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

Alibaba Group Holding  / Equity Bottom-Up

<ul class="">
<li>Alibaba (BABA) is selling BigBasket.com to Tata Group.</li>
<li>It is rumored that Alibaba (BABA) will dismiss the Xiami Music team.</li>
<li>Xiaomi (1810 HK) issued 1 billion shares at the price of HK$23.70.</li>
<li>Trip.com (TCOM)’s revenue decreased by 48% yoy in 3Q20.</li>
</ul>


Alibaba (BABA) is selling BigBasket.com to Tata Group.
It is rumored that Alibaba (BABA) will dismiss the Xiami Music team.
Xiaomi (1810 HK) issued 1 billion shares at the price of HK$23.70.
Trip.com (TCOM)’s revenue decreased by 48% yoy in 3Q20.


China Internet Weekly (7Dec2020): Alibaba Withdrawing from India and Domestic Music Market

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<div style="text-align: start;">
<strong>Our base case valuation of Airbnb suggests an EV of $39.7 billion, an implied market cap of $45.0 billion, and an implied price per share of $64.3 per share, which would represent a 29% upside from the high end of the IPO price range of $44 to $50 per share.</strong> Given the attractive upside, we have a positive view of the Airbnb IPO. Our base case valuation assumes an estimated sales of $4.8 billion in 2021 (up 37.3% YoY). Our sales estimate of $4.8 billion in 2021 is similar to the company's sales in 2019. </div><div style="text-align: start;"></div><div style="text-align: start;">Our base case valuation also assumes an EV/Sales multiple of 8.3x in 2021, which is the same valuation multiple used for Booking Holdings, one of the comps. The $35 billion in market cap figure (top end of the IPO price range of $50 per share) would imply an EV/S multiple of 6.3x in 2021, if we use an estimated sales of $4.8 billion in 2021. The 6.3x EV/S multiple would be 24% below the valuation multiple of Booking Holdings but 22% higher than the average EV/S multiple of Airbnb's comps.</div>


Our base case valuation of Airbnb suggests an EV of $39.7 billion, an implied market cap of $45.0 billion, and an implied price per share of $64.3 per share, which would represent a 29% upside from the high end of the IPO price range of $44 to $50 per share. Given the attractive upside, we have a positive view of the Airbnb IPO. Our base case valuation assumes an estimated sales of $4.8 billion in 2021 (up 37.3% YoY). Our sales estimate of $4.8 billion in 2021 is similar to the company's sales in 2019. Our base case valuation also assumes an EV/Sales multiple of 8.3x in 2021, which is the same valuation multiple used for Booking Holdings, one of the comps. The $35 billion in market cap figure (top end of the IPO price range of $50 per share) would imply an EV/S multiple of 6.3x in 2021, if we use an estimated sales of $4.8 billion in 2021. The 6.3x EV/S multiple would be 24% below the valuation multiple of Booking Holdings but 22% higher than the average EV/S multiple of Airbnb's comps.

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<p>Chinese super app <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> reported Q320 results earlier this week. Total revenue increased by 29% YoY in the period, but core Operating Profit <em>declined</em> by around 23% YoY, mainly due to growing losses in Meituan's New Initiatives segment. </p><p>Meanwhile, Meituan's largest operating segment, Food Delivery, reported a 33% YoY jump in revenue, driven in part by a 61% increase in advertising and other revenue. However, margins on actual food delivery activity <em>fell</em> sharply compared to both Q319 and Q220. </p><p>The reasons for the sharp dip in food delivery margins in Q320 are still unclear to us, but this crucial source of profits deserves close attention from investors, in our view. We also worry investors may be growing impatient with outsized losses in the New Initiatives segment.</p>

Chinese super app Meituan (3690 HK) reported Q320 results earlier this week. Total revenue increased by 29% YoY in the period, but core Operating Profit declined by around 23% YoY, mainly due to growing losses in Meituan's New Initiatives segment. Meanwhile, Meituan's largest operating segment, Food Delivery, reported a 33% YoY jump in revenue, driven in part by a 61% increase in advertising and other revenue. However, margins on actual food delivery activity fell sharply compared to both Q319 and Q220. The reasons for the sharp dip in food delivery margins in Q320 are still unclear to us, but this crucial source of profits deserves close attention from investors, in our view. We also worry investors may be growing impatient with outsized losses in the New Initiatives segment.

Meituan: 'Delivery Margin' Dipped in Q3 | How Patient Will Investors Be with 'New Initiatives'?

