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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/atrenew-inc" target="_blank" data-smartkarma-citation="entities:33426:1" rel="noopener">ATRenew (RERE US)</a> operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS. </li>
<li>The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.</li>
<li>The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.</li>
</ul>



ATRenew (RERE US) operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS. 
The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.
The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.


ATRenew (RERE US): Pre-Owned Satisfaction

Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>PDD's spectacular 3Q results will prove unsustainable based on our assessments of its core markets and deep-dive benchmark analysis of growth trajectory of PDD and Alibaba, using GMV as scale.</li>
<li>We see earnings risk going into 2023 due to well-penetrated wallet share of core user base, deflating growth drivers and ramp-up of investments.</li>
<li>In the long term, inevitable multiple compression also renders the risk-return payoff of this US$100bn company mediocre, even under blue-sky growth forecasts. Prefer Alibaba over PDD.</li>
</ul>


PDD's spectacular 3Q results will prove unsustainable based on our assessments of its core markets and deep-dive benchmark analysis of growth trajectory of PDD and Alibaba, using GMV as scale.
We see earnings risk going into 2023 due to well-penetrated wallet share of core user base, deflating growth drivers and ramp-up of investments.
In the long term, inevitable multiple compression also renders the risk-return payoff of this US$100bn company mediocre, even under blue-sky growth forecasts. Prefer Alibaba over PDD.


Pinduoduo (PDD US): Spectacular 3Q, Tough Outlook

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>’s 3Q22 mirrored its strong previous quarter with revenue of RMB 35.5bn (consensus: RMB 30.8bn) and OP of RMB 10.4bn (consensus: RMB 6.7bn).</li>
<li>CCP’s anti-monopoly drive and common prosperity measures are helping Pinduoduo to outperform the competition.</li>
<li>Nonetheless, we refrain from being outright positive on any of the Chinese e-commerce names with the economy heading into a slowdown and the lowest sector-multiple at above 12x FY+1 OP.</li>
</ul>



Pinduoduo (PDD US)’s 3Q22 mirrored its strong previous quarter with revenue of RMB 35.5bn (consensus: RMB 30.8bn) and OP of RMB 10.4bn (consensus: RMB 6.7bn).
CCP’s anti-monopoly drive and common prosperity measures are helping Pinduoduo to outperform the competition.
Nonetheless, we refrain from being outright positive on any of the Chinese e-commerce names with the economy heading into a slowdown and the lowest sector-multiple at above 12x FY+1 OP.


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.

Event-Driven

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

<ul>
<li>After hitting the bottom during the COVID crisis, the only direction left for <a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> to move is up.</li>
<li>Given the current valuations, Miniso could generate multi-bagger returns during favourable market conditions.</li>
<li>In addition, Miniso could help investors generate sizable returns in the short-term on the short side with increased short exposure to Chinese E-commerce.</li>
</ul>


After hitting the bottom during the COVID crisis, the only direction left for MINISO Group Holdings (MNSO US) to move is up.
Given the current valuations, Miniso could generate multi-bagger returns during favourable market conditions.
In addition, Miniso could help investors generate sizable returns in the short-term on the short side with increased short exposure to Chinese E-commerce.


Miniso: Genuinely Undervalued & A Decent Long Hedge to Increase Short Exposure to Chinese E-Commerce

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

Hainan Island Construction Co Ltd.  is a property development company. The Company also operates regional malls and hotels.

Guangzhou Friendship Group Co., Ltd operates supermarkets and department stores in Guangzhou, China.  The Company sells a variety of consumer products, including apparel, food and beverages, electronics, jewelry, cosmetics, and electric appliances.  Guangzhou Friendship also leases real estate properties.

Guangzhou Friendship Group Co, Ltd. (000987 CH)

Golden Eagle Retail Group Limited operates department stores in China. The Company's stores target mid-range and high-end market segments in China, and contain various functions and amenities such as dining, entertainment, beauty and personal care, cinemas, and preschool education in addition to their core function as an international department store.

Tianjin Quanye Bazaar (Group) Co., Ltd. owns and operates department stores and supermarkets, as well as sells general merchandise on a wholesale basis. Tianjin Quanye also provides storage and cargo delivery services, and invests in real estate and interior decoration businesses.

Xian International Medical Investment Co Ltd is principally engaged in the medical services industry.

Xian International Medical Invest (000516 CH)

Wangfujing Group Co., Ltd. owns and operates department stores in Beijing, Guangzhou, Chengdu, Wuhan, and other cities in China.  The Company also develops residential real estate.

Dollar General Corporation operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern, and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health, beauty, pet supplies, and non-consumables such as seasonal merchandise.

Trent Limited operates a chain of retail stores that sell fashion apparel, cosmetics, perfumery products and toiletry items. The Company sells apparel for men, women and children. Trent sells its cosmetics products under the "Westside" and "Trent" brand names.

Dollar Tree, Inc. operates a discount variety store chain in the United States. The Company sells an assortment of everyday general merchandise at the $1.00 price point.

Pan Pacific International Holdings Corporation operates discount stores which sell consumer electronics, daily necessities, groceries, watches, and sporting goods. The Company mostly operates small scale stores based in Tokyo.

Pan Pacific International Holdings (7532 JP)

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

Next Plc conducts retailing, home shopping, and customer services management operations.  The Company's retail stores sell ladies wear, mens wear, childrens wear, and housewares.

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

Dollarama Inc. operates as an online marketplace. The Company offers cleaning, school, office, home, kitchen, food, health, beauty, hardware, electronics, toys, and pets products, as well as provides delivery services. Dollarama serves customers in Canada.

MercadoLibre, Inc. operates an online trading site for the Latin American markets. The Company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format. MercadoLibre offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

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PDD Holdings (PDD US)

ATRenew (RERE US): Pre-Owned Satisfaction

Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks. The valuation remains undemanding.

Arun George

Pinduoduo (PDD US): Spectacular 3Q, Tough Outlook

PDD's spectacular 3Q results will prove unsustainable. Near term earnings risk and long term multiple compression render the payoff of this US$100...

Eric Chen

Pinduoduo: The Odd One Out

Expected to outperform the competition, possibly through government support, we think PDD could be the safest route to invest in the battered...

Oshadhi Kumarasiri

Tencent Investee Selldown - The US$120bn Global Overhang

There have been multiple reports that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. We look at Tencent's...

Sumeet Singh

Miniso: Genuinely Undervalued & A Decent Long Hedge to Increase Short Exposure to Chinese E-Commerce

It might take some time for Miniso to generate multi-bagger returns on a stand-alone basis, but it could still help investors generate sizable...

Oshadhi Kumarasiri

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