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

OneConnect Financial Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/oneconnect-financial-techno" target="_blank" data-smartkarma-citation="entities:28432:1" rel="noopener">OneConnect Financial Technology (OCFT US)</a> (OC) raise around US$312m in its US listing. OC is a part of Ping An group. It provides cloud-native technology applications and technology-enabled services to financial institutions. </p></div><div><p>In my previous notes, I spoke about the company’s products, its past growth and the heady valuation:</p></div><div><ul>
<li><a href="https://www.smartkarma.com/insights/oneconnect-financial-pre-ipo-the-positives-prospects-appear-promising" target="_blank" rel="noopener">OneConnect Financial Pre-IPO - The Positives - Prospects Appear Promising</a></li>
<li>
<a href="https://www.smartkarma.com/insights/oneconnect-financial-pre-ipo-the-negatives-previous-valuation-might-have-been-too-demanding" target="_blank" rel="noopener">OneConnect Financial Pre-IPO - The Negatives - Previous Valuation Might Have Been Too Demanding, </a>and</li>
<li><a href="https://www.smartkarma.com/insights/oneconnect-financial-ipo-even-the-sizeable-down-round-might-not-be-enough" target="_blank" rel="noopener">OneConnect Financial IPO - Even the Sizeable Down Round Might Not Be Enough</a></li>
<li><a href="https://www.smartkarma.com/insights/oneconnect-financial-ipo-getting-closer-to-fair-value-but-not-there-yet" target="_blank" rel="noopener">OneConnect Financial IPO - Getting Closer to Fair Value but Not There Yet</a></li>
</ul></div><div><p>In this note, I'll look at the deal dynamics and provide a table with implied valuation at different share price levels.</p></div>

OneConnect Financial Technology (OCFT US) (OC) raise around US$312m in its US listing. OC is a part of Ping An group. It provides cloud-native technology applications and technology-enabled services to financial institutions. In my previous notes, I spoke about the company’s products, its past growth and the heady valuation:
OneConnect Financial Pre-IPO - The Positives - Prospects Appear Promising

OneConnect Financial Pre-IPO - The Negatives - Previous Valuation Might Have Been Too Demanding, and
OneConnect Financial IPO - Even the Sizeable Down Round Might Not Be Enough
OneConnect Financial IPO - Getting Closer to Fair Value but Not There Yet
In this note, I'll look at the deal dynamics and provide a table with implied valuation at different share price levels.

OneConnect Financial IPO Trading - One of the Lowest Levels of First Day Trading Volume

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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>OneConnect Financial Technology (OCFT) is a leading technology as-a-service platform for financial institutions in China. The company has seen strong growth in revenue over the last eleven quarters, however, the revenue growth has been decelerating since the beginning of 2019. The company has not yet begun making operating profits but the operating losses as a percentage of revenue have been declining on a quarter-over-quarter basis.</p><p>OCFT was started off as the financial technology solution arm of Ping An Group and the company generates about 45% of revenue from Ping An Group. In addition to Ping An, its associate Lufax Group is also a significant customer of OCFT with about 12% of revenue in 9M2019. These two customers account for about 57% of total revenue which exposes the company to significant customer concentration risk. In addition, we are concerned about the company’s customer acquisition and revenue per customer which we believe is on a declining trend. OCFT’s financial disclosures are abrupt as we have observed changes in disclosures from one period to another. In addition, the company’s high operating cash burn is also a concern.</p><p>OCFT has filed to list its shares in the US to raise approximately US$468m at the midpoint of its indicative IPO price range of US$12-14 per ADR. We believe the company’s shares are overvalued at the above price range. In addition, we have also highlighted governance related concerns such as the controlling shareholder, related-party transactions and the impact of having a VIE structure in place.</p><p>A large number of unprofitable Chinese tech stocks with good growth potential have been queueing up to list their shares in the US, however, a majority of these IPOs have failed to attract large institutional investors in the US. Most of these Chinese stocks trade thinly following their US listings due to low liquidity as most of these stocks are owned by<strong> a</strong> few insiders.</p>

OneConnect Financial Technology (OCFT) is a leading technology as-a-service platform for financial institutions in China. The company has seen strong growth in revenue over the last eleven quarters, however, the revenue growth has been decelerating since the beginning of 2019. The company has not yet begun making operating profits but the operating losses as a percentage of revenue have been declining on a quarter-over-quarter basis.OCFT was started off as the financial technology solution arm of Ping An Group and the company generates about 45% of revenue from Ping An Group. In addition to Ping An, its associate Lufax Group is also a significant customer of OCFT with about 12% of revenue in 9M2019. These two customers account for about 57% of total revenue which exposes the company to significant customer concentration risk. In addition, we are concerned about the company’s customer acquisition and revenue per customer which we believe is on a declining trend. OCFT’s financial disclosures are abrupt as we have observed changes in disclosures from one period to another. In addition, the company’s high operating cash burn is also a concern.OCFT has filed to list its shares in the US to raise approximately US$468m at the midpoint of its indicative IPO price range of US$12-14 per ADR. We believe the company’s shares are overvalued at the above price range. In addition, we have also highlighted governance related concerns such as the controlling shareholder, related-party transactions and the impact of having a VIE structure in place.A large number of unprofitable Chinese tech stocks with good growth potential have been queueing up to list their shares in the US, however, a majority of these IPOs have failed to attract large institutional investors in the US. Most of these Chinese stocks trade thinly following their US listings due to low liquidity as most of these stocks are owned by a few insiders.

OneConnect Financial Technology IPO: Connections at Loose Ends

China

Ping An Insurance (Group) Company of China Limited provides products and services through its five ecosystems in financial services, healthcare, auto services, real estate services and Smart City solutions. The Group's insurance business writes property, casualty, and life insurance products.

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Ping An Insurance Group of (PNGAY US)

OneConnect Financial IPO Trading - One of the Lowest Levels of First Day Trading Volume

OneConnect Financial Technology (OCFT US) (OC) raise around US$312m in its US listing. OC is a part of Ping An group. It provides cloud-native...

Sumeet Singh

OneConnect Financial Technology IPO: Connections at Loose Ends

OneConnect Financial Technology (OCFT) is a leading technology as-a-service platform for financial institutions in China. The company has seen...

Shifara Samsudeen, ACMA, CGMA

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