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

<a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month. Yesterday, it undertook a share subdivision and ADR to shares ratio adjustment in its EGM.  So far ten companies have undertaken a secondary listing in Hong Kong, raising a total of US$28bn with a range of US$0.5-11.4bn. Along with covering all of the past listings, we have also looked at the drivers for the secondary listings in our earlier notes, links to which are below: <ul>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline looks rich, have three years to move</a>, published in Feb 2021, we looked at the recent updates from the Holding Foreign Companies Accountable Act and Hong Kong Exchanges changes to corporate weighted average voting rights. In this note, we’ll take an early look at the deal and talk about likely timing and impact of the raising.</li>
</ul>In this note, we’ll take a look at the deal and talk about the likely impact of the raising.

Baidu (BIDU US) plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month. Yesterday, it undertook a share subdivision and ADR to shares ratio adjustment in its EGM.  So far ten companies have undertaken a secondary listing in Hong Kong, raising a total of US$28bn with a range of US$0.5-11.4bn. Along with covering all of the past listings, we have also looked at the drivers for the secondary listings in our earlier notes, links to which are below: 

China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline looks rich, have three years to move, published in Feb 2021, we looked at the recent updates from the Holding Foreign Companies Accountable Act and Hong Kong Exchanges changes to corporate weighted average voting rights. In this note, we’ll take an early look at the deal and talk about likely timing and impact of the raising.
In this note, we’ll take a look at the deal and talk about the likely impact of the raising.

Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:<ul>
<li>Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>To have a more balanced representation of the Hong Kong stock market, the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.</li>
<li>To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.</li>
<li>There will be 20-25 'Hong Kong companies' in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and this number will be evaluated at least every 2 years.</li>
<li>All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as well.</li>
</ul>There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:
Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the Hong Kong Hang Seng Index (HSI INDEX). 
To have a more balanced representation of the Hong Kong stock market, the Hong Kong Hang Seng Index (HSI INDEX) constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.
To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.
There will be 20-25 'Hong Kong companies' in the Hong Kong Hang Seng Index (HSI INDEX) and this number will be evaluated at least every 2 years.
All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as well.
There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

HSI Market Consultation: BIG Changes Coming

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.

<a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (1869782D US)</a> provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development. In 2020, Tuya was the largest IoT PaaS business globally as measured by the volume of smart devices powered, according to CIC.Tuya is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (10.8% stake) and NEA (23.9% stake). Jeff Immelt, the former chairman and CEO of <a href="https://www.smartkarma.com/entities/general-electric-co" target="_blank" data-smartkarma-citation="entities:782:1" rel="noopener">General Electric Co (GE US)</a>, is a venture partner at NEA and has been appointed as a director at Tuya. Tuya has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Despite the growing user demand for smart IoT enabled devices driven by increased affordability and improved user experiences, most products are not connected yet. Devices related to smart home and smart business reached 762.8 million in 2019 and is expected to grow to 2.5 billion by 2024, representing a CAGR of 26.7%, according to CIC. This is a huge opportunity for companies that can offer their customers a cost-effective solution to bring their products online. <div class="content-highlight">PaaS is a key enabler to accelerate the launch of smart IoT enabled devices by making the software development cycles and feature update process time and cost-efficient. PaaS is a platform where third-party providers deliver software, infrastructure and hardware tools needed for software developers to build and manage software efficiently. Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. Overall, we believe that Tuya’s fundamentals are attractive.</div>

Tuya Inc (1869782D US) provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development. In 2020, Tuya was the largest IoT PaaS business globally as measured by the volume of smart devices powered, according to CIC.Tuya is backed by Tencent Holdings (700 HK) (10.8% stake) and NEA (23.9% stake). Jeff Immelt, the former chairman and CEO of General Electric Co (GE US), is a venture partner at NEA and has been appointed as a director at Tuya. Tuya has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Despite the growing user demand for smart IoT enabled devices driven by increased affordability and improved user experiences, most products are not connected yet. Devices related to smart home and smart business reached 762.8 million in 2019 and is expected to grow to 2.5 billion by 2024, representing a CAGR of 26.7%, according to CIC. This is a huge opportunity for companies that can offer their customers a cost-effective solution to bring their products online. PaaS is a key enabler to accelerate the launch of smart IoT enabled devices by making the software development cycles and feature update process time and cost-efficient. PaaS is a platform where third-party providers deliver software, infrastructure and hardware tools needed for software developers to build and manage software efficiently. Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. Overall, we believe that Tuya’s fundamentals are attractive.

