Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Numerous media accounts have mentioned that Didi could relaunch its ride-hailing app in China by the end of 2021.</li>
<li>In terms of share price trend, it is starting to form an attractive double bottom pattern, with increasing prices on rising volume. </li>
<li>Our base case valuation of DiDi Global is a target price of $12 per share, which represents a 35% upside from current levels.</li>
</ul>


Numerous media accounts have mentioned that Didi could relaunch its ride-hailing app in China by the end of 2021.
In terms of share price trend, it is starting to form an attractive double bottom pattern, with increasing prices on rising volume. 
Our base case valuation of DiDi Global is a target price of $12 per share, which represents a 35% upside from current levels.


Didi Global - Higher Probability of Relaunching Ride Hailing App in China by the End of 2021

Research on Tech Companies

Evelyn Zhang

Thematic (Sector/Industry)

<p>A series of recent Chinese policies promoting vocational schools instead of traditional secondary education, and efforts to eliminate after-class cramming makes me to recommend short K12 education related stocks and long vocational training related stocks.</p>

A series of recent Chinese policies promoting vocational schools instead of traditional secondary education, and efforts to eliminate after-class cramming makes me to recommend short K12 education related stocks and long vocational training related stocks.

A Twist of Fate – China’s Suppression of Secondary Education in Favor of Vocational Education

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

17 Education & Technology Grou / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/17-education-and-technology-group-inc" target="_blank" data-smartkarma-citation="entities:31033:1" rel="noopener">17 Education and Technology (YQ US)</a> is an online leading education technology company in China. It ranked fifth in online K-12 large-class after-school tutoring market as measured by gross billing and paid course enrolments in 2019 and 1H20, according to Frost &amp; Sullivan.</p></div><div><p>17 Education has launched its IPO at a price range of $9.50-11.50 per ADS. At the mid-point of the IPO price range, 17 Education will raise net proceeds of $265.2 million. Indications of interest have been received for up to $80 million of the offer shares from the CPE Fund, which is managed by China Pinnacle Equity Management. The IPO will be priced on 3 December. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/17-education-technology-ipo-initiation-acquired-taste" target="_blank" data-smartkarma-citation="insights:45820" rel="noopener">17 Education &amp; Technology IPO Initiation: Acquired Taste</a>, we stated that investing in the China online education sector requires acceptance that the high upfront losses are a necessary evil which should generate returns through the lifetime value of K-12 students. For investors comfortable with this dynamic, we believe that 17 Education has attractive fundamentals. Our valuation analysis suggests that the IPO price is attractive. </p></div></div></div>

17 Education and Technology (YQ US) is an online leading education technology company in China. It ranked fifth in online K-12 large-class after-school tutoring market as measured by gross billing and paid course enrolments in 2019 and 1H20, according to Frost &amp; Sullivan.17 Education has launched its IPO at a price range of $9.50-11.50 per ADS. At the mid-point of the IPO price range, 17 Education will raise net proceeds of $265.2 million. Indications of interest have been received for up to $80 million of the offer shares from the CPE Fund, which is managed by China Pinnacle Equity Management. The IPO will be priced on 3 December. In 17 Education &amp; Technology IPO Initiation: Acquired Taste, we stated that investing in the China online education sector requires acceptance that the high upfront losses are a necessary evil which should generate returns through the lifetime value of K-12 students. For investors comfortable with this dynamic, we believe that 17 Education has attractive fundamentals. Our valuation analysis suggests that the IPO price is attractive. 

17 Education & Technology IPO: Valuation Insights

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

China Distance Education Holdings Ltd (ADR) / Event-Driven

China Distance Education Holdings Ltd (ADR)

<p>On 8th June, the top shareholders of <a href="https://www.smartkarma.com/entities/china-distance-education-hldgs-ltd-adr" target="_blank" data-smartkarma-citation="entities:9679:1" rel="noopener">China Distance Education Hldgs Ltd (Adr) (DL US)</a>, Mr.Zhengdong Zhu and his spouse Ms. Baohong Yin, made a "<em><a href="http://ir.cdeledu.com/news_en/PressReleases_en/li2006087242.shtml" target="_blank" rel="noopener">Preliminary Non-Binding Proposal</a></em>" to acquire all the outstanding shares of the company. </p><p>The Offer Price will be US$9.08 in cash per ADS (US$2.27 per ordinary share) and this translates to an implied market cap of US$307mn for the company. </p><p>The Target board has said it had "<em>just received the Proposal Letter and has not had an opportunity to carefully review and evaluate the proposal or make any decision with respect to the Company’s response to the proposal"</em>. </p><p>At the time of writing, the company's shares are at US$8.21 - approximately 9.6% below the Offer Price (10.6% upside).</p><p>In this insight, we take a look at the details of the proposal to evaluate the likelihood of this Deal going through.</p><p>More below the fold. </p>