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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/airbnb-inc" target="_blank" data-smartkarma-citation="entities:431:1" rel="noopener">Airbnb Inc (9865065Z US)</a> filed an amended S1 with the Securities and Exchange Commission on 1<sup>st</sup> of December 2020 to offer 50.0m new Class A common shares at an offer price range of $44.0-50.0 per share. The IPO will include an additional 1.9m secondary Class A common shares and an overallotment option of another 5.0m shares. At a deal size of $2.5-2.84 billion (including the over-allotment option), Airbnb IPO could be one of the largest IPOs on the NYSE this year.</li>
<li>Most of the loss-making tech start-ups in the recent past have failed to provide a business model capable of being profitable in the near future. Armed with money from private market funding at almost ridiculous valuations, these start-ups go on to spend big money on customer acquisition (chasing revenue growth) without giving proper attention to the ROI of customer acquisition and marketing spend.</li>
<li>Airbnb’s philosophy is different from those tech start-ups and it is the main reason why we like the company so much. We discuss the details below.</li>
</ul>



Airbnb Inc (9865065Z US) filed an amended S1 with the Securities and Exchange Commission on 1st of December 2020 to offer 50.0m new Class A common shares at an offer price range of $44.0-50.0 per share. The IPO will include an additional 1.9m secondary Class A common shares and an overallotment option of another 5.0m shares. At a deal size of $2.5-2.84 billion (including the over-allotment option), Airbnb IPO could be one of the largest IPOs on the NYSE this year.
Most of the loss-making tech start-ups in the recent past have failed to provide a business model capable of being profitable in the near future. Armed with money from private market funding at almost ridiculous valuations, these start-ups go on to spend big money on customer acquisition (chasing revenue growth) without giving proper attention to the ROI of customer acquisition and marketing spend.
Airbnb’s philosophy is different from those tech start-ups and it is the main reason why we like the company so much. We discuss the details below.


<p>On Tuesday after the US market close, China's leading online travel agency <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> reported Q320 results. Net Revenue declined 48% YoY, and Adjusted Operating Income fell 50%.</p><p>Trip.com's results were largely in-line with guidance and expectations, but we believe the pace of the company's recovery is lagging that of some peers and the industry as a whole, even after adjusting for Trip.com's relatively high exposure to outbound travel, which has collapsed. Trip.com's revenue guidance for Q420 also suggests the pace of its recovery will continue to disappoint in the near-term. </p><p>We don't see anything to get excited about in Trip.com's Q320 results and Q420 guidance. </p>

On Tuesday after the US market close, China's leading online travel agency Trip.com (TCOM US) reported Q320 results. Net Revenue declined 48% YoY, and Adjusted Operating Income fell 50%.Trip.com's results were largely in-line with guidance and expectations, but we believe the pace of the company's recovery is lagging that of some peers and the industry as a whole, even after adjusting for Trip.com's relatively high exposure to outbound travel, which has collapsed. Trip.com's revenue guidance for Q420 also suggests the pace of its recovery will continue to disappoint in the near-term. We don't see anything to get excited about in Trip.com's Q320 results and Q420 guidance. 

Trip.com Q320 Results Met Guidance, But Q420 Guidance Suggests Very Slow Recovery

China

Trip.com Group Ltd. provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services.

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Trip.com (TCOM US)

China Internet Weekly (7Dec2020): Alibaba Withdrawing from India and Domestic Music Market

Alibaba (BABA) are selling BigBasket.com to Tata Group in India and will dismiss Xiami Music in China. Xiaomi will issue new shares.

Ming Lu

Airbnb IPO Valuation Analysis

Our base case valuation of Airbnb suggests an implied market cap of $45.0 billion ($64.3 per share), which would represent a 29% upside from the...

Douglas Kim

Meituan: 'Delivery Margin' Dipped in Q3 | How Patient Will Investors Be with 'New Initiatives'?

Meituan posted strong top-line growth in Q320, but core profitability dipped. We are concerned about 'delivery margin' and wonder how long...

Tracking Traffic

What Sets Airbnb Apart from Others?

Airbnb filed an amended S1 with the Securities and Exchange Commission on 1st of December 2020 to offer 50.0m new Class A common shares at an offer...

Oshadhi Kumarasiri

Trip.com Q320 Results Met Guidance, But Q420 Guidance Suggests Very Slow Recovery

Trip.com met Q320 net revenue guidance but offered guidance for Q420 that assumes only modest progress toward recovery in the current period.

Tracking Traffic

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