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>
<li>Internet companies’ revenue increased strongly from May to August.</li>
<li>The growth rate of internet user base accelerated in 2Q20.</li>
<li>Weibo (WB)’s performance was still weak in 2Q20.</li>
<li>Jack Ma resigned as a board member of Alibaba.</li>
</ul>


Internet companies’ revenue increased strongly from May to August.
The growth rate of internet user base accelerated in 2Q20.
Weibo (WB)’s performance was still weak in 2Q20.
Jack Ma resigned as a board member of Alibaba.


China Internet Weekly (5Oct2020): Internet Revenue Overcame Pandemic, Internet User Base Accelerated

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>Back on the 6 July, <a href="https://www.smartkarma.com/entities/sina-corp-china" target="_blank" data-smartkarma-citation="entities:22691:1" rel="noopener">Sina Corp (Class A) (SINA US)</a> <a href="http://ir.sina.com/index.php/static-files/69e95aee-2729-457f-be56-73628090b8ea" target="_blank" rel="noopener">announced</a> the receipt of a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman/CEO Charles Chao - at US$41/share,  a ~20% premium to the average closing price during the 30 trading days prior to the announcement.</p>
<p>Yesterday, SINA announced it had <a href="http://ir.sina.com/static-files/de1ddd0f-354f-42de-9b33-b1bc414ab1b4" target="_blank" rel="noopener">entered</a> into an Agreement and Plan of Merger with New Wave pursuant to which New Wave will acquire all of the outstanding ordinary shares not owned at US$43.30/share (an 18.1% premium to the undisturbed price).</p>
<p>Despite the 5.6% bump to the initial non-binding proposal, the Offer price still looks light. However, Chao/New Wave controls ~61% of the voting power, and the merger requires two-thirds approval.</p>
<p>The merger is expected to close in the 1Q21. </p>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


Back on the 6 July, Sina Corp (Class A) (SINA US) announced the receipt of a preliminary non-binding “going private” proposal from New Wave MMXV - a company controlled by its chairman/CEO Charles Chao - at US$41/share,  a ~20% premium to the average closing price during the 30 trading days prior to the announcement.
Yesterday, SINA announced it had entered into an Agreement and Plan of Merger with New Wave pursuant to which New Wave will acquire all of the outstanding ordinary shares not owned at US$43.30/share (an 18.1% premium to the undisturbed price).
Despite the 5.6% bump to the initial non-binding proposal, the Offer price still looks light. However, Chao/New Wave controls ~61% of the voting power, and the merger requires two-thirds approval.
The merger is expected to close in the 1Q21. 


As always, more below the fold.


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.

<p><a href="https://www.smartkarma.com/entities/sina-corp-china" target="_blank" data-smartkarma-citation="entities:22691:1" rel="noopener">Sina Corp (Class A) (SINA US)</a> entered into a definitive agreement for going private transaction with New Wave MMXV Limited at a sweetened privatisation price of $43.30 per ordinary share, which is a marginal 5.6% increase above the initial privatisation price. New Wave is controlled by Mr Charles Chao, the Chairman and CEO.</p><p>We <a href="https://www.smartkarma.com/insights/sina-s-opportunistic-privatisation-bid" target="_blank" rel="noopener">had previously noted</a> that the initial privatisation proposal smacks of opportunism and a poor deal for long-term shareholders. The improved terms remain a poor deal for long-term shareholders particularly as the China internet sector has re-rated (in terms of CY2021 P/E rating) since the announcement of the initial proposal. Also, SINA’s market cap implied by the improved privatisation bid remains below the value of SINA’s stake in <a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (Adr) (WB US)</a>. </p><div class="content-highlight"><p>Nevertheless, the privatisation will likely succeed as the Chairman (primarily through New Wave) owns 61.2% of the aggregate voting power, which a just short of the two-thirds voting power threshold. To succeed, shareholders holding a combined 5.5% of the voting power (12.0% of ordinary shares) need to support the privatisation. The gross spread to the offer price at the last close is 1.8%. </p></div>

