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

<div><p><a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a> is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. </p></div><div><p>At the proposed IPO price range of HK$26.50-31.80 per share, Bairong will have a market cap of HK$13,125.2-15,750.2 million ($1.7-2.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$3,440.7 million ($443 million). Three cornerstone investors will purchase $220 million worth of the offer shares (47.29% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Cederberg (a London-based fund manager), China Structural Reform Fund and Franchise Fund. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/bairong-ipo-initiation-creditworthy" target="_blank" data-smartkarma-citation="insights:49249" rel="noopener">Bairong IPO Initiation: Creditworthy</a>, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. </p></div></div></div>

Bairong (1569395D CH) is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. At the proposed IPO price range of HK$26.50-31.80 per share, Bairong will have a market cap of HK$13,125.2-15,750.2 million ($1.7-2.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$3,440.7 million ($443 million). Three cornerstone investors will purchase $220 million worth of the offer shares (47.29% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Cederberg (a London-based fund manager), China Structural Reform Fund and Franchise Fund. In Bairong IPO Initiation: Creditworthy, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. 

<div><p><a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a> is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. Bairong is aiming to launch its $300-500 million HKEx IPO as soon as this Friday, according to press reports. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/bairong-ipo-initiation-creditworthy" target="_blank" data-smartkarma-citation="insights:49249" rel="noopener">Bairong IPO Initiation: Creditworthy</a>, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. In this note, we present our forecasts and take the first look at Bairong's potential valuation. </p></div></div></div>

Bairong (1569395D CH) is a leading independent AI-powered technology platform in China serving the financial services industry. It is the largest independent financial big data analytics solutions provider in China with a 9.0% revenue market share in 2020, according to Frost &amp; Sullivan. Bairong is aiming to launch its $300-500 million HKEx IPO as soon as this Friday, according to press reports. In Bairong IPO Initiation: Creditworthy, we opined that the good 4Q20 revenue growth exit rate points to recovery. We noted that Bairong has the potential to combine solid growth with profitability and cash generation. We concluded that Bairong is worth a closer look. In this note, we present our forecasts and take the first look at Bairong's potential valuation. 

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<p>Sumo Logic set IPO price at $22 per share and successfully raised ~$340 million from the sale of 14.8 million shares of common stock in September. Underwriters have exercised in full their option to purchase ~2.2 million shares at IPO price. Moreover, entities affiliated with Tiger Global Management have agreed to purchase ~1.8 million shares at IPO price too. Therefore, we believe IPO was oversubscribed and Sumo could sell shares to investors at above the initial price range. Despite this fact, shares of Sumo Logic closed at ~$27 a share and climbed 22% on its first trading day.</p><p>However, rally was shortlived and later Sumo Logic shares fell ~37% from all time-high and could find the bottom near $17 a share. Investors were disappointed by slowing revenue growth rates next year, high cash burn rates and increased customer churn for customers with ARR&lt;$100K. </p>

Sumo Logic set IPO price at $22 per share and successfully raised ~$340 million from the sale of 14.8 million shares of common stock in September. Underwriters have exercised in full their option to purchase ~2.2 million shares at IPO price. Moreover, entities affiliated with Tiger Global Management have agreed to purchase ~1.8 million shares at IPO price too. Therefore, we believe IPO was oversubscribed and Sumo could sell shares to investors at above the initial price range. Despite this fact, shares of Sumo Logic closed at ~$27 a share and climbed 22% on its first trading day.However, rally was shortlived and later Sumo Logic shares fell ~37% from all time-high and could find the bottom near $17 a share. Investors were disappointed by slowing revenue growth rates next year, high cash burn rates and increased customer churn for customers with ARR&lt;$100K. 

Sumo Logic. One of the Most Undervalued Unicorns in Our SaaS/Cloud Coverage Universe

<p style="text-align: justify;">Sumo Logic provides best-in-class cloud monitoring, log management, cloud SIEM tools and real-time insights for web and SaaS based apps. Company is looking for innovative ways to reduce costs, exposure to security vulnerabilities and helps organizations at every stage of digital transformation. Sumo Logic has 2,100+ customers, including Airbnb, Anheuser-Busch, Samsung, Fastly, Okta, Sharp, One Medical, Teladoc, Fidelity, Medallia. We have positive view on Sumo Logic despite COVID-19 pandemic and intense competition from Elastic, Splunk and Datadog. Sumo Logic stock currently trades at 10x our FY 2021 revenue estimate of ~$200 million and our Sep 2021 price target of $39 a share implies ~56% upside potential keeping in mind $400 million of cash and cash equivalents after successful IPO.</p><p style="text-align: justify;">Sumo Logic offered ~15 million shares at $22 a share (above the range) and we estimate net proceeds from the offering to reach $300 million. Tiger Global Management has indicated an interest in purchasing up to 10% of the shares in this offering at IPO price. Lead underwriters are Morgan Stanley, J.P. Morgan, RBC Capital Markets and Jefferies.</p>

Sumo Logic provides best-in-class cloud monitoring, log management, cloud SIEM tools and real-time insights for web and SaaS based apps. Company is looking for innovative ways to reduce costs, exposure to security vulnerabilities and helps organizations at every stage of digital transformation. Sumo Logic has 2,100+ customers, including Airbnb, Anheuser-Busch, Samsung, Fastly, Okta, Sharp, One Medical, Teladoc, Fidelity, Medallia. We have positive view on Sumo Logic despite COVID-19 pandemic and intense competition from Elastic, Splunk and Datadog. Sumo Logic stock currently trades at 10x our FY 2021 revenue estimate of ~$200 million and our Sep 2021 price target of $39 a share implies ~56% upside potential keeping in mind $400 million of cash and cash equivalents after successful IPO.Sumo Logic offered ~15 million shares at $22 a share (above the range) and we estimate net proceeds from the offering to reach $300 million. Tiger Global Management has indicated an interest in purchasing up to 10% of the shares in this offering at IPO price. Lead underwriters are Morgan Stanley, J.P. Morgan, RBC Capital Markets and Jefferies.

Sumo Logic IPO. Attractive Valuations For Fast-Growing SaaS Unicorn

United States

Sumo Logic, Inc. provides cloud-based log management and analytics services. The Company enables enterprises to collect and analyze machine data from virtual sources that include servers, virtualization and security infrastructure, network devices, custom applications, and databases. Sumo Logic serves customers worldwide.

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Sumo Logic Inc (SUMO US)

Bairong IPO: Valuation Insights

Bairong has launched its IPO to raise net proceeds of $443m at the mid-point of the IPO price range of HK$26.50-31.80 per share. Our valuation...

Arun George

Bairong IPO: Valuation First Look

Bairong is aiming to launch its $300-500m HKEx IPO as soon as this Friday, according to press reports. In this note, we present our forecasts and...

Arun George

Sumo Logic. One of the Most Undervalued Unicorns in Our SaaS/Cloud Coverage Universe

Investors should pay attention to attractive valuations of Sumo Logic and positive catalyst - forthcoming 3Q FY20 earnings, what may drive stock...

Andrei Zakharov

Sumo Logic IPO. Attractive Valuations For Fast-Growing SaaS Unicorn

Sumo Logic provides best-in-class cloud monitoring, log management, cloud SIEM tools and real-time insights for web and SaaS based apps. Company is...

Andrei Zakharov

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