IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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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

FSN E-Commerce Ventures (Nykaa) / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa) (1003622D IN)</a> provides e-retailing of beauty and fashion products through two verticals Nykaa (beauty and personal care) and Nykaa Fashion (apparel and accessories). Nykaa is the largest speciality beauty and personal care platform in India as measured by the value of products sold in the FY21 and in 5MFY22 (five months ending August), according to RedSeer. </p><p>Nykaa will launch its IPO on 28 October. The IPO comprises a primary raise of Rs6,300 million ($84 million) with the remainder 42.0 million secondary shares. At the indicative price range of Rs1,085-1,125 per share, the gross proceeds are Rs51.8-53.2 billion ($691-714 million). The secondary sellers include promoters Falguni Nayar and Sanjay Nayar (through Sanjay Nayar Family Trust), TPG and Lighthouse.</p><p>In <a href="https://www.smartkarma.com/insights/nykaa-ipo-initiation-beauty-parade" target="_blank" data-smartkarma-citation="insights:58791" rel="noopener">Nykaa IPO Initiation: Beauty Parade</a>, we stated that Nykaa has a strong positioning in India’s e-commerce beauty products industry, underpinned by the strong brand recognition of the ‘Nykaa’ brand. It has been able to retain a large customer base, leading to repeat orders such that existing consumers accounted for 70% of GMV in FY21. Nykaa also has relationships with 2,476 brands but with no dependence on any brand or product. The financial performance is solid with strong growth, rising margins and cash generation. These characteristics should enable Nykaa to hold its own against intensifying competition. We concluded that Nykaa has attractive fundamentals.</p><div class="content-highlight"><p>In this note, we look at the updated prospectus which outlines the 1QFY22 results (for the quarter ending June) and KPIs for 5MFY22 (five months ending August). Overall, the recent results reinforce our view that Nykaa has the ability to deliver strong profitable growth. We will discuss valuation in our next note.  </p></div>

FSN E-Commerce Ventures (Nykaa) (1003622D IN) provides e-retailing of beauty and fashion products through two verticals Nykaa (beauty and personal care) and Nykaa Fashion (apparel and accessories). Nykaa is the largest speciality beauty and personal care platform in India as measured by the value of products sold in the FY21 and in 5MFY22 (five months ending August), according to RedSeer. Nykaa will launch its IPO on 28 October. The IPO comprises a primary raise of Rs6,300 million ($84 million) with the remainder 42.0 million secondary shares. At the indicative price range of Rs1,085-1,125 per share, the gross proceeds are Rs51.8-53.2 billion ($691-714 million). The secondary sellers include promoters Falguni Nayar and Sanjay Nayar (through Sanjay Nayar Family Trust), TPG and Lighthouse.In Nykaa IPO Initiation: Beauty Parade, we stated that Nykaa has a strong positioning in India’s e-commerce beauty products industry, underpinned by the strong brand recognition of the ‘Nykaa’ brand. It has been able to retain a large customer base, leading to repeat orders such that existing consumers accounted for 70% of GMV in FY21. Nykaa also has relationships with 2,476 brands but with no dependence on any brand or product. The financial performance is solid with strong growth, rising margins and cash generation. These characteristics should enable Nykaa to hold its own against intensifying competition. We concluded that Nykaa has attractive fundamentals.In this note, we look at the updated prospectus which outlines the 1QFY22 results (for the quarter ending June) and KPIs for 5MFY22 (five months ending August). Overall, the recent results reinforce our view that Nykaa has the ability to deliver strong profitable growth. We will discuss valuation in our next note.  

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Yunnan Botanee Bio-Technology / Equity Bottom-Up

<p>On August 10, <a href="https://www.smartkarma.com/entities/yunnan-botanee-bio-technology" target="_blank" data-smartkarma-citation="entities:33954:1" rel="noopener">Yunnan Botanee Bio-Technology (300957 CH)</a> released its 2021/1H financial results. In the first half of 2021, Botanee achieved revenue of RMB1.412 billion, up 49.94% YoY. Net profit attributed to shareholders was RMB265 million, up 65.28% YoY. Net profit after deducting non-recurring gains and losses was RMB253 million, up 68.46% YoY. The performance was outstanding, but the market seemed to have very modest response. Botanee’s share price was just up 1.02% on August 11 and 3.98% on August 12 but down 5.35% on August 13. So, how is this Company? What are the concerns behind positive financial results?</p>

On August 10, Yunnan Botanee Bio-Technology (300957 CH) released its 2021/1H financial results. In the first half of 2021, Botanee achieved revenue of RMB1.412 billion, up 49.94% YoY. Net profit attributed to shareholders was RMB265 million, up 65.28% YoY. Net profit after deducting non-recurring gains and losses was RMB253 million, up 68.46% YoY. The performance was outstanding, but the market seemed to have very modest response. Botanee’s share price was just up 1.02% on August 11 and 3.98% on August 12 but down 5.35% on August 13. So, how is this Company? What are the concerns behind positive financial results?

Botanee Bio-Technology (300957.CH)-The Success of WINONA Cannot Cover up the Concerns on the Outlook

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

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)

Nykaa IPO: On Trend

In this note, we look at the updated prospectus which outlines 1QFY22 results and KPIs for 5MFY22. The recent results reinforce our view that Nykaa...

Arun George

Botanee Bio-Technology (300957.CH)-The Success of WINONA Cannot Cover up the Concerns on the Outlook

The article analyzed a popular skin care product company Botanee in terms of the market potential, 2021H1 performance, strength, comparison with...

Xinyao (Criss) Wang

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

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