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

Weilong Delicious Global Holdi / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/weilong-delicious-global-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33378:1" rel="noopener">Weilong Delicious Global (WDG HK)</a> is a leading spicy snack food company in China. It is one of the fastest-growing and most profitable companies in the snack food industry in China, according to Frost &amp; Sullivan.  </p><p>Weilong is seeking approval for an HKEx IPO to raise up to $1 billion, according to press reports. Weilong’s shareholders include CPE, Hillhouse, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, Yunfeng Capital and Sequoia Capital China. </p><p>Generation Z and the millennials are the primary consumers in the snack food industry in China, as they account for 38.2% of China’s population but 69.2% of snack food consumption, according to Frost &amp; Sullivan. The retail sales value of China’s spicy snack food industry is forecasted to grow at a CAGR of 10.4% from 2020 to 2025 and reach RMB257.0 billion by 2025, according to Frost &amp; Sullivan. As the leading snack food brand as measured by brand awareness among those at or under the age of 25, Weilong is well-placed to tap this market opportunity. </p><div class="content-highlight"><p>Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation. Weilong is also relatively unscathed from the spate of recent regulations that have decimated other sectors, such as the technology and education sector. On balance, we think that Weilong’s fundamentals are attractive.</p></div>

Weilong Delicious Global (WDG HK) is a leading spicy snack food company in China. It is one of the fastest-growing and most profitable companies in the snack food industry in China, according to Frost &amp; Sullivan.  Weilong is seeking approval for an HKEx IPO to raise up to $1 billion, according to press reports. Weilong’s shareholders include CPE, Hillhouse, Tencent (700 HK), Yunfeng Capital and Sequoia Capital China. Generation Z and the millennials are the primary consumers in the snack food industry in China, as they account for 38.2% of China’s population but 69.2% of snack food consumption, according to Frost &amp; Sullivan. The retail sales value of China’s spicy snack food industry is forecasted to grow at a CAGR of 10.4% from 2020 to 2025 and reach RMB257.0 billion by 2025, according to Frost &amp; Sullivan. As the leading snack food brand as measured by brand awareness among those at or under the age of 25, Weilong is well-placed to tap this market opportunity. Weilong offers an appealing mix of robust top-line growth, high margins and strong cash generation. Weilong is also relatively unscathed from the spate of recent regulations that have decimated other sectors, such as the technology and education sector. On balance, we think that Weilong’s fundamentals are attractive.

Weilong Delicious IPO Initiation: Tasty Bite

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.

<div>
<p>ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.</p>
</div>
<div>We covered various aspects of the deal in our earlier notes,</div>
<div>
<ul>
<li>
<a href="https://www.smartkarma.com/compose/insight/59814/ANE%20Logistics%20Pre-IPO%20-%20Margins%20Expanding%20but%20Appears%20to%20Be%20Falling%20Behind" target="_blank" rel="noopener">ANE Logistics Pre-IPO - Margins expanding but appears to be falling behind,</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/ane-logistics-pre-ipo-phip-updates-underlying-growth-is-far-from-clear" target="_blank" rel="noopener">ANE Logistics Pre-IPO - PHIP updates - Underlying growth is far from clear</a> and</li>
<li><a href="https://www.smartkarma.com/insights/ane-logistics-ipo-weird-disclosures-continue" target="_blank" rel="noopener">ANE Logistics IPO - Weird Disclosures Continue</a></li>
</ul>
<p>In this note, we will talk about updates since our last note</p>
</div>


ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.

