Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>The growth rate of total revenue rose to 24% in 2020 from 16% in 2019.</li>
<li>The growth rate of game accelerated to 18% in 2020 from 16% in 2019 and 11% in 2018. </li>
<li>The gross margin of game had been stable throughout 2020, but minor businesses erased part of profit.</li>
<li>The stock will have an upside of 29%.</li>
</ul>


The growth rate of total revenue rose to 24% in 2020 from 16% in 2019.
The growth rate of game accelerated to 18% in 2020 from 16% in 2019 and 11% in 2018. 
The gross margin of game had been stable throughout 2020, but minor businesses erased part of profit.
The stock will have an upside of 29%.


NetEase (NTES): Total and Game Revenue Growth Rates Accelerated in 2020, 29% Upside

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<div>
<p>Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong, as per media reports. The company is said to have filed confidentially in Jan 2021 and is aiming for a listing in March 2021.</p>
<p>We have covered the background of the deal in our earlier note, <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>.</p>
<p>Bilibili reported its 4Q20 results today morning. As these are likely to be the last set of results before the company goes in for its secondary listing, in this note we take a quick look at the results. </p>
</div>


Bilibili plans to raise around US$3bn in its secondary listing in Hong Kong, as per media reports. The company is said to have filed confidentially in Jan 2021 and is aiming for a listing in March 2021.
We have covered the background of the deal in our earlier note, Bilibili Secondary Listing Early Look - Will Probably Be More like JD and NetEase.
Bilibili reported its 4Q20 results today morning. As these are likely to be the last set of results before the company goes in for its secondary listing, in this note we take a quick look at the results. 


Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note

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

<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 launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.</p>
<p>The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.</p>
<div>
<div id="sda-INARTICLE">Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. </div>
<div></div>
</div>
<div>The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. </div>
<div></div>
<div>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> faces the challenge of facing off against <a href="https://www.smartkarma.com/entities/mercadolibre-inc" target="_blank" data-smartkarma-citation="entities:27954:1" rel="noopener">MercadoLibre Inc (MELI US)</a>, which is a formidable adversary that has seen off <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> on its doorstep already. </div>
<div></div>
<div>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> does have a track record of winning share quickly seemingly "against all odds" in unseating <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> in Indonesia. </div>
<div></div>
<div>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.</div>

Sea Ltd (SE US) has launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.
The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.

Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. 


The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. 


Sea Ltd (SE US) faces the challenge of facing off against MercadoLibre Inc (MELI US), which is a formidable adversary that has seen off Amazon.com Inc (AMZN US) on its doorstep already. 


Sea Ltd (SE US) does have a track record of winning share quickly seemingly "against all odds" in unseating Tokopedia PT (1087142D IJ) and Lazada Group (LAZADA SP) in Indonesia. 


Sea Ltd (SE US) trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like Sea Ltd (SE US) over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

<ul>
<li>Online karaoke’ active users decreased by 31% and the time on site decreased by 13%<a target="_blank"> in China</a>.</li>
<li>Music per capita time on site plunged sharply by 26% in China.</li>
<li>Monthly active users of TME’s top app shrank.</li>
<li>China Mobile’s music app is freely using TME’s copyrights.</li>
</ul>


Online karaoke’ active users decreased by 31% and the time on site decreased by 13% in China.
Music per capita time on site plunged sharply by 26% in China.
Monthly active users of TME’s top app shrank.
China Mobile’s music app is freely using TME’s copyrights.


Tencent Music (TME): Less Attractive than Other Entertainments

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>, the largest e-commerce company in South Korea with $12.0bn in annual revenue and 14.9m in quarterly active customers, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.</p><p>In our two previous insights on the IPO; <a href="https://www.smartkarma.com/insights/coupang-ipo-not-worth-subscribing-at-rumoured-50-0bn-valuation" target="_blank" rel="noopener">Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation</a>, <a href="https://www.smartkarma.com/insights/coupang-ipo-lacks-margin-upside" target="_blank" rel="noopener">Coupang IPO: Lacks Margin Upside</a>, we looked at the company’s business model, future prospects, and revenue and earnings estimates. In this insight, we assess the fairness of the company's rumoured $50.0bn valuation.</p>

Coupang (CPNG US), the largest e-commerce company in South Korea with $12.0bn in annual revenue and 14.9m in quarterly active customers, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of $1.0bn.In our two previous insights on the IPO; Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation, Coupang IPO: Lacks Margin Upside, we looked at the company’s business model, future prospects, and revenue and earnings estimates. In this insight, we assess the fairness of the company's rumoured $50.0bn valuation.

Coupang IPO: Initial Thoughts on Rumoured $50.0bn Valuation

China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

NetEase (NTES): Total and Game Revenue Growth Rates Accelerated in 2020, 29% Upside

The growth rate of total revenue rose to 24% in 2020 from 16% in 2019. The growth rate of game accelerated to 18% in 2020 from 16% in 2019 and 11%...

Ming Lu

Bilibili Secondary Listing Early Look - 4Q20 Results Quick Note

Bilibili plans to raise around US$3bn in its secondary listing in HK, as per media reports. The company is said to have filed confidentially in Jan...

Sumeet Singh

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

Sea Ltd (SE US) remains the listed key proxy for the explosive growth in e-commerce in South East Asia, fuelled by growing revenues from its gaming...

Angus Mackintosh

Tencent Music (TME): Less Attractive than Other Entertainments

Online karaoke and online music plunged in China. Monthly active users of TME’s top app shrank. China Mobile’s music app is freely using TME’s...

Ming Lu

Coupang IPO: Initial Thoughts on Rumoured $50.0bn Valuation

Coupang is fundamentally different from other e-commerce platforms as it generates over 92% of revenue from own inventory retail. Therefore a EV...

Oshadhi Kumarasiri

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