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

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>The IPO space saw a few pops this week, some were somewhat justifiable in <a href="https://www.smartkarma.com/entities/sbfc-finance-limited" target="_blank" data-smartkarma-citation="entities:36713:1" rel="noopener">SBFC Finance Limited</a> and <a href="https://www.smartkarma.com/entities/concord-biotech-ltd" target="_blank" data-smartkarma-citation="entities:36267:1" rel="noopener">Concord Biotech</a> while one was reminisent of the 2020-21 frenzy,  <a href="https://www.smartkarma.com/entities/vinfast-auto-ltd" target="_blank" data-smartkarma-citation="entities:36550:1" rel="noopener">Vinfast</a>. </li>
<li>In the placement space, the selldown for <a href="https://www.smartkarma.com/entities/interglobe-aviation-ltd" target="_blank" data-smartkarma-citation="entities:24877:1" rel="noopener">InterGlobe Aviation Ltd (INDIGO IN)</a> materialised as expected but despite that the deal didn't do much.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
The IPO space saw a few pops this week, some were somewhat justifiable in SBFC Finance Limited and Concord Biotech while one was reminisent of the 2020-21 frenzy,  Vinfast. 
In the placement space, the selldown for InterGlobe Aviation Ltd (INDIGO IN) materialised as expected but despite that the deal didn't do much.


ECM Weekly (20th August 2023) - Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Tencent reported 2Q23 revenue/non-IFRS net income (2.5%)/2.3% vs cons. Gaming was weaker than the street expected, while online advertising beat.</li>
<li>We expect gaming growth will improve slightly while advertising growth will decelerate in 3Q. </li>
<li>We maintain BUY but cut TP to HK$ 402 to reflect online gaming weakness.</li>
</ul>


Tencent reported 2Q23 revenue/non-IFRS net income (2.5%)/2.3% vs cons. Gaming was weaker than the street expected, while online advertising beat.
We expect gaming growth will improve slightly while advertising growth will decelerate in 3Q. 
We maintain BUY but cut TP to HK$ 402 to reflect online gaming weakness.


[Tencent (700 HK, BUY, TP HK$402) TP Change]: Cut TP to HK$ 402 to Reflect Weakness in Gaming

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.</li><li>Non-IFRS net income increased by 33% YoY to RMB37.5bn in 2Q23, beating CMBI/consensus estimate by 7/13%, mainly due to 1) better-than-expected ad revenue growth (+34% YoY); and 2) FBS/ad business GPM expansion (+5.1/8.3ppt YoY).</li><li>Tencent’s investments in Video Account, international games and business services continue to bear fruit, reaccelerating higher margin business segments growth and unleashing operating leverage. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.Non-IFRS net income increased by 33% YoY to RMB37.5bn in 2Q23, beating CMBI/consensus estimate by 7/13%, mainly due to 1) better-than-expected ad revenue growth (+34% YoY); and 2) FBS/ad business GPM expansion (+5.1/8.3ppt YoY).Tencent’s investments in Video Account, international games and business services continue to bear fruit, reaccelerating higher margin business segments growth and unleashing operating leverage. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent  (700 HK) – Solid earnings growth on GPM expansion

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> reported 2Q2023 results today. Revenue grew 11.3% YoY to RMB149.2bn (vs consensus RMB151.1bn) while reported OP increased 34% YoY to RMB40.3bn (vs consensus RMB44.6bn).</li>
<li>Rapid growth in ad business, video account monetisation and cost controls have contributed to Tencent’s 2Q2023 earnings despite domestic gaming business has slowed down.</li>
<li>Though Tencent’s 2Q2023 results show a recovery in earnings, we would interpret the company’s earnings with caution given the slowdown in domestic gaming and social networks businesses.</li>
</ul>



Tencent (700 HK) reported 2Q2023 results today. Revenue grew 11.3% YoY to RMB149.2bn (vs consensus RMB151.1bn) while reported OP increased 34% YoY to RMB40.3bn (vs consensus RMB44.6bn).
Rapid growth in ad business, video account monetisation and cost controls have contributed to Tencent’s 2Q2023 earnings despite domestic gaming business has slowed down.
Though Tencent’s 2Q2023 results show a recovery in earnings, we would interpret the company’s earnings with caution given the slowdown in domestic gaming and social networks businesses.


Tencent: Earnings Miss, Cost Controls Help Margins; Slowdown in Domestic Gaming Is Concerning

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<ul>
<li>In 2Q23, online advertising and FinTech revenues continued to grow rapidly.</li>
<li>Game revenue was slow, but two existing games were still at the top of the game market.</li>
<li>The operating margin improve significantly, benefiting from the layoff last year.</li>
</ul>


In 2Q23, online advertising and FinTech revenues continued to grow rapidly.
Game revenue was slow, but two existing games were still at the top of the game market.
The operating margin improve significantly, benefiting from the layoff last year.