We covered various aspects of the deal in our earlier notes,



ANE Logistics Pre-IPO - Margins expanding but appears to be falling behind, 

ANE Logistics Pre-IPO - PHIP updates - Underlying growth is far from clear and
ANE Logistics IPO - Weird Disclosures Continue

In this note, we will talk about updates since our last note


ANE Logistics IPO Trading - No Demand, We Would Stay Clear

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>In the past few weeks, Facebook changed its name to Meta, showing its emphasis on the concept as central to its future. Nvidia and AMD have been skyrocketing as investors speculate that in the future, all the large platforms will be putting huge money behind the concept. AMD just got a big win at Facebook to help power its Metaverse. Facebook is putting soooo much behind the metaverse…its almost a shame they couldn’t just buy Roblox.</p><p>This was a fine fine quarter for Roblox, the platform is aging up, growth accelerating internationally, platform extensions abound. But…consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively…not the type of revisions that merits a 30% move higher. 8% short interest doesn’t sound like much, but 4 days to cover on a relatively thin float seems to be the culprit. We would take profits on Roblox and look to re-engage in the $80s.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

In the past few weeks, Facebook changed its name to Meta, showing its emphasis on the concept as central to its future. Nvidia and AMD have been skyrocketing as investors speculate that in the future, all the large platforms will be putting huge money behind the concept. AMD just got a big win at Facebook to help power its Metaverse. Facebook is putting soooo much behind the metaverse…its almost a shame they couldn’t just buy Roblox.This was a fine fine quarter for Roblox, the platform is aging up, growth accelerating internationally, platform extensions abound. But…consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively…not the type of revisions that merits a 30% move higher. 8% short interest doesn’t sound like much, but 4 days to cover on a relatively thin float seems to be the culprit. We would take profits on Roblox and look to re-engage in the $80s.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p>Tencent shows a heavy bias after seeing the touted secondary rejection at 510 with a test on 410 still in the cards. Range congestion fits with a wave five breakdown.</p><p>Our recent update on Tencent touted selling short at 510 for a test on the 410 macro pivot support and still the conviction.</p><p>The flat range sides with a break lower. Note that the HK tech index and the HSI index also mirror a similar pattern. This type of a flat range pattern does fit with a wave 4 congestion followed by a fresh leg down to break that key 410 support.</p><p>Let's see if 410 can hold for a triple bottom?</p>

Tencent shows a heavy bias after seeing the touted secondary rejection at 510 with a test on 410 still in the cards. Range congestion fits with a wave five breakdown.Our recent update on Tencent touted selling short at 510 for a test on the 410 macro pivot support and still the conviction.The flat range sides with a break lower. Note that the HK tech index and the HSI index also mirror a similar pattern. This type of a flat range pattern does fit with a wave 4 congestion followed by a fresh leg down to break that key 410 support.Let's see if 410 can hold for a triple bottom?

Tencent 510 Rejection in Line with Call to Test 410 Macro Pivot

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>Just plain horrible.</p>
<p>Following an indicative pre-market sell-off of 35%, <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc (JOBS US)</a> closed down 19.2%, and is now 20% adrift of the undisturbed price. </p>
<p>The news? As per 51job's <a href="https://ir.51job.com/ir/php/2021/PreRelease20211108.php?1108" target="_blank" rel="noopener">announcement</a>:</p>
<blockquote>
<p>that certain members of the buyer consortium that formed Garnet Faith Limited to acquire the Company ... have been in consultation with Chinese regulators on recent regulatory changes in China that may be applicable to the Company and the Proposed Transaction. The consultation process by these buyer consortium members is currently ongoing and a clear timeline to its completion cannot be provided at this time. </p>
</blockquote>
</div>
<p>"<em>Recent regulatory changes</em>" emerged shortly after <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>'s listing in early July, and a broad regulatory crackdown followed, casting a net over sectors from education to technology. As quoted by Ministry of Industry and Information Technology spokesperson Zhao Zhiguo back in September: "<em>we are guiding relevant companies to carry out self-examination and rectification</em>".</p>
<p>Late last month State Administration for Market Regulation (SAMR) proposed a list of responsibilities it wanted internet platforms to uphold. This latest edict primarily targeted large platforms (such as <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>) and that they should (according to a Reuters <a href="https://www.reuters.com/world/china/china-proposes-guidelines-internet-platform-responsibilities-2021-10-29/" target="_blank" rel="noopener">article</a>) "<em>abide by the principles of fairness when offering services and should open their services up to other platform operators. They should not obtain data without users' consent and should be transparent when using big data to recommend products</em>."  The SAMR said these were draft guidelines that were open to public consultation until yesterday.</p>
<p>51job.com is the leading recruitment website/platform in China. Shares rolled over in July as the regulatory oversight on internet platforms ensnared more sectors/companies. </p>
<p>Yet this latest announcement from 51job provides little new news to what was already known. Timing, admittedly, was not ideal, arriving shortly on the heels of last week's <a href="https://www.sec.gov/Archives/edgar/data/0001295484/000110465921132333/tm2131363d1_sc13da.htm" target="_blank" rel="noopener">announcement</a> that funding for the Offer had progressed.  </p>
<p>The significant price correction yesterday - which could all but be construed as a dealbreak - can ostensibly be put down to short-term investors piling into 51job on the financing news, then turning tail, exiting en-masse after the perceived financing head-fake.  </p>
<p>Yesterday's price movement appears overdone.  The gross spread to terms is now out to 45.8%.</p>
<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/535/original/image_87521874221636431612863.png?1636431613" class="editor-image img-responsive" data-smartkarma-image-id="240535"></figure>
<p>More below the fold.</p>
</div>


