>
<ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/xpeng-motors-placement-level-the-playing-field" target="_blank" rel="noopener">Xpeng Motors (小鹏汽车) Placement - Level the Playing Field</a></li></ul>
</div>

Xpeng Motors (XPEV US) is looking to raise about US$1.7bn via a listing in Hong Kong. We have covered the stocks since IPO, including its previous deal. In this note, we will talk about the updates since then and the deal dynamics.We have covered the IPO in:


Xpeng Motors (小鹏汽车) Pre-IPO - Lots to like with Solid Backing from Investors 

Xpeng Motors (小鹏汽车): Visited a Store, Fairly Priced, But with Recharging Problem 
Xpeng Motors (小鹏汽车) Pre-IPO - Car Comparison and P7 Performance Test

Xpeng Motors (小鹏汽车) Pre-IPO - Peer Comparison and Valuation 

Xpeng Motors (小鹏汽车) IPO - Riding the Momentum 

Xpeng Motors (小鹏汽车) Trading - NIO Leading the Charge 

And the previous placement in:
Xpeng Motors (小鹏汽车) Placement - Level the Playing Field


Xpeng Motors HK Listing - Will Probably Be Hot Given Strong Momentum but past Deal Didn’t Do Well

<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 up to US$4bn 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 the deal background and financials overview in our previous notes<a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-one-of-asia-s-largest-ipos-this-year-tearsheet" target="_blank" rel="noopener"></a>:</p></div><div><ul style="list-style-type: disc;">
<li>
<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>.</li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-has-a-principal-agent-problem-rumoured-target-valuation-is-a-stretch" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-pre-ipo-competitive-in-car-hailing-uncompetitive-in-others-generally-valuable" target="_blank" rel="noopener">DIDI (滴滴) Pre-IPO: Competitive in Car Hailing, Uncompetitive In “Others”, Generally Valuable</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-peer-comparison" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Peer Comparison</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-valuation" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/didi-chuxing-pre-ipo-bull-case-index-inclusion-uber-exit" target="_blank" rel="noopener">DiDi Chuxing Pre-IPO - Bull Case, Index Inclusion, Uber Exit</a></li>
</ul></div><div><p>In this note, we will run the deal through our ECM framework and talk about the deal dynamics.</p></div>

DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, aims to raise up to US$4bn 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 the deal background and financials overview in our previous notes:

DiDi Chuxing Pre-IPO - One of Asia’s Largest IPOs This Year - Tearsheet.
DiDi Chuxing Pre-IPO - Has a Principal Agent Problem, Rumoured Target Valuation Is a Stretch
DIDI (滴滴) Pre-IPO: Competitive in Car Hailing, Uncompetitive In “Others”, Generally Valuable
DiDi Chuxing Pre-IPO - Peer Comparison
DiDi Chuxing Pre-IPO - Valuation
DiDi Chuxing Pre-IPO - Bull Case, Index Inclusion, Uber Exit
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

DiDi Chuxing IPO - At Fair Value, with Partial Lock-Up and Index Inclusion Pulling It Either Way

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)

Didi IPO: Forecasts, Peer Comparison and Valuation

Didi’s IPO is fairly valued at the indicative IPO price range compared to its peers Uber, Lyft and Grab who are trading at higher EV/Revenue...

Shifara Samsudeen, ACMA, CGMA

DiDi Global IPO: Valuation Insights

Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that...

Arun George

Dingdong Maicai IPO Valuation Analysis

Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price...

Douglas Kim

Xpeng Motors HK Listing - Will Probably Be Hot Given Strong Momentum but past Deal Didn’t Do Well

Xpeng Motors (XPEV US) is looking to raise about US$1.7bn via a listing in Hong Kong. We have the IPO and its previous deal. In this note, we will...

Sumeet Singh

DiDi Chuxing IPO - At Fair Value, with Partial Lock-Up and Index Inclusion Pulling It Either Way

DiDi Chuxing (DIDI US), the world’s largest mobility technology platform, aims to raise up to US$4bn in its US listing. It is backed by Softbank...

Sumeet Singh

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