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.

Equity Capital Markets

GoTo Gojek Tokopedia Tbk PT / Equity Capital Markets

<ul>
<li>GoTo aims to raise around US$1.25bn from a local listing, which will mainly be targeted at domestic investors. </li>
<li>GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.</li>
<li>In this note, we will talk about the company's valuation.</li>
</ul>


GoTo aims to raise around US$1.25bn from a local listing, which will mainly be targeted at domestic investors. 
GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we will talk about the company's valuation.


GoTo IPO - Valuation - Missed the Tide, Boat Won’t Rise

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.

Equity Bottom-Up

<ul>
<li>It was reported yesterday that the Chinese venture capitalist, Neil Shen who heads Sequoia Capital China has decided to trim his personal investments in <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, two of the most successful investments that propelled his personal net worth to over $4.0bn.</li>
<li>We think the exit of high profile Chinese investors who has on the ground knowledge of Chinese politics (amidst the regulatory scrutiny and Xi’s push for common prosperity) could rattle both domestic and overseas investors. Meanwhile, Pinduoduo’s valuation multiples have significant further downside risk, possibly prolonging the weakness that lasted since March 2021.</li>
</ul>


It was reported yesterday that the Chinese venture capitalist, Neil Shen who heads Sequoia Capital China has decided to trim his personal investments in Pinduoduo (PDD US) and Meituan (3690 HK), two of the most successful investments that propelled his personal net worth to over $4.0bn.
We think the exit of high profile Chinese investors who has on the ground knowledge of Chinese politics (amidst the regulatory scrutiny and Xi’s push for common prosperity) could rattle both domestic and overseas investors. Meanwhile, Pinduoduo’s valuation multiples have significant further downside risk, possibly prolonging the weakness that lasted since March 2021.


Pinduoduo: Foreign Investors Could Panic as VC Chief Trims His Holdings

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

The State Administration for Market Regulation, China's antitrust regulator, imposed a fine of RMB3.4 billion (USD530 million) on food delivery group <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> for abusing its market position and ordered the company to rectify its operations.Amongst other required remedial actions, Meituan was ordered to return deposit money to merchants. Merchant had reportedly used deposits, algorithms, and data to ensure that its restaurant merchants remained loyal to the platform, according to an <a href="https://www.ft.com/content/8862b118-75ad-45b1-85df-b3fa09d26ac3" target="_blank" rel="noopener">FT article</a>. This begs the question. Why are merchant deposits required by e-commerce companies like Meituan, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>? After all, most of the merchant transactions are 3P, which means the platforms do not carry any inventory risk and therefore do not need merchant deposits to offset risks. Could it be to increase switching costs or even to hold merchants ransom as the FT article suggests. In this Insight, we discuss how merchant deposits and merchant payables have been used as a means to pad operating cashflows (even though they are not strictly free cashflows), particularly for fast growing e-commerce platforms.Further, we have seen the "walled gardens" of China's tech giants <a href="https://www.scmp.com/tech/big-tech/article/3148572/big-techs-walled-gardens-start-crack-tencent-vows-follow-beijings" target="_blank" rel="noopener">start to crack</a> - in other words, merchants can freely switch platforms taking away merchant deposits with them, which could potentially affect cashflows.

The State Administration for Market Regulation, China's antitrust regulator, imposed a fine of RMB3.4 billion (USD530 million) on food delivery group Meituan (3690 HK) for abusing its market position and ordered the company to rectify its operations.Amongst other required remedial actions, Meituan was ordered to return deposit money to merchants. Merchant had reportedly used deposits, algorithms, and data to ensure that its restaurant merchants remained loyal to the platform, according to an FT article. This begs the question. Why are merchant deposits required by e-commerce companies like Meituan, Alibaba Group (9988 HK) and Pinduoduo (PDD US)? After all, most of the merchant transactions are 3P, which means the platforms do not carry any inventory risk and therefore do not need merchant deposits to offset risks. Could it be to increase switching costs or even to hold merchants ransom as the FT article suggests. In this Insight, we discuss how merchant deposits and merchant payables have been used as a means to pad operating cashflows (even though they are not strictly free cashflows), particularly for fast growing e-commerce platforms.Further, we have seen the "walled gardens" of China's tech giants start to crack - in other words, merchants can freely switch platforms taking away merchant deposits with them, which could potentially affect cashflows.  

Merchant Deposits and Payables to Pad Cashflows - Who's Culpable?

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>We expect PDD to report the highest growth in topline for 4Q23 over last three years. In particular, we believe its bottom line will beat by wide margin.</li>
<li>But easy days are gone for PDD’s domestic e-commerce business and high base will kick in from 1Q24, resulting in tough comps, notable deceleration and potentially short-term share price volatility.</li>
<li>We see 20% upside to current PDD valuation by assigning 20xPE to our US$12 billion adjusted net profit estimate for 2024.</li>
</ul>


We expect PDD to report the highest growth in topline for 4Q23 over last three years. In particular, we believe its bottom line will beat by wide margin.
But easy days are gone for PDD’s domestic e-commerce business and high base will kick in from 1Q24, resulting in tough comps, notable deceleration and potentially short-term share price volatility.
We see 20% upside to current PDD valuation by assigning 20xPE to our US$12 billion adjusted net profit estimate for 2024.


Pinduoduo (PDD US): Another Strong Beat Around the Corner

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>PDD Holdings Inc. surpassed Wall Street's revenue and earnings expectations, with total revenue reaching RMB 68.8 billion, marking a 94% year-on-year increase.</li><li>In the third quarter, they responded to a growing demand for consumption upgrades by introducing impactful promotions like the Summer Carnival, Duo Duo Harvest Festival, National Brand Festival, and Duo Duo Reading Month.</li><li>PDD also collaborated with over 100 Chinese national brands for the National Goods Festival, promoting top brands through live streaming sessions.</li></ul>

PDD Holdings Inc. surpassed Wall Street's revenue and earnings expectations, with total revenue reaching RMB 68.8 billion, marking a 94% year-on-year increase.In the third quarter, they responded to a growing demand for consumption upgrades by introducing impactful promotions like the Summer Carnival, Duo Duo Harvest Festival, National Brand Festival, and Duo Duo Reading Month.PDD also collaborated with over 100 Chinese national brands for the National Goods Festival, promoting top brands through live streaming sessions.

PDD Holdings Inc.: Exploring the Game-Changing Strategies Behind Their Success! - Major Drivers

China

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)

GoTo IPO - Valuation - Missed the Tide, Boat Won’t Rise

GoTo aims to raise around US$1.25bn from a local listing, which will mainly be targeted at domestic investors. In this note, we talk about its...

Sumeet Singh

Pinduoduo: Foreign Investors Could Panic as VC Chief Trims His Holdings

We think the exit of high profile Chinese investors who has on the ground knowledge of Chinese politics could rattle both domestic and overseas...

Oshadhi Kumarasiri

Merchant Deposits and Payables to Pad Cashflows - Who's Culpable?

Merchant deposits and merchant payables have been used to pad operating cashflows (even though they are not free cashflows), particularly for fast...

Jason Yap, CFA

Pinduoduo (PDD US): Another Strong Beat Around the Corner

For 4Q23, we expect PDD to report highest revenue growth rate in 3 years and strong beat in bottom line. Yet muted earnings in 1Q24 will likely...

Eric Chen

PDD Holdings Inc.: Exploring the Game-Changing Strategies Behind Their Success! - Major Drivers

PDD Holdings Inc. surpassed Wall Street's revenue and earnings expectations, with total revenue reaching RMB 68.8 billion, marking a 94%...

Baptista Research

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