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.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and <a href="https://inews.hket.com/article/2926566/%E3%80%90%E6%96%B0%E8%82%A1IPO%E3%80%91%E8%81%AF%E6%98%93%E8%9E%8D%E7%A7%91%E6%8A%809959%E6%9A%97%E7%9B%A4%E3%80%80%E7%8F%BE%E5%8D%876-%E3%80%81%E6%97%A9%E6%AE%B5%E6%9B%BE%E8%B7%8C%E8%BF%91%E4%B8%80%E6%88%90?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">currently trading around 6% higher</a> at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, <a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a>, closed -16% below its IPO price on the first day and has not yet recovered.    </p></div><div><p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49693" rel="noopener">Linklogis IPO: Valuation Insights</a>, we noted that the IPO price range is reasonable.</p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. </p></div></div></div>

Linklogis (9959 HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and currently trading around 6% higher at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, Bairong (1569395D CH), closed -16% below its IPO price on the first day and has not yet recovered.    In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In Linklogis IPO: Valuation Insights, we noted that the IPO price range is reasonable.Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. 

<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (LINK HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis 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>, CITIC Capital, GIC and <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>. </p></div><div><p>At the proposed IPO price range of HK$16.28-18.28 per share, Linklogis will have a market cap of HK$36,864-41,393 million ($4.7-5.3 billion). At the mid-point of the IPO price range, the net proceeds are HK$7,581.3 million ($976 million). Six cornerstone investors will purchase $365 million worth of the offer shares (36.22% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are BlackRock, Fidelity International, Janus Henderson, Ontario Teachers’, Sequoia Funds and EDB Investments. </p></div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive.</p>
<div class="content-highlight"><p>Notwithstanding the recent de-rating of Chinese tech names, our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. </p></div>
</div></div>

Linklogis (LINK HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis is backed by Tencent Holdings (700 HK), CITIC Capital, GIC and Standard Chartered (STAN LN). At the proposed IPO price range of HK$16.28-18.28 per share, Linklogis will have a market cap of HK$36,864-41,393 million ($4.7-5.3 billion). At the mid-point of the IPO price range, the net proceeds are HK$7,581.3 million ($976 million). Six cornerstone investors will purchase $365 million worth of the offer shares (36.22% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are BlackRock, Fidelity International, Janus Henderson, Ontario Teachers’, Sequoia Funds and EDB Investments. 
In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive.
Notwithstanding the recent de-rating of Chinese tech names, our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. 


<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (LINK HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis 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>, CITIC Capital, GIC and <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>. Linklogis will launch an HKEx IPO to raise as much as $1 billion on Friday, according to press reports.</p></div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In this note, we present our forecasts and take the first look at Linklogis' potential valuation. </p></div></div>

Linklogis (LINK HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis is backed by Tencent Holdings (700 HK), CITIC Capital, GIC and Standard Chartered (STAN LN). Linklogis will launch an HKEx IPO to raise as much as $1 billion on Friday, according to press reports.In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In this note, we present our forecasts and take the first look at Linklogis' potential valuation. 

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Palantir Technologies  / Equity Bottom-Up

<p>Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.</p><p></p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

<p>In 4Q20, Amazon turned in another sensational quarter, but essentially hasn’t moved since September as it has been “growing” into its valuation after a meteoric move in 1H20. In the past year, Amazon has spent an incremental $11.5B on COVID related costs (~10% of 2020 opex), increased the square footage of its logistics network’s square footage by 50%  and also added ~650,000 (!!!) employees, doubling its employee base in what also turns out to be the largest mobilization of workers in the US since World War II. And yet…since September 2, the stock is down 4% from its alltime high. We think Amazon is worth closer to $6,000 then $3,000 and think that it has potentially the same type of setup as last year when we began writing (on Smartkarma) about Amazon. In years after the company has huge capacity expansions, it tends to outperform as the operating leverage of capacity utilization shines through.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

In 4Q20, Amazon turned in another sensational quarter, but essentially hasn’t moved since September as it has been “growing” into its valuation after a meteoric move in 1H20. In the past year, Amazon has spent an incremental $11.5B on COVID related costs (~10% of 2020 opex), increased the square footage of its logistics network’s square footage by 50%  and also added ~650,000 (!!!) employees, doubling its employee base in what also turns out to be the largest mobilization of workers in the US since World War II. And yet…since September 2, the stock is down 4% from its alltime high. We think Amazon is worth closer to $6,000 then $3,000 and think that it has potentially the same type of setup as last year when we began writing (on Smartkarma) about Amazon. In years after the company has huge capacity expansions, it tends to outperform as the operating leverage of capacity utilization shines through.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

United States

Workday, Inc. provides enterprise cloud-based applications. The Company offers human capital, spend, and financial management, as well as payroll, initiatives and higher education solutions. Workday serves the finance, healthcare, manufacturing, education, and technology industries worldwide.

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Workday Inc Class A (WDAY US)

Linklogis IPO: Trading Debut

Linklogis priced its IPO at HK$17.58 and trading around 6% higher at HK$18.70 in the Futu securities grey market. We continue to think that the IPO...

Arun George

Linklogis IPO: Valuation Insights

Linklogis has launched its IPO to raise net proceeds of $976m at the mid-point. Notwithstanding the recent de-rating of Chinese tech, we think that...

Arun George

Linklogis IPO: Valuation First Look

Linklogis will launch an HKEx IPO to raise as much as $1 billion on Friday, according to press reports. In this note, we present our forecasts and...

Arun George

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

Palantir's quarter, much like the rest of the company was perplexing. We believe the stock is overvalued even in the high 20s, and the coming...

Aaron Gabin

Amazon 4Q20: The GOAT Departs

Amazon CEO Jeff Bezos is stepping down. We doubt he steps away. 2021 is a unique setup. Its the first time Amazon was up during a big capacity...

Aaron Gabin

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