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

RLX Technology Inc / Equity Capital Markets

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<p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> has raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p>
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<p>In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, talk about the trading dynamics and provide a valuation table at different  share price levels.</p>
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<p>Links to our previous notes:</p>
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<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-peer-comparison-and-valuation" target="_blank" rel="noopener">RLX Technology Pre-IPO - Peer Comparison and Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-ipo-valuation-has-more-than-doubled-in-two-months" target="_blank" rel="noopener">RLX Technology IPO - Valuation Has More than Doubled in Two Months</a></li>
</ul>
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RLX Technology Inc (RLX US) has raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. 


In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, talk about the trading dynamics and provide a valuation table at different  share price levels.


Links to our previous notes:




RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
RLX Technology Pre-IPO - Peer Comparison and Valuation
RLX Technology IPO - Valuation Has More than Doubled in Two Months



RLX Technology IPO Trading - We Won't Be Chasing

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a>, China’s number one branded e-vapour company, has demonstrated strong growth since inception in January 2018. The company has captured 62.6% of China’s closed-system e-vapour products market during the first 33 months of operations and might find it difficult to maintain domestic revenue growth in high double digits range in future. Even though overseas expansion has the potential to offset the slowdown of domestic revenue growth, RELX’s performance in about 100 overseas markets was thus far unimpressive. However, the IPO valuation seems to imply sustained growth rates. Thus, we would avoid the RLX Technology IPO on long term investment standpoint. However, as a relative play, RLX Technology’s IPO valuation appears to be at a substantial discount to <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, a recent HK IPO in the upstream portion of the e-vapour supply chain. We discuss the details below.</p>

RLX Technology Inc (RLX US), China’s number one branded e-vapour company, has demonstrated strong growth since inception in January 2018. The company has captured 62.6% of China’s closed-system e-vapour products market during the first 33 months of operations and might find it difficult to maintain domestic revenue growth in high double digits range in future. Even though overseas expansion has the potential to offset the slowdown of domestic revenue growth, RELX’s performance in about 100 overseas markets was thus far unimpressive. However, the IPO valuation seems to imply sustained growth rates. Thus, we would avoid the RLX Technology IPO on long term investment standpoint. However, as a relative play, RLX Technology’s IPO valuation appears to be at a substantial discount to Smoore International (6969 HK), a recent HK IPO in the upstream portion of the e-vapour supply chain. We discuss the details below.

RLX Technology IPO Valuation: Smoore International May Not Be The Perfect Hedge

<p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a>, China’s number one branded e-vapor company with a market share of 62.6% of the closed-system e-vapor products, has announced its indicative pricing range at $8-10 per ADS which implies an EV between $11.4-14.3bn.</p><p>At the top end of the IPO price range, our 2022 revenue estimate of $867.7m (Revenue CAGR of 56% through 2019-22) places RLX on 16.5x 2022 EV/Sales. With revenue growth of 93% YoY in 9M20, domestic market share of 62.6% and an overseas footprint in 100 countries by the end of 2020, we believe our revenue estimate is quite reasonable.</p><p>E-vapor OEM, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, whose 2019-22 revenue CAGR is 35% is currently trading at 2022 EV/Sales of 19.0x, 15% above RLX’s 2022 EV/Sales multiple. Therefore, RLX’s 16.5x 2022 EV/Sales multiple does not seem so unreasonable, especially considering the current behavior of capital markets.</p><p>The IPO valuation looks attractive and possibly have a decent upside in the short term. However, there are some significant risks associated with investing in RLX which investors need to be aware of before deciding to subscribe to the IPO.</p>

RLX Technology Inc (RLX US), China’s number one branded e-vapor company with a market share of 62.6% of the closed-system e-vapor products, has announced its indicative pricing range at $8-10 per ADS which implies an EV between $11.4-14.3bn.At the top end of the IPO price range, our 2022 revenue estimate of $867.7m (Revenue CAGR of 56% through 2019-22) places RLX on 16.5x 2022 EV/Sales. With revenue growth of 93% YoY in 9M20, domestic market share of 62.6% and an overseas footprint in 100 countries by the end of 2020, we believe our revenue estimate is quite reasonable.E-vapor OEM, Smoore International (6969 HK), whose 2019-22 revenue CAGR is 35% is currently trading at 2022 EV/Sales of 19.0x, 15% above RLX’s 2022 EV/Sales multiple. Therefore, RLX’s 16.5x 2022 EV/Sales multiple does not seem so unreasonable, especially considering the current behavior of capital markets.The IPO valuation looks attractive and possibly have a decent upside in the short term. However, there are some significant risks associated with investing in RLX which investors need to be aware of before deciding to subscribe to the IPO.