Tencent (700 HK): 2Q23, Ad and FinTech Recovering, Margin Higher, Buy

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

East Money Information Co., Ltd. operates online financial information platform.  The Company's products include internet advertising and financial data.

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

Hithink RoyalFlush Information Network Co Ltd provides online financial data, data analysis software, and other financial software system.

Hithink RoyalFlush Information Network (300033 CH)

People.cn Company Limited mainly engages in internet advertising, information services, mobile value-added and technical services. The Company's main products include original messages, government information services, public opinion research and consulting, mobile news, and ISP services.

Autohome Inc is an online destination for automobile consumers in China.  The Company delivers comprehensive, independent and interactive content to automobile buyers and owners.

Wangsu Science & Technology Co., Ltd. provides online business solutions in China. The Company also provides Content Delivery Network (CDN), and Internet Data Centers (IDC).

Shanghai Wangsu Science & Technology Co (300017 CH)

Beijing Sinnet Technology Company Limited provides customers with broadband access services, IDC and its value-added services, and other internet integrated services. The Company's core business are broadband access services, IDC and its value-added services.

GDS Holdings Limited operates as a holding company. The Company, through its subsidiaries, develops and operates data centers. GDS Holdings offers risk and security management, information technology planing, remote monitoring, cloud hosting, virtualization, disaster recovery, and remote data protection services.

INESA Intelligent Tech Inc. operates in the IT industry. The Company designs and manages cloud servers and big data applications for businesses. INESA Intelligent also manufactures electronic components.

eBay Inc. operates an online trading community.  The Company's service is used by buyers and sellers for the exchange of products and services such as coins, collectibles, computers, memorabilia, stamps and toys, as well as concert and sporting tickets.  eBay also offers, through a subsidiary, secure online payment services.

VeriSign Inc provides domain names and Internet security, enabling the world to connect online with reliability and confidence, anytime, anywhere. The Company ensures the security, stability and resiliency of key Internet infrastructure including the .com and .net top-level domains among others. VeriSign also offers intelligence-driven security services.

GoDaddy, Inc. provides a cloud-based web platform for small businesses, web design professionals and individuals. The Company's platform provides applications that help them connect to their customers, manage their businesses and get found online.

Naver Corp. provides Internet site with web portal services, such as search engine, online game and content development.  The Company also offers marketing service through text and banner advertisement.

CoStar Group Inc. provides building-specific information to the United States commercial real estate industry and related industries. The Company's database details office and industrial space. The database provides digitized photographs and floor plan images on individual commercial buildings in the company's markets.

Yandex NV operates an Internet website in Russia.  The Company's website offers an Internet search engine, news, shopping information, blogs, photographs and videos.  Yandex earns its revenues from online advertising.

SPS Commerce Inc provides on-demand supply chain management solutions through an online hosted software suite.  The Company uses pre-built integrations to eliminate on-premise software and support staff to shorten supply cycle times, optimize inventory levels and reduce costs.

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet; ranging from live and on-demand streaming video capabilities to conventional content on websites, to tools that help people transact business and reach out to new and existing customers.

NEXTDC Ltd. develops data centers. The Company develops and operates carrier and systems integrator neutral data centers in Australia. NEXTDC's customers will also be able to use the data centers as connectivity and content hubs.

AppFolio, Inc. provides cloud-based software solutions. The Company offers a cloud-based property management software that allows apartment and residential property managers to market, manage, and grow their business. AppFolio conducts business in the United States.

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 (700 HK)

ECM Weekly (20th August 2023) - Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

[Tencent (700 HK, BUY, TP HK$402) TP Change]: Cut TP to HK$ 402 to Reflect Weakness in Gaming

We expect gaming growth will improve slightly while advertising growth will decelerate in 3Q. We maintain BUY but cut TP to HK$ 402 to reflect...

Blue Lotus Research Institute

Tencent (700 HK) – Solid earnings growth on GPM expansion

Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.

CMB International

Tencent: Earnings Miss, Cost Controls Help Margins; Slowdown in Domestic Gaming Is Concerning

Tencent's 2Q2023 earnings missed consensus. Rapid growth in advertising, video account monetisation and cost controls have contributed to earnings...

Shifara Samsudeen, ACMA, CGMA

Tencent (700 HK): 2Q23, Ad and FinTech Recovering, Margin Higher, Buy

In 2Q23, online advertising and FinTech revenues continued to grow rapidly. Two existing games were still at the top of the game market. The...

Ming Lu

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