Just plain horrible.
Following an indicative pre-market sell-off of 35%, 51 Job Inc (JOBS US) closed down 19.2%, and is now 20% adrift of the undisturbed price. 
The news? As per 51job's announcement:

that certain members of the buyer consortium that formed Garnet Faith Limited to acquire the Company ... have been in consultation with Chinese regulators on recent regulatory changes in China that may be applicable to the Company and the Proposed Transaction. The consultation process by these buyer consortium members is currently ongoing and a clear timeline to its completion cannot be provided at this time. 


"Recent regulatory changes" emerged shortly after DiDi Global (DIDI US)'s listing in early July, and a broad regulatory crackdown followed, casting a net over sectors from education to technology. As quoted by Ministry of Industry and Information Technology spokesperson Zhao Zhiguo back in September: "we are guiding relevant companies to carry out self-examination and rectification".
Late last month State Administration for Market Regulation (SAMR) proposed a list of responsibilities it wanted internet platforms to uphold. This latest edict primarily targeted large platforms (such as Alibaba Group (9988 HK), Tencent (700 HK), and Meituan (3690 HK)) and that they should (according to a Reuters article) "abide by the principles of fairness when offering services and should open their services up to other platform operators. They should not obtain data without users' consent and should be transparent when using big data to recommend products."  The SAMR said these were draft guidelines that were open to public consultation until yesterday.
51job.com is the leading recruitment website/platform in China. Shares rolled over in July as the regulatory oversight on internet platforms ensnared more sectors/companies. 
Yet this latest announcement from 51job provides little new news to what was already known. Timing, admittedly, was not ideal, arriving shortly on the heels of last week's announcement that funding for the Offer had progressed.  
The significant price correction yesterday - which could all but be construed as a dealbreak - can ostensibly be put down to short-term investors piling into 51job on the financing news, then turning tail, exiting en-masse after the perceived financing head-fake.  
Yesterday's price movement appears overdone.  The gross spread to terms is now out to 45.8%.


More below the fold.


China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Weilong Delicious IPO Initiation: Tasty Bite

Weilong is seeking approval for an HKEx IPO to raise up to $1 billion. Weilong offers an appealing mix of robust top-line growth, high margins and...

Arun George

ANE Logistics IPO Trading - No Demand, We Would Stay Clear

ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is...

Sumeet Singh

Roblox 3Q21: 30% Move for THESE Results?

Fine quarter for Roblox, but consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively. We would take profits on Roblox and...

Aaron Gabin

Tencent 510 Rejection in Line with Call to Test 410 Macro Pivot

Tencent shows a heavy bias after seeing the touted secondary rejection at 510 with a test on 410 still in the cards. Range congestion fits with a...

Thomas Schroeder

51job (JOB US): That Was An Overreaction

Trading at a gross spread of 45.8%. I expect this spread to stay wide given the opaqueness of the regulatory overlay, the (likely) vacuum of...

David Blennerhassett

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