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.

<div><p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> is the leading branded e-vapour company in China with 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. RLX has launched its IPO at a price range of $8.00-10.00 per ADS. At the mid-point of the IPO price range, RLX will raise net proceeds of $1.0 billion at a market cap of $14.0 billion. </p></div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/rlx-technology-ipo-initiation-smoke-signals" target="_blank" data-smartkarma-citation="insights:46758" rel="noopener">RLX Technology IPO Initiation: Smoke Signals</a>, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. In <a href="https://www.smartkarma.com/insights/rlx-technology-vs-smoore-which-is-a-better-play-on-the-vaping-market" target="_blank" data-smartkarma-citation="insights:46851" rel="noopener">RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?</a>,  we compared RLX and <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>’s business model and fundamentals. Our analysis showed that subject to the IPO valuation, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability. </p>
<p>The proposed IPO price range is more than double the valuation of the last raise - Series D-2 at $36.2 per share in September 2020 ($3.62 per share post the 10-for-1 share subdivision effected on 11 January 2021). Each ADS represents one Class A ordinary share. RLX partly justifies the significant bump on the 71% rise in Smoore's share price in 4Q20. RLX will be invariably benchmarked to Smoore on a relative valuation basis which will helpfully provide support for the proposed IPO price range. </p>
<div class="content-highlight"><p>Overall, our valuation analysis suggests that RLX is fully priced at the IPO price range and we would be inclined to participate at most at the low-end of the IPO price range.</p></div>
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RLX Technology Inc (RLX US) is the leading branded e-vapour company in China with 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. RLX has launched its IPO at a price range of $8.00-10.00 per ADS. At the mid-point of the IPO price range, RLX will raise net proceeds of $1.0 billion at a market cap of $14.0 billion. 
In RLX Technology IPO Initiation: Smoke Signals, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. In RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?,  we compared RLX and Smoore International (6969 HK)’s business model and fundamentals. Our analysis showed that subject to the IPO valuation, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability. 
The proposed IPO price range is more than double the valuation of the last raise - Series D-2 at $36.2 per share in September 2020 ($3.62 per share post the 10-for-1 share subdivision effected on 11 January 2021). Each ADS represents one Class A ordinary share. RLX partly justifies the significant bump on the 71% rise in Smoore's share price in 4Q20. RLX will be invariably benchmarked to Smoore on a relative valuation basis which will helpfully provide support for the proposed IPO price range. 
Overall, our valuation analysis suggests that RLX is fully priced at the IPO price range and we would be inclined to participate at most at the low-end of the IPO price range.


<div><p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p></div><div><p>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</p></div><div><p>Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.</p></div><div><p>However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.</p></div><div><p>In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, we'll run the deal through our ECM framework and comment on updates in the new filing.</p></div><div><p><strong>Links to our previous notes:</strong></p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-peer-comparison-and-valuation" target="_blank" rel="noopener">RLX Technology Pre-IPO - Peer Comparison and Valuation</a></li>
</ul></div>

RLX Technology Inc (RLX US) aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, we'll run the deal through our ECM framework and comment on updates in the new filing.Links to our previous notes:

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
RLX Technology Pre-IPO - Peer Comparison and Valuation


RLX Technology IPO - Valuation Has More than Doubled in Two Months

China

Smoore International Holdings Limited offering vaping technology solutions with advanced research and development technology. The Company manufactures and produces closed system vaping devices, self branded open system vaping devices, vaping components, and other products. Smoore International Holdings markets its products throughout Hong Kong.

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Smoore International Holdings (6969 HK)

RLX Technology IPO Trading - We Won't Be Chasing

RLX Technology Inc (RLX US) raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

RLX Technology IPO Valuation: Smoore International May Not Be The Perfect Hedge

RLX’s IPO valuation appears to be at a substantial discount to Smoore, a recent HK IPO in the upstream portion of the e-vapour supply chain....

Oshadhi Kumarasiri

RLX Technology IPO: Risk of Unknowns

RLX Technology, China’s number one branded e-vapor company with a market share of 62.6%, has announced its indicative pricing range at $8-10 per...

Oshadhi Kumarasiri

RLX Technology IPO: Valuation Insights

RLX has launched its IPO to raise net proceeds of $1.0 billion. Overall, RLX is fully priced at the IPO price range and we would be inclined to...

Arun George

RLX Technology IPO - Valuation Has More than Doubled in Two Months

RLX Technology (RLX US) aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

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