Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul class="">
<li>We believe revenue will stop slowing down in 3Q21 and 2022.</li>
<li>FinTech not only sells financial products to personal customers, but also provides financial risk management to corporate clients.</li>
<li>WeChat users spend more time on mini-programs of retail and other daily services.</li>
<li>We believe the stock has an upside of 36% for the end of September 2022.</li>
</ul>


We believe revenue will stop slowing down in 3Q21 and 2022.
FinTech not only sells financial products to personal customers, but also provides financial risk management to corporate clients.
WeChat users spend more time on mini-programs of retail and other daily services.
We believe the stock has an upside of 36% for the end of September 2022.


Tencent (700 HK): 3Q21 Outlook: Will Stop Slowing Down, 36% Upside

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

Equity Capital Markets

Quwan Holding Limited / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/quwan-holding-limited" target="_blank" data-smartkarma-citation="entities:34883:1" rel="noopener">Quwan Holding Limited (1478079D CH)</a> is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by Goldman Sachs, CICC, and Jefferies. </p><p>Quwan Network is a gaming-centric mobile social platform provider that operates primarily via its mobile app, TT Chat. According to Frost &amp; Sullivan (F&amp;S), the firm was the largest voice-based mobile social platform and the largest gamer-centric mobile social platform in China in terms of average MAUs in the first half of 2021. In 1H21, the firm had 16.2m average MAUs, and users spent approximately 158 minutes a day in voice chat rooms where on average, 850,000 of them are initiated per day.</p>

Quwan Holding Limited (1478079D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by Goldman Sachs, CICC, and Jefferies. Quwan Network is a gaming-centric mobile social platform provider that operates primarily via its mobile app, TT Chat. According to Frost &amp; Sullivan (F&amp;S), the firm was the largest voice-based mobile social platform and the largest gamer-centric mobile social platform in China in terms of average MAUs in the first half of 2021. In 1H21, the firm had 16.2m average MAUs, and users spent approximately 158 minutes a day in voice chat rooms where on average, 850,000 of them are initiated per day.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div><p>We have covered most aspects of the deal in our earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul></div><div><ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-low-end-still-appear-reasonable-but-stock-will-more-likely-be-driven-by-sentiment" target="_blank" rel="noopener">Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-comparison-with-kakao-bank-and-an-alternate-look-at-valuation" target="_blank" rel="noopener">Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation</a></li>
</ul></div><p>In this note, we will talk about the deal's trading dynamics.</p>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.We have covered most aspects of the deal in our earlier notes:
Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,
Kakao Pay IPO - Peer comparison - local and international, and
Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement
Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment
Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation
In this note, we will talk about the deal's trading dynamics.

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.

<p>Supply constraints. Wage inflation. People shopping in stores. Fixed cost develeraging.</p><p>In 4Q20, Amazon earned $3.3B in EBIT for its retail businesses (NA + International). Amazon guided for $0–$3B in EBIT in 4Q21. If we assume the midpoint of Amazon’s guidance of $1.5B and subtract out the ~$10.5B in profits we expect from AWS and Amazon’s Advertising in 4Q21, that implies Retail is going to lose $9B (!!) in 4Q21. Amazon counts its ads business’ profitability within retail. We presume the Ad business has ~50% EBIT margins…which means this quarter Ads generated $4B in profits, while overall retail was breakeven on GAAP EBIT, meaning core retail lost $4B. Meaning, Amazon will have lost $13B in retail over the 2<sup>nd</sup> half of 2021. That is a staggering number. That only Amazon can absorb. And only Amazon will walk into 2022 with its already fortress retail moat stacked $13B higher than competitors can match. While a good amount of the $13B in losses are structural (wage inflation for instance), A LOT are also transitory…which means 2022 should see some significant operating leverage. THIS is when you invest in Amazon.</p><p> Amazon is our Top 2022 long idea. We think its worth $6,000.</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>

Supply constraints. Wage inflation. People shopping in stores. Fixed cost develeraging.In 4Q20, Amazon earned $3.3B in EBIT for its retail businesses (NA + International). Amazon guided for $0–$3B in EBIT in 4Q21. If we assume the midpoint of Amazon’s guidance of $1.5B and subtract out the ~$10.5B in profits we expect from AWS and Amazon’s Advertising in 4Q21, that implies Retail is going to lose $9B (!!) in 4Q21. Amazon counts its ads business’ profitability within retail. We presume the Ad business has ~50% EBIT margins…which means this quarter Ads generated $4B in profits, while overall retail was breakeven on GAAP EBIT, meaning core retail lost $4B. Meaning, Amazon will have lost $13B in retail over the 2nd half of 2021. That is a staggering number. That only Amazon can absorb. And only Amazon will walk into 2022 with its already fortress retail moat stacked $13B higher than competitors can match. While a good amount of the $13B in losses are structural (wage inflation for instance), A LOT are also transitory…which means 2022 should see some significant operating leverage. THIS is when you invest in Amazon. Amazon is our Top 2022 long idea. We think its worth $6,000.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.

