TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Meta Platforms (Facebook) / Equity Bottom-Up

<p>Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

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

Zhihu Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC. Zhihu is acknowledged as the first choice among all online content communities in China where people look for information to make decisions or find answers, according to CIC. Zhihu 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>, <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> and <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>.</p></div><div><p>At the mid-point of the proposed IPO price range of $9.50-11.50 per ADS, Zhihu will have a fully diluted market cap of $6.2 billion. Zhihu will also raise an additional $250 million in a concurrent private placement to <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>, <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>, Tencent and Lilith Games. At the mid-point of the IPO price range, the net proceeds including the concurrent private placement are $801.3 million. </p></div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/zhihu-ipo-initiation-question-time" target="_blank" data-smartkarma-citation="insights:48928" rel="noopener">Zhihu IPO Initiation: Question Time</a>, we opined that as the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from favourable industry trends. We concluded that Zhihu’s fundamentals are attractive. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. </p></div></div>

Zhihu Technology (ZH US) is the largest Q&amp;A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020, according to CIC. Zhihu is acknowledged as the first choice among all online content communities in China where people look for information to make decisions or find answers, according to CIC. Zhihu is backed by Tencent Holdings (700 HK), Kuaishou Technology (1024 HK) and Baidu (BIDU US).At the mid-point of the proposed IPO price range of $9.50-11.50 per ADS, Zhihu will have a fully diluted market cap of $6.2 billion. Zhihu will also raise an additional $250 million in a concurrent private placement to Alibaba Group (BABA US), JD.com Inc (ADR) (JD US), Tencent and Lilith Games. At the mid-point of the IPO price range, the net proceeds including the concurrent private placement are $801.3 million. In Zhihu IPO Initiation: Question Time, we opined that as the largest Q&amp;A-inspired online community, Zhihu is well-positioned to benefit from favourable industry trends. We concluded that Zhihu’s fundamentals are attractive. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. 

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>Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong. </p></div><div><p>We have covered the background of the deal in our earlier notes, <a href="https://www.smartkarma.com/insights/bilibili-secondary-listing-early-look-will-probably-be-more-like-jd-and-netease" target="_blank" rel="noopener">Bilibili Secondary Listing Early Look - Will Probably Be More like JD and NetEase</a> and <a href="https://www.smartkarma.com/insights/bilibili-secondary-listing-early-look-4q20-results-quick-note" target="_blank" rel="noopener">Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note</a>.</p></div><div><p>In this note, we'll touch upon the updates since our last note.</p></div>

Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong. We have covered the background of the deal in our earlier notes, Bilibili Secondary Listing Early Look - Will Probably Be More like JD and NetEase and Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note.In this note, we'll touch upon the updates since our last note.

Bilibili Secondary Listing - Volatile but Should Be Hot

Event-Driven

<div><p>On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> reluctantly sold US$10bn worth of <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> shares.  <span>I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next week. </span></p></div><div><p>We have covered the previous placement in our earlier note, <a href="https://www.smartkarma.com/insights/tencent-placement-huge-deal-in-size-small-in-relative-terms-succumbing-to-the-holdco-discount" target="_blank" rel="noopener">Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount</a> and spoken about the implications of the lock-up expiry in our Feb 2021 note <a href="https://www.smartkarma.com/insights/tencent-placement-lock-up-expiry-us-10bn-block-and-buyback-linked-holdco-trade" target="_blank" rel="noopener">Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade</a>.</p></div><div><p>In this note, I’ll talk about the updates since then.</p></div>

On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, Naspers (NPN SJ) reluctantly sold US$10bn worth of Tencent Holdings (700 HK) shares.  I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next week. We have covered the previous placement in our earlier note, Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount and spoken about the implications of the lock-up expiry in our Feb 2021 note Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade.In this note, I’ll talk about the updates since then.

Tencent Placement Lock-Up Expiry -  Block and Buyback Linked Holdco Trade Update

<p>Roblox, an online gaming platform geared towards children, is poised to continue the accelerating usage and monetization triggered by the pandemic. Its business model produces a flywheel where its audience grows as new games are introduced, further incentivizing its user/developers to create more user generated content that strengthens the platform. A large, hyper engaged youth audience offers Roblox open-ended optionality around advertising, sponsorships, and other new monetization avenues. Already highly cash generative, Roblox is poised to invest in localization efforts to expand its global reach, while potentially introducing new metaverse-based gaming platforms for older demographics. </p>
<p><strong>Base Case Valuation: $30B<br></strong><strong>Bull Case: $60B<br>Bear Case: $10B</strong></p>
<div class="content-highlight">
<p style="text-align: left;">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p>
</div>

Roblox, an online gaming platform geared towards children, is poised to continue the accelerating usage and monetization triggered by the pandemic. Its business model produces a flywheel where its audience grows as new games are introduced, further incentivizing its user/developers to create more user generated content that strengthens the platform. A large, hyper engaged youth audience offers Roblox open-ended optionality around advertising, sponsorships, and other new monetization avenues. Already highly cash generative, Roblox is poised to invest in localization efforts to expand its global reach, while potentially introducing new metaverse-based gaming platforms for older demographics. 
Base Case Valuation: $30B Bull Case: $60B Bear Case: $10B

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  


Roblox: If Its in the Game, Its in the Game

United States

Meta Platforms Inc. operates as a social technology company. The Company builds applications and technologies that help people connect, find communities, and grow businesses. meta Platform is also involved in advertisements, augmented and virtual reality.

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Meta Platforms (Facebook) (META US)

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

Macro tends to control the market in between earnings seasons, when fundamental performance matters less. As we approach 1Q21 earnings in a few...

Aaron Gabin

Zhihu IPO: Valuation Insights

At the mid-point of the $9.50-11.50 IPO price range, Zhihu's net proceeds inc. the concurrent private placement is $801.3 million. Our valuation...

Arun George

Bilibili Secondary Listing - Volatile but Should Be Hot

Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong. We have covered the background of the deal in our earlier notes. In...

Sumeet Singh

Tencent Placement Lock-Up Expiry - Block and Buyback Linked Holdco Trade Update

On 22nd March 2018, in Hong Kong one of the largest overnight placements was launched. On that day, Naspers sold US$10bn worth of Tencent shares....

Sumeet Singh

Roblox: If Its in the Game, Its in the Game

Roblox is set to IPO tomorrow. We think its a unique asset and are inclined to own this depending on how outlandish valuation turns out to be as...

Aaron Gabin

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