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo's (PDD US)</a> share price skyrocketed 6x in the last 12 months and 2.2x since the regulators released the anti-monopoly guidelines (AML) and opened an investigation on Alibaba on 10 November 2020. We believe investors flocked to PDD as they interpreted <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group's (BABA US)</a> loss as PDD's gain. The current price level implies a 54% Price to GMV premium to Alibaba.There are five reasons why I would consider cashing in the chips and look for better value in Alibaba: 1) Better operating metrics2) Cheaper valuations3) Greater operating efficiency4) PDD's execution risk5) Is PDD really immune from AML?

Pinduoduo's (PDD US) share price skyrocketed 6x in the last 12 months and 2.2x since the regulators released the anti-monopoly guidelines (AML) and opened an investigation on Alibaba on 10 November 2020. We believe investors flocked to PDD as they interpreted Alibaba Group's (BABA US) loss as PDD's gain. The current price level implies a 54% Price to GMV premium to Alibaba.There are five reasons why I would consider cashing in the chips and look for better value in Alibaba: 1) Better operating metrics2) Cheaper valuations3) Greater operating efficiency4) PDD's execution risk5) Is PDD really immune from AML?  

Pinduoduo (PDD US): Know When to Fold, Know When to Run

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

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>, where Gojek recently increased its own stake to 22.16%. 
GIC will invest around US$225m to acquire circa 9% stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> through a rights issue to take place in March.
The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.
<a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.
The potential customer base for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. 
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> probably represents the most serious potential competitive threat for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>.
<div class="content-highlight">
Valuations for the merged <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> have crept up to US$35bn-US$40bn and no doubt an early success with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will help it command a higher multiple on the listing of the combined entity. 
</div>

Gojek (1379371D IJ) just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in Bank Jago Tbk PT (ARTO IJ), where Gojek recently increased its own stake to 22.16%. 
GIC will invest around US$225m to acquire circa 9% stake in Bank Jago Tbk PT (ARTO IJ) through a rights issue to take place in March.
The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.
Bank Jago Tbk PT (ARTO IJ) will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.
The potential customer base for Bank Jago Tbk PT (ARTO IJ) will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. 
Sea Ltd (SE US) is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. Sea Ltd (SE US) probably represents the most serious potential competitive threat for Bank Jago Tbk PT (ARTO IJ).

Valuations for the merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) have crept up to US$35bn-US$40bn and no doubt an early success with Bank Jago Tbk PT (ARTO IJ) will help it command a higher multiple on the listing of the combined entity. 


Gojek (1379371D IJ) - A Leg Up for Digital Finance?

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 (700 HK)

Baidu Secondary Listing Early Look - Will Be One of the Largest Secondary Listings This Year

Baidu plans to raise around US$4-5bn in its secondary listing in Hong Kong. The company is said to be looking at launching an offering this month.

Sumeet Singh

HSI Market Consultation: BIG Changes Coming

Hang Seng Indexes has announced the conclusions of the market consultation and the HSI is going to look different in a years time. Financials see a...

Brian Freitas

Tuya IPO Initiation: Connected Future

Tencent-backed Tuya has filed for an NYSE IPO to raise proceeds of $1 billion, according to press reports. Overall, we believe that Tuya’s...

Arun George

Pinduoduo (PDD US): Know When to Fold, Know When to Run

Pinduoduo's (PDD US) share price jumped 2.2x since last November. The company will have a tough time meeting lofty consensus expectations. Rotate...

Mitchell Kim

Gojek (1379371D IJ) - A Leg Up for Digital Finance?

The move by GIC to invest in Bank Jago represents a vote of confidence in Gojek's digital financial strategy and places it ahead of its competitors...

Angus Mackintosh

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