Sina Corp (Class A) (SINA US) entered into a definitive agreement for going private transaction with New Wave MMXV Limited at a sweetened privatisation price of $43.30 per ordinary share, which is a marginal 5.6% increase above the initial privatisation price. New Wave is controlled by Mr Charles Chao, the Chairman and CEO.We had previously noted that the initial privatisation proposal smacks of opportunism and a poor deal for long-term shareholders. The improved terms remain a poor deal for long-term shareholders particularly as the China internet sector has re-rated (in terms of CY2021 P/E rating) since the announcement of the initial proposal. Also, SINA’s market cap implied by the improved privatisation bid remains below the value of SINA’s stake in Weibo Corp (Adr) (WB US). Nevertheless, the privatisation will likely succeed as the Chairman (primarily through New Wave) owns 61.2% of the aggregate voting power, which a just short of the two-thirds voting power threshold. To succeed, shareholders holding a combined 5.5% of the voting power (12.0% of ordinary shares) need to support the privatisation. The gross spread to the offer price at the last close is 1.8%. 

SINA Receives a Cursory Bump to the Privatisation Price

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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yalla-group-ltd" target="_blank" data-smartkarma-citation="entities:29286:1" rel="noopener">Yalla Group Ltd (YALA US)</a> is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA) region with about 12.5m monthly active users. The company filed for an IPO on the on New York Stock Exchange under the symbol "YALA" and intends to raise about $130-167m via a primary offering of 18.6m Yalla Group ADS at $7-9 per ADS- each ADS represents one Class A ordinary share.</li>
<li>One of the existing shareholders, Orchid Asia has already expressed interest in purchasing up to U$30 million of the ADS offered in the IPO.</li>
<li>An overallotment option, if exercised, could increase the IPO by $19.5-25.1m.</li>
</ul>



Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA) region with about 12.5m monthly active users. The company filed for an IPO on the on New York Stock Exchange under the symbol "YALA" and intends to raise about $130-167m via a primary offering of 18.6m Yalla Group ADS at $7-9 per ADS- each ADS represents one Class A ordinary share.
One of the existing shareholders, Orchid Asia has already expressed interest in purchasing up to U$30 million of the ADS offered in the IPO.
An overallotment option, if exercised, could increase the IPO by $19.5-25.1m.


<div><p><a href="https://www.smartkarma.com/entities/yalla-group-ltd" target="_blank" data-smartkarma-citation="entities:29286:1" rel="noopener">Yalla Group Ltd (YALA US)</a> is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yalla-group-ipo-initiation-eat-pray-chat" target="_blank" rel="noopener">our initiation note</a>, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.</p></div></div></div>

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. In our initiation note, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.

China

Weibo Corp is a social media platform for people to create, distribute and discover Chinese-language content.  The Company offers users public self-expression in real time with a powerful platform for social interaction, as well as content aggregation and distribution.

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Weibo Corp (WB US)

China Internet Weekly (5Oct2020): Internet Revenue Overcame Pandemic, Internet User Base Accelerated

Internet companies’ revenue increased strongly from May to August. The growth rate of internet user base accelerated in 2Q20. Weibo (WB)’s...

Ming Lu

SINA Corp: Offer Firmed. Price Sweetened

Sina Corp (Class A) (SINA US) looks sets to join the growing list of Chinese companies seeking to delist in the US and relist, ostensibly in Hong...

David Blennerhassett

SINA Receives a Cursory Bump to the Privatisation Price

SINA entered into a definitive agreement for going private transaction with New Wave MMXV Limited at a sweetened privatisation price of $43.30 per...

Arun George

Yalla Group IPO Valuation

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA)...

Oshadhi Kumarasiri

Yalla Group IPO: Valuation Insights

Chindata (CD US) is a data centre operator which is backed by Bain Capital (57.17% shareholder), APG Strategic Real Estate Pool/Dutch pension...

Arun George

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