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

Autohome Inc (Adr) / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/autohome-inc-adr" target="_blank" data-smartkarma-citation="entities:20234:1" rel="noopener">Autohome Inc (Adr) (ATHM US)</a> has launched a $1 billion secondary listing in Hong Kong. The primary/secondary spilt of the offer is 66.7%/33.3%. The selling shareholder is Yun Chen which is a non-wholly-owned subsidiary of <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-china" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group Co Of China (601318 CH)</a>.</p><p>In <a href="https://www.smartkarma.com/insights/autohome-secondary-listing-motoring-online" target="_blank" data-smartkarma-citation="insights:48751" rel="noopener">Autohome Secondary Listing: Motoring Online</a> outlined our views on Autohome’ fundamentals and valuation. The H shares will be priced on 9 March (Tuesday) and are scheduled for listing on 15 March.  </p><div class="content-highlight"><p>In this note, we will look at Autohome’s potential HK-ADS premium/(discount). Autohome will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. Overall, we think that Autohome pricing its H-shares around a 2% discount to its ADSs will be reasonable.</p></div>

Autohome Inc (Adr) (ATHM US) has launched a $1 billion secondary listing in Hong Kong. The primary/secondary spilt of the offer is 66.7%/33.3%. The selling shareholder is Yun Chen which is a non-wholly-owned subsidiary of Ping An Insurance Group Co Of China (601318 CH).In Autohome Secondary Listing: Motoring Online outlined our views on Autohome’ fundamentals and valuation. The H shares will be priced on 9 March (Tuesday) and are scheduled for listing on 15 March.  In this note, we will look at Autohome’s potential HK-ADS premium/(discount). Autohome will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. Overall, we think that Autohome pricing its H-shares around a 2% discount to its ADSs will be reasonable.

Autohome Secondary Listing: HK-ADS Premium/(Discount) Views

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.</p>
</div>
<p>The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.</p>
<p>Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.</p>
<p>The company's self-developed game <em>Free Fire </em>was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.</p>
<p>In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.</p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.</p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.</p>
<p>The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.</p>
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<section class="figure">For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.</section>


Sea Ltd (SE US) released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.

The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.
Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.
The company's self-developed game Free Fire was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.
In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.
Sea Ltd (SE US) is also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.
Sea Ltd (SE US) has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.
The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.



For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.

Sea Ltd (SE US) - Metamorphosis in Motion

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.

<p>Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as well</p>
<p>I have covered most aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/autohome-secondary-listing-doesn-t-need-the-cash-at-all" target="_blank" rel="noopener">Autohome Secondary Listing - Doesn’t Need the Cash at All. </a>In this note, I'll only touch upon the updates since my last note.</p>

Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as well
I have covered most aspects of the deal in my earlier note, Autohome Secondary Listing - Doesn’t Need the Cash at All. In this note, I'll only touch upon the updates since my last note.

Autohome Secondary Listing - Going Down a Different Route

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".</p><p>The main changes to the index are:</p><ul>
<li>Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>To have a more balanced representation of the Hong Kong stock market, the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.</li>
<li>To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.</li>
<li>There will be 20-25 'Hong Kong companies' in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and this number will be evaluated at least every 2 years.</li>
<li>All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as well.</li>
</ul><p>There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.</p><p>With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.</p>

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:
Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the Hong Kong Hang Seng Index (HSI INDEX). 
To have a more balanced representation of the Hong Kong stock market, the Hong Kong Hang Seng Index (HSI INDEX) constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.
To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.
There will be 20-25 'Hong Kong companies' in the Hong Kong Hang Seng Index (HSI INDEX) and this number will be evaluated at least every 2 years.
All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as well.
There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

HSI Market Consultation: BIG Changes Coming

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Kuaishou (1024 HK)’s vice president of community content was arrested for taking bribes.</li>
<li>Alibaba (BABA)’s public relation manager was rumored to jump off the office building in Beijing.</li>
<li>Suning Commerce (002024 CN)’s founder will sell his shareholdings.</li>
</ul>


Kuaishou (1024 HK)’s vice president of community content was arrested for taking bribes.
Alibaba (BABA)’s public relation manager was rumored to jump off the office building in Beijing.
Suning Commerce (002024 CN)’s founder will sell his shareholdings.


China Internet Weekly (Feb 22): Kuaishou VP Arrested, BABA Manager Dead “by Accident”, & Q4 Results

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

Autohome Secondary Listing: HK-ADS Premium/(Discount) Views

Autohome will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. We think that a 2% discount...

Arun George

Sea Ltd (SE US) - Metamorphosis in Motion

Sea Ltd continues to achieve higher than expected rates of growth both for its digital entertainment and e-commerce business, with digital...

Angus Mackintosh

Autohome Secondary Listing - Going Down a Different Route

Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as...

Sumeet Singh

HSI Market Consultation: BIG Changes Coming

Hang Seng Indexes has announced the conclusions of the market consultation and the HSI is going to look different in a years time. Financials see a...

Brian Freitas

China Internet Weekly (Feb 22): Kuaishou VP Arrested, BABA Manager Dead “by Accident”, & Q4 Results

Kuaishou’s vice president was arrested for taking bribes. Alibaba’s manager was rumored to jump off the office building. Suning Commerce’s founder...

Ming Lu

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