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

Kerry Express Thailand / Equity Capital Markets

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and also counts VGI as a major shareholder.Kerry Express Thailand is Thailand's largest private express delivery company. As of FY19, it had over 16,000 service locations in all provinces in Thailand, with its next-day delivery service covering 99.9% of Thai population. It also offers same-day delivery service within the Bangkok Metropolitan, Greater Bangkok areas and certain upcountry areas. It delivers more than 1.1m parcels everyday.Revenue tripled over FY17-19, while gross profit was up 2.22x, EBITDA was up 2.36x, and PATMI was up 10.2x. Although, 9M20 operations weren’t anything to write home about with revenue merely being flat YoY.Apart from being a well known brand in Thailand, it presents one of the only ways to get exposure to the e-commerce market. If that wasn’t enough, its cornerstone book is one of the best that I’ve seen, of late.

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and also counts VGI as a major shareholder.Kerry Express Thailand is Thailand's largest private express delivery company. As of FY19, it had over 16,000 service locations in all provinces in Thailand, with its next-day delivery service covering 99.9% of Thai population. It also offers same-day delivery service within the Bangkok Metropolitan, Greater Bangkok areas and certain upcountry areas. It delivers more than 1.1m parcels everyday.Revenue tripled over FY17-19, while gross profit was up 2.22x, EBITDA was up 2.36x, and PATMI was up 10.2x. Although, 9M20 operations weren’t anything to write home about with revenue merely being flat YoY.Apart from being a well known brand in Thailand, it presents one of the only ways to get exposure to the e-commerce market. If that wasn’t enough, its cornerstone book is one of the best that I’ve seen, of late.

Kerry Express Thailand IPO - Time for Delivery

Alpha-Centric ESG Research

Kyle Rudden

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):<ol>
<li>
COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).</li>
<li>
Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated <a href="https://www.hhs.gov/coronavirus/explaining-operation-warp-speed/index.html" target="_blank" rel="noopener">billions</a> to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.</li>
<li>
PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.</li>
</ol>

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):

COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).

Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated billions to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.

PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.


Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

In the September quarter, revenue growth at <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>'s logistics arm CaiNiao Network accelerated sharply, as the unit continued to grow faster than Alibaba, total eCommerce sales, and China's express market.How has CaiNiao Network managed to grow so much faster than eCommerce and associated logistics spending, and what does it mean for China's listed express companies?In this note we identify likely drivers of CaiNiao's superior sales momentum. We also explain the threat CaiNiao's strength poses to the five express companies in which Alibaba has invested.In our view, CaiNiao's growth will make it tougher for commodity-type express companies to breathe. These companies are already under pressure from declining margins and rising CapEx requirements. <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>, which operates mostly outside of Alibaba's orbit and is thus insulated from many of these problems, remains the most attractive name in Chinese express, in our opinion, but <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> is an interesting play on potential M&amp;A in the sector.

In the September quarter, revenue growth at Alibaba Group (BABA US)'s logistics arm CaiNiao Network accelerated sharply, as the unit continued to grow faster than Alibaba, total eCommerce sales, and China's express market.How has CaiNiao Network managed to grow so much faster than eCommerce and associated logistics spending, and what does it mean for China's listed express companies?In this note we identify likely drivers of CaiNiao's superior sales momentum. We also explain the threat CaiNiao's strength poses to the five express companies in which Alibaba has invested.In our view, CaiNiao's growth will make it tougher for commodity-type express companies to breathe. These companies are already under pressure from declining margins and rising CapEx requirements. S.F. Holding (002352 CH), which operates mostly outside of Alibaba's orbit and is thus insulated from many of these problems, remains the most attractive name in Chinese express, in our opinion, but BEST Inc (BEST US) is an interesting play on potential M&amp;A in the sector. 

As Growth Accelerates, Alibaba's CaiNiao Network Is Pushing Aside Commodity-Type Express Firms

After moderating in August, headline express sector volume surged in September. Total parcel volume grew by 44.6% last month, and key inter-city volume was up almost 50%. 
Pricing remains weak, however. For all express shipments, ASPs fell by 12.2%, and the companies that report monthly numbers all reported YoY ASP declines of between 15% and 31%.
In other express sector news: <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a> pre-announced Q3 losses, we check on how <a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a>'s Hong Kong IPO has fared so far, and we note (again) <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> massive scale relative to its Chinese peers -- and it's incredible year of growth. 
We continue to rate SF Holding BUY as we expect it to continue to gain share from peers. We also recently upgraded <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US) </a>to BUY on our expectation that it could become an attractive target once sector M&amp;A takes off. Meanwhile, ZTO remains a SELL in our view.

