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

EBeauty Holdings / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/ebeauty-holdings" target="_blank" data-smartkarma-citation="entities:33505:1" rel="noopener">EBeauty Holdings (1894926D HK)</a> is the largest beauty brand e-commerce enablement service provider by GMV (gross merchandise value) facilitated or generated in China, with a market share of 13.3% in 2020, according to iResearch. eBeauty primarily executes the branding and marketing strategies that the brand partners have designed, operating their official online stores, while in some cases it provides marketing strategy advisory to brand partners to help them formulate their marketing strategies.</p><p>eBeauty is pre-marketing an HKEx IPO to raise around $600 million, according to press reports. The shareholders include Genesis Capital, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a> and Mass Ave Global.</p><p>eBeauty is a play on the rising complexity of China’s beauty e-commerce industry which has resulted in more brands out-sourcing their e-commerce operations to specialized brand e-commerce enablement service providers (such as eBeauty). The beauty e-commerce industry is fast-evolving, with mounting demands for personalised marketing strategy, multi-channel operation capabilities and technology solutions. These demanding requirements force a significant proportion of beauty brands to engage service providers who offer a suite of services in the e-commerce value chain.</p><div class="content-highlight"><p>eBeauty is capitalising on these industry dynamics by delivering solid organic growth, rising margins and good cash generation. Overall, we believe that eBeauty is worth a closer look.</p></div>

EBeauty Holdings (1894926D HK) is the largest beauty brand e-commerce enablement service provider by GMV (gross merchandise value) facilitated or generated in China, with a market share of 13.3% in 2020, according to iResearch. eBeauty primarily executes the branding and marketing strategies that the brand partners have designed, operating their official online stores, while in some cases it provides marketing strategy advisory to brand partners to help them formulate their marketing strategies.eBeauty is pre-marketing an HKEx IPO to raise around $600 million, according to press reports. The shareholders include Genesis Capital, Ping An Insurance (H) (2318 HK), Bilibili Inc (BILI US) and Mass Ave Global.eBeauty is a play on the rising complexity of China’s beauty e-commerce industry which has resulted in more brands out-sourcing their e-commerce operations to specialized brand e-commerce enablement service providers (such as eBeauty). The beauty e-commerce industry is fast-evolving, with mounting demands for personalised marketing strategy, multi-channel operation capabilities and technology solutions. These demanding requirements force a significant proportion of beauty brands to engage service providers who offer a suite of services in the e-commerce value chain.eBeauty is capitalising on these industry dynamics by delivering solid organic growth, rising margins and good cash generation. Overall, we believe that eBeauty is worth a closer look.

EBeauty Holdings IPO Initiation: Attention Pays

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.

Yatsen Holding Ltd / Equity Capital Markets

<div><p>Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. </p></div><div><p>I have covered various aspects of the deal in my earlier notes, links to which are below:</p></div><div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-pre-ipo-growing-fast-but-slowing-down" target="_blank" rel="noopener">Yatsen Pre-IPO - Growing Fast but Slowing Down</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-ipo-pricey-but-it-comes-with-strong-investor-backing" target="_blank" rel="noopener">Yatsen IPO - Pricey but It Comes with Strong Investor Backing</a></li></ul><p>In this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.</p>

Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. I have covered various aspects of the deal in my earlier notes, links to which are below:Yatsen Pre-IPO - Growing Fast but Slowing DownYatsen IPO - Pricey but It Comes with Strong Investor BackingIn this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.

Yatsen IPO Trading - A Little More Pricey Now

<p>Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. </p><p>Yatsen was founded in 2016 and has since then launched three color cosmetics and skincare brands. Together, these brands have served 23.4m customers in 2019. According to the CIC report, Perfect Diary became the top color cosmetics brand in China in terms of online retail sales in 2019.</p><p>Its revenue increased by 4.7x in 2019 and was up 73% YoY over 9M20. The increase in revenue was driven by a 2.4x increase in its customer base in 2019 and another 50% YoY growth over 9M20. Yatsen operates a DTC model and does most of its marketing through its network of 15,000 KOLs. </p><p>On the flip side, growth for its biggest brand slowed down considerably over 9M20. At the same time, its selling and marketing expenses have ballooned leading to the company again reporting losses over 9M20. There is also the case of its founders repeatedly selling shares to the company.</p><p>In terms of valuation, the company hasn’t generated consistent profits, hence, one can only compare it on EV/Sales basis, on which measure it looks alright. However, the timing of future profitability remains uncertain given the turnaround in selling and marketing expenses in FY20, the continued offline expansion and the company’s growing penchant for acquisitions.</p><p>Link to my previous note:</p><p><a href="https://www.smartkarma.com/insights/yatsen-pre-ipo-growing-fast-but-slowing-down" target="_blank" rel="noopener">Yatsen Pre-IPO - Growing Fast but Slowing Down</a></p>

Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. Yatsen was founded in 2016 and has since then launched three color cosmetics and skincare brands. Together, these brands have served 23.4m customers in 2019. According to the CIC report, Perfect Diary became the top color cosmetics brand in China in terms of online retail sales in 2019.Its revenue increased by 4.7x in 2019 and was up 73% YoY over 9M20. The increase in revenue was driven by a 2.4x increase in its customer base in 2019 and another 50% YoY growth over 9M20. Yatsen operates a DTC model and does most of its marketing through its network of 15,000 KOLs. On the flip side, growth for its biggest brand slowed down considerably over 9M20. At the same time, its selling and marketing expenses have ballooned leading to the company again reporting losses over 9M20. There is also the case of its founders repeatedly selling shares to the company.In terms of valuation, the company hasn’t generated consistent profits, hence, one can only compare it on EV/Sales basis, on which measure it looks alright. However, the timing of future profitability remains uncertain given the turnaround in selling and marketing expenses in FY20, the continued offline expansion and the company’s growing penchant for acquisitions.Link to my previous note:Yatsen Pre-IPO - Growing Fast but Slowing Down

Yatsen IPO - Pricey but It Comes with Strong Investor Backing

<div>
<p><a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. </p>
<p>Yatsen has launched its IPO at a price range of $8.50-10.50 per ADS. Indications of interest have been received for up to $300 million of the offer shares. Existing shareholders, Hillhouse Capital and Tiger Global will subscribe for $120 million and $80 million of the offer shares, respectively. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Yunfeng Financial Group will subscribe for $50 million and $50 million of the offer shares, respectively. Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yatsen-ipo-initiation-face-the-facts" target="_blank" data-smartkarma-citation="insights:44817" rel="noopener">Yatsen IPO Initiation: Face the Facts</a>, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. In <a href="https://www.smartkarma.com/insights/yatsen-ipo-comparison-with-leading-domestic-brands" target="_blank" data-smartkarma-citation="insights:45198" rel="noopener">Yatsen IPO: Comparison with Leading Domestic Brands</a> we noted that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. Our valuation analysis suggests that IPO price is unattractive and we would be inclined to give the IPO a pass. </p></div></div></div>


Yatsen Holding (YSG US) is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. 
Yatsen has launched its IPO at a price range of $8.50-10.50 per ADS. Indications of interest have been received for up to $300 million of the offer shares. Existing shareholders, Hillhouse Capital and Tiger Global will subscribe for $120 million and $80 million of the offer shares, respectively. Tencent Holdings (700 HK) and Yunfeng Financial Group will subscribe for $50 million and $50 million of the offer shares, respectively. Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range. 
In Yatsen IPO Initiation: Face the Facts, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. In Yatsen IPO: Comparison with Leading Domestic Brands we noted that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. Our valuation analysis suggests that IPO price is unattractive and we would be inclined to give the IPO a pass. 

<p><a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. Founded in 2016, Yasten has three colour cosmetics and skincare brands: <em>Perfect Diary, Little Ondine </em>and <em>Abby’s Choice</em>. </p><p>In <a href="https://www.smartkarma.com/insights/yatsen-ipo-initiation-face-the-facts" target="_blank" data-smartkarma-citation="insights:44817" rel="noopener">Yatsen IPO Initiation: Face the Facts</a>, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. Yasten will likely be compared to its A-Share listed peers – <a href="https://www.smartkarma.com/entities/proya-cosmetics-co-ltd" target="_blank" data-smartkarma-citation="entities:26602:1" rel="noopener">Proya Cosmetics (603605 CH)</a>, Guangdong Marubi Biotechnology and <a href="https://www.smartkarma.com/entities/shanghai-jahwa-united-co-a" target="_blank" data-smartkarma-citation="entities:4266:1" rel="noopener">Shanghai Jahwa United Co A (600315 CH)</a>.</p><div class="content-highlight"><p>Despite differing end-product revenue exposure, we think that this comparison is appropriate as they are all plays on China’s beauty market and share some overlap in customers and products. Our analysis suggests that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. </p></div>

Yatsen Holding (YSG US) is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. Founded in 2016, Yasten has three colour cosmetics and skincare brands: Perfect Diary, Little Ondine and Abby’s Choice. In Yatsen IPO Initiation: Face the Facts, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. Yasten will likely be compared to its A-Share listed peers – Proya Cosmetics (603605 CH), Guangdong Marubi Biotechnology and Shanghai Jahwa United Co A (600315 CH).Despite differing end-product revenue exposure, we think that this comparison is appropriate as they are all plays on China’s beauty market and share some overlap in customers and products. Our analysis suggests that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. 

Yatsen IPO: Comparison with Leading Domestic Brands

China

Proya Cosmetics Co., Ltd. operates as a cosmetics products manufacturing company. The Company researches and markets skin care products, make up, body wash, and other related products. Proya Cosmetics markets its products throughout China.

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Proya Cosmetics (603605 CH)

EBeauty Holdings IPO Initiation: Attention Pays

eBeauty is pre-marketing an HKEx IPO to raise around $600 m. eBeauty is capitalising on favourable industry dynamics by delivering solid organic...

Arun George

Yatsen IPO Trading - A Little More Pricey Now

Yatsen Holding raised around US$617m in its US IPO, by pricing its IPO at the top-end of its range. The company is backed by Hillhouse, Tencent and...

Sumeet Singh

Yatsen IPO - Pricey but It Comes with Strong Investor Backing

Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global.

Sumeet Singh

Yatsen IPO: Valuation Insights

Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range of $8.50-10.50 per ADS. Our valuation analysis suggests...

Arun George

Yatsen IPO: Comparison with Leading Domestic Brands

Our analysis suggests that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation.

Arun George

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