On 8th June, the top shareholders of China Distance Education Hldgs Ltd (Adr) (DL US), Mr.Zhengdong Zhu and his spouse Ms. Baohong Yin, made a "Preliminary Non-Binding Proposal" to acquire all the outstanding shares of the company. The Offer Price will be US$9.08 in cash per ADS (US$2.27 per ordinary share) and this translates to an implied market cap of US$307mn for the company. The Target board has said it had "just received the Proposal Letter and has not had an opportunity to carefully review and evaluate the proposal or make any decision with respect to the Company’s response to the proposal". At the time of writing, the company's shares are at US$8.21 - approximately 9.6% below the Offer Price (10.6% upside).In this insight, we take a look at the details of the proposal to evaluate the likelihood of this Deal going through.More below the fold. 

China Distance Education (DL US): Takeover Proposal by the Founders

<p><a href="https://www.smartkarma.com/entities/youdao-inc" target="_blank" data-smartkarma-citation="entities:28315:1" rel="noopener">Youdao (DAO US)</a> is the online learning unit of <a href="https://www.smartkarma.com/entities/netease-inc-adr" target="_blank" data-smartkarma-citation="entities:17203:1" rel="noopener">Netease Inc (Adr) (NTES US)</a>, a 66% shareholder. Youdao has launched its IPO at an indicative price range of $15-18 per ADS. Along with a $125 million concurrent private placement, the net proceeds are $208.5 million at the mid-point of the IPO price range.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/youdao-ipo-initiation-chasing-growth-at-all-costs" target="_blank" rel="noopener">our initiation note</a>, we noted that Youdao sits squarely in the growth-at-all-costs, highly-valued private companies category. We believe that Youdao's fundamentals struggle to justify its last private valuation round, let alone any aspiration to come to the public markets with an excessive valuation. Overall, our valuation analysis suggests that the IPO price range is unattractive.</p></div>

Youdao (DAO US) is the online learning unit of Netease Inc (Adr) (NTES US), a 66% shareholder. Youdao has launched its IPO at an indicative price range of $15-18 per ADS. Along with a $125 million concurrent private placement, the net proceeds are $208.5 million at the mid-point of the IPO price range.In our initiation note, we noted that Youdao sits squarely in the growth-at-all-costs, highly-valued private companies category. We believe that Youdao's fundamentals struggle to justify its last private valuation round, let alone any aspiration to come to the public markets with an excessive valuation. Overall, our valuation analysis suggests that the IPO price range is unattractive.

Youdao IPO: Valuation Calls for a Compulsory Re-Education

China

NaaS Technology Inc. operates as an electric vehicle charging services provider. The Company serves customers in China.

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NaaS Technology (NAAS US)

Didi Global - Higher Probability of Relaunching Ride Hailing App in China by the End of 2021

There have been numerous media accounts in the past two days that have mentioned that DiDi Global (DIDI US) is likely to relaunch its ride-hailing...

Douglas Kim

A Twist of Fate – China’s Suppression of Secondary Education in Favor of Vocational Education

Change is afoot in one of China's main social mobility mechanism, the education system. The country is promoting vocational education in an effort...

Evelyn Zhang

17 Education & Technology IPO: Valuation Insights

17 Education has launched its IPO at a price range of $9.50-11.50 per ADS. Our valuation analysis suggests that the IPO price is attractive.

Arun George

China Distance Education (DL US): Takeover Proposal by the Founders

On 8th June, the top shareholders of China Distance Education Hldgs Ltd (Adr) (DL US), Mr.Zhengdong Zhu and his spouse Ms. Baohong Yin, made a...

Janaghan Jeyakumar, CFA

Youdao IPO: Valuation Calls for a Compulsory Re-Education

Youdao (DAO US) is the online learning unit of Netease Inc (Adr) (NTES US), a 66% shareholder. Youdao has launched its IPO at an indicative price...

Arun George

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