Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names. </li>
<li>Of these companies, only two are expected to be EBITDA positive in FY22. </li>
<li>They are <strong><a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a></strong> and <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener"><strong>Sohu.com (SOHU US</strong>)</a>. This insight looks at both names. </li>
</ul>


Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names. 
Of these companies, only two are expected to be EBITDA positive in FY22. 
They are JOYY (YY US) and Sohu.com (SOHU US). This insight looks at both names. 


Negative EVs: JOYY & Sohu's Steep Discount To Net Cash

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/lufax-holdings" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax Holdings (LU US)</a> is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. Lufax has launched its IPO at a price range of $11.50-13.50 per ADS to raise net proceeds of $2,109 million at the mid-point of the IPO price range. At the mid-point of the IPO price range, Lufax will command a market cap of $30.5 billion which is around 20% lower than the 2018 Series C round valuation of $39 billion. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/lufax-ipo-initiation-lost-in-transition" target="_blank" rel="noopener">our initiation note</a>, we stated that while Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile. Overall, our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.</p></div></div></div>

Lufax Holdings (LU US) is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. Lufax has launched its IPO at a price range of $11.50-13.50 per ADS to raise net proceeds of $2,109 million at the mid-point of the IPO price range. At the mid-point of the IPO price range, Lufax will command a market cap of $30.5 billion which is around 20% lower than the 2018 Series C round valuation of $39 billion. In our initiation note, we stated that while Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile. Overall, our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.

<p><a href="https://www.smartkarma.com/entities/lufax-holdings" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax Holdings (LU US)</a> is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. In retail credit, Lufax is the second-largest non-traditional financial service providers in China as measured by outstanding balances of retail credit facilitated, according to Oliver Wyman. Lufax has filed for an NYSE IPO to raise an estimated $3 billion, according to press reports. </p><div class="content-highlight"><p>The Chinese consumer finance sector has gone through a corona-induced extreme stress test in 1H20. The sector has proved to be more often than not value destructive for public market investors and continues to remain hostage to regulatory change. While Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile.  </p></div>

Lufax Holdings (LU US) is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. In retail credit, Lufax is the second-largest non-traditional financial service providers in China as measured by outstanding balances of retail credit facilitated, according to Oliver Wyman. Lufax has filed for an NYSE IPO to raise an estimated $3 billion, according to press reports. The Chinese consumer finance sector has gone through a corona-induced extreme stress test in 1H20. The sector has proved to be more often than not value destructive for public market investors and continues to remain hostage to regulatory change. While Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile.  

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.

Alibaba Group Holding  / Equity Bottom-Up

<ul class="">
<li>Alibaba (BABA)’s Freshippo opened two “Freshippo-mini” stores in Beijing.</li>
<li>Alibaba (BABA)’s Ele.me began to deliver goods other than cooked food.</li>
<li>The smart phone shipment decreased by 16.6% YoY in June, worse than 11.8% YoY in May.</li>
</ul>


Alibaba (BABA)’s Freshippo opened two “Freshippo-mini” stores in Beijing.
Alibaba (BABA)’s Ele.me began to deliver goods other than cooked food.
The smart phone shipment decreased by 16.6% YoY in June, worse than 11.8% YoY in May.


China Internet Weekly (13Jul2020): Alibaba’s Freshippo and Ele.me Exploring Cities and Businesses

<p><a href="https://www.smartkarma.com/entities/360-finance-inc" target="_blank" data-smartkarma-citation="entities:27756:1" rel="noopener">360 Finance, Inc. (QFIN US)</a> is a leading online consumer lending platform and the finance partner of the 360 Group. <a href="https://www.smartkarma.com/entities/9f-inc" target="_blank" data-smartkarma-citation="entities:28238:1" rel="noopener">9F Inc (JFG US)</a>, a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018.</p><div class="content-highlight"><p>The Chinese consumer finance sector has gone through a corona-induced extreme stress test in 1Q20. While the industry remains hostage to regulations, we believe that the long 360 Finance/short 9F is an attractive pair trade for investors keen on exposure to the Chinese online consumer finance industry. </p></div>

360 Finance, Inc. (QFIN US) is a leading online consumer lending platform and the finance partner of the 360 Group. 9F Inc (JFG US), a P2P lending platform, is the largest online consumer finance platform among the independent marketplace lending platforms in China, as measured by outstanding loan balance as of 31 December 2018.The Chinese consumer finance sector has gone through a corona-induced extreme stress test in 1Q20. While the industry remains hostage to regulations, we believe that the long 360 Finance/short 9F is an attractive pair trade for investors keen on exposure to the Chinese online consumer finance industry. 

China Consumer Finance Pair Trade: Long 360 Finance/Short 9F

China

Yirendai Ltd. engages in the online consumer finance business. The Company provides services for both online and offline marketplace connecting borrowers and investors, as well as wealth management services. Yirendai serves customers in China.

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Yirendai Ltd (YRD US)

Negative EVs: JOYY & Sohu's Steep Discount To Net Cash

I'd tilt slightly towards Sohu. It did successfully sell Sogou; whereas Joyy failed to sell YY live. That may provide some insight as to how the...

David Blennerhassett

Lufax IPO: Valuation Insights

Our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.

Arun George

Lufax IPO Initiation: Lost in Transition

We find it hard to be enthused by the Lufax story as its heavily reliant on a sector that has repeatedly been subject to regulatory blows which led...

Arun George

China Internet Weekly (13Jul2020): Alibaba’s Freshippo and Ele.me Exploring Cities and Businesses

Alibaba (BABA)’s Freshippo opened two “Freshippo-mini” stores in Beijing. Alibaba (BABA)’s Ele.me began to deliver goods other than cooked...

Ming Lu

China Consumer Finance Pair Trade: Long 360 Finance/Short 9F

360 Finance, Inc. (QFIN US) is a leading online consumer lending platform and the finance partner of the 360 Group. 9F Inc (JFG US), a P2P lending...

Arun George

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