Amazon 3Q21: 4Q’s $9 Billion Consumer Shock Absorber

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

Global Digital Niaga Tbk PT / Private Capital Markets

<p>Founded in 2010, Blibli was one of the pioneers of online shopping malls in Indonesia operating under a B2C model rather unlike its competitors, which have adopted a mixed approach with more focus on the C2C marketplace and adding B2C later. It has branched out to B2B, B2B2C, and B2G (government) and its target market is a more affluent consumer versus <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> and Shopee. Given the private nature of the company, we view BliBli as the Dark Knight of Indonesian e-commerce. </p>
<p>The company is owned by GDP Ventures which is part of Djarum Group, which owns one of the major tobacco companies in Indonesia as well as a controlling stake in<a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" rel="noopener"> Bank Central Asia (BBCA IJ),</a> Indonesia's largest private bank and leader in transactional banking.</p>
<p>BliBli has around 100,000 merchants selling 30,000 local and international brands on the platform covering a total of 16 product different categories.</p>
<p>It has around 18m monthly active users on the platform ranking number five in terms of visitors in 2Q2021, ahead of JD.id and behind <a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a> and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a>.</p>
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<p>BliBli uses a wide range of payment options including GoPay, which is not surprising since it is a shareholder in<a href="https://www.smartkarma.com/entities/gojek" target="_blank" rel="noopener"> Gojek.</a> It has also invested in medical internet provider HaloDoc and took over travel platform Tiket.com in mid-2017.</p>
<p>The company has been bringing more MSMEs onto the platform that produce goods themselves rather than resell items from elsewhere. </p>
<p>BliBli also offers free deliveries plus a multitude of payment options, with its own in-house wallet called BliPay but also uses a multitude of payment and financing options outlined below.</p>
<p>BliBli presents stiff competition with the other major players, with a strong backer in Djarum, which has deep pockets. It is increasingly diversified in its product offering and has its interests well-aligned with the government, especially with its push to bring MSMEs onto the platform.</p>
<p>The company recently announced that it would buy a 51% stake in <a href="https://www.smartkarma.com/entities/supra-boga-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:16780:1" rel="noopener">Supra Boga Lestari (RANC IJ)</a>, which operates upscale supermarket chains including Ranch Market, The Gourmet, and Farmers Market. This potentially increases the company's exposure to online groceries. </p>
<div class="content-highlight">
<p>BliBli is already said to have achieved unicorn status with a valuation of over US$1bn and has appointed advisors Credit Suisse and Morgan Stanley ahead of a potential listing in early 2022 said to be in Jakarta. A valuation above US$1bn should be easily achievable on the first inspection and this IPO will attract the attention of both local and foreign investors.</p>
</div>

Founded in 2010, Blibli was one of the pioneers of online shopping malls in Indonesia operating under a B2C model rather unlike its competitors, which have adopted a mixed approach with more focus on the C2C marketplace and adding B2C later. It has branched out to B2B, B2B2C, and B2G (government) and its target market is a more affluent consumer versus Tokopedia and Shopee. Given the private nature of the company, we view BliBli as the Dark Knight of Indonesian e-commerce. 
The company is owned by GDP Ventures which is part of Djarum Group, which owns one of the major tobacco companies in Indonesia as well as a controlling stake in Bank Central Asia (BBCA IJ), Indonesia's largest private bank and leader in transactional banking.
BliBli has around 100,000 merchants selling 30,000 local and international brands on the platform covering a total of 16 product different categories.
It has around 18m monthly active users on the platform ranking number five in terms of visitors in 2Q2021, ahead of JD.id and behind Bukalapak (BUKA IJ) and Lazada Group (LAZADA SP).



BliBli uses a wide range of payment options including GoPay, which is not surprising since it is a shareholder in Gojek. It has also invested in medical internet provider HaloDoc and took over travel platform Tiket.com in mid-2017.
The company has been bringing more MSMEs onto the platform that produce goods themselves rather than resell items from elsewhere. 
BliBli also offers free deliveries plus a multitude of payment options, with its own in-house wallet called BliPay but also uses a multitude of payment and financing options outlined below.
BliBli presents stiff competition with the other major players, with a strong backer in Djarum, which has deep pockets. It is increasingly diversified in its product offering and has its interests well-aligned with the government, especially with its push to bring MSMEs onto the platform.
The company recently announced that it would buy a 51% stake in Supra Boga Lestari (RANC IJ), which operates upscale supermarket chains including Ranch Market, The Gourmet, and Farmers Market. This potentially increases the company's exposure to online groceries. 

BliBli is already said to have achieved unicorn status with a valuation of over US$1bn and has appointed advisors Credit Suisse and Morgan Stanley ahead of a potential listing in early 2022 said to be in Jakarta. A valuation above US$1bn should be easily achievable on the first inspection and this IPO will attract the attention of both local and foreign investors.


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)

Tencent (700 HK): 3Q21 Outlook: Will Stop Slowing Down, 36% Upside

We believe revenue will stop slowing down in 3Q21 and 2022. FinTech provides financial risk management to corporate clients. WeChat users spend...

Ming Lu

Quwan Holding Limited Pre-IPO Tearsheet

Quwan Holding Limited (1478079D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by Goldman Sachs, CICC,...

Clarence Chu

Kakao Pay IPO Trading - Won't Be Chasing

Kakao Pay, one of South Korea’s largest payment and financial services apps, raised around US$1.3bn in its South Korean IPO. Kakao held a 55% stake...

Sumeet Singh

Amazon 3Q21: 4Q’s $9 Billion Consumer Shock Absorber

Supply constraints. Wage inflation. People shopping in stores. Fixed cost develeraging. Amazon's retail business will lose $13B in 2H21. 2022...

Aaron Gabin

BliBli - Enter The Dark Knight

BliBli is the "Dark Knight" of Indonesian e-commerce, given its private nature, strong market presence, and unicorn status. It has plans to IPO in...

Angus Mackintosh

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