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

Yatsen Holding Ltd / Equity Capital Markets

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<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

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Positive news flow surrounding COVID-19 is encouraging on many fronts. Still, despite encouraging news and the relief rally in global equities, history tells us that this is a fairly standard bear market rally in terms of its magnitude, making us believe the global equity market is not yet out of the woods. We are watching for signs of a turn of the tide. There has been significant damage inflicted and that damage is going to take time to repair. Actionable Themes in this report have representation in Staples, Health Care, Technology, and a collection of bottom-up ideas. </p>

Positive news flow surrounding COVID-19 is encouraging on many fronts. Still, despite encouraging news and the relief rally in global equities, history tells us that this is a fairly standard bear market rally in terms of its magnitude, making us believe the global equity market is not yet out of the woods. We are watching for signs of a turn of the tide. There has been significant damage inflicted and that damage is going to take time to repair. Actionable Themes in this report have representation in Staples, Health Care, Technology, and a collection of bottom-up ideas. 

<p>We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.</p>

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Global Equities (ACWI-US) Likely to Retest the March Low

<p>Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low - and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. In this report we highlight key technical levels and indicators to watch and <span>suggest investment opportunities with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.</span></p>

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low - and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. In this report we highlight key technical levels and indicators to watch and suggest investment opportunities with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Global Equity Strategy: Initial Low Established

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)

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

Major Indexes Testing Resistance

Positive news flow surrounding COVID-19 is encouraging on many fronts. Still, despite encouraging news and the relief rally in global equities,...

Vermilion Research

Global Equities (ACWI-US) Likely to Retest the March Low

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the...

Vermilion Research

Global Equity Strategy: Initial Low Established

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the...

Vermilion Research

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