After moderating in August, headline express sector volume surged in September. Total parcel volume grew by 44.6% last month, and key inter-city volume was up almost 50%. 
Pricing remains weak, however. For all express shipments, ASPs fell by 12.2%, and the companies that report monthly numbers all reported YoY ASP declines of between 15% and 31%.
In other express sector news: STO Express (002468 CH) pre-announced Q3 losses, we check on how ZTO Express (ZTO US)'s Hong Kong IPO has fared so far, and we note (again) S.F. Holding (002352 CH) massive scale relative to its Chinese peers -- and it's incredible year of growth. 
We continue to rate SF Holding BUY as we expect it to continue to gain share from peers. We also recently upgraded BEST Inc (BEST US) to BUY on our expectation that it could become an attractive target once sector M&amp;A takes off. Meanwhile, ZTO remains a SELL in our view. 

TRACKING TRAFFIC/Chinese Express: Pricing Still Weak | STO Q3 Profit Warning | ZTO HK IPO Update

The purpose of this note is to analyze the different eCommerce fulfillment markets pursued by <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> and <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US).</a> KEX focuses on Thailand's domestic express market, while Best has a competing domestic service and is also developing a X-border express service to quickly move Chinese goods into multiple SE Asian markets.To better understand these two markets, we looked at market data from KEX's IPO documents as well as financial data disclosed by eCommerce giant <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>. These figures, combined with numbers from KEX itself and the Chinese express companies, give investors a sense of the size and growth potential of the Thai domestic and X-border eComm fulfillment markets.While both markets offer attractive growth, they also present distinct challenges. In the Thai domestic express market, these challenges include a lack of scale (compared to China's expess market) and relatively low population density, especially outside of Metro Bangkok. Challenges presented by the X-border market include exorbitant pricing, competition from large multinationals, and increased complexity (ie, paperwork, customs, tariffs, etc). We conclude that KEX is an intriguing pure play on Thailand's eCommerce development whose upcoming IPO is worth following. Regarding Best, we recently upgraded its shares to Buy on expected sector consolidation. To date its Thai and X-border revenues remain a very small part of the company's business which probably won't "move the needle" in the near-term.

The purpose of this note is to analyze the different eCommerce fulfillment markets pursued by Kerry Express Thailand (KEX TB) and BEST Inc (BEST US). KEX focuses on Thailand's domestic express market, while Best has a competing domestic service and is also developing a X-border express service to quickly move Chinese goods into multiple SE Asian markets.To better understand these two markets, we looked at market data from KEX's IPO documents as well as financial data disclosed by eCommerce giant Alibaba Group (BABA US). These figures, combined with numbers from KEX itself and the Chinese express companies, give investors a sense of the size and growth potential of the Thai domestic and X-border eComm fulfillment markets.While both markets offer attractive growth, they also present distinct challenges. In the Thai domestic express market, these challenges include a lack of scale (compared to China's expess market) and relatively low population density, especially outside of Metro Bangkok. Challenges presented by the X-border market include exorbitant pricing, competition from large multinationals, and increased complexity (ie, paperwork, customs, tariffs, etc). We conclude that KEX is an intriguing pure play on Thailand's eCommerce development whose upcoming IPO is worth following. Regarding Best, we recently upgraded its shares to Buy on expected sector consolidation. To date its Thai and X-border revenues remain a very small part of the company's business which probably won't "move the needle" in the near-term. 

Kerry Express & Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia

United States

United Parcel Service, Inc.(UPS) delivers packages and documents throughout the United States and in other countries and territories.  The Company also provides global supply chain services and less-than-truckload transportation, primarily in the U.S. UPS's business consists of integrated air and ground pick-up and delivery network

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United Parcel Service Cl B (UPS US)

Kerry Express Thailand IPO - Time for Delivery

Kerry Express Thailand aims to raise around up to US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics and...

Sumeet Singh

Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Biden's recently-announced COVID-19 response plan suggests a number of investment themes. This Insight overviews the more significant of those...

Kyle Rudden

As Growth Accelerates, Alibaba's CaiNiao Network Is Pushing Aside Commodity-Type Express Firms

Amid a price war in China's express sector, the dramatic growth of Alibaba's logistics arm CaiNiao Network is adding to existing pressure on most...

Tracking Traffic

TRACKING TRAFFIC/Chinese Express: Pricing Still Weak | STO Q3 Profit Warning | ZTO HK IPO Update

Although volumes bounced back in September, pricing remains weak. We retain our BUY ratings on SF Holding and Best Inc, while ZTO Express remains a...

Tracking Traffic

Kerry Express & Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia

Define market opportunity: domestic Thailand (KEX

Tracking Traffic

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