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

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/014/original/BANNER-TTOtherDec20_GreyOrange.png?1608832116" class="editor-image img-responsive" data-smartkarma-image-id="180014"></figure></section><p>In November, anti-monopoly regulators announced drafts of new rules that will apply to eCommerce 'platform' businesses. And last week authorities announced an anti-monopoly probe into some of <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 anti-competitive practices. We believe the probe could eventually extend to a range of logistics companies linked to Alibaba. </p><p>The ongoing regulator action against Alibaba's "choose one from two" policy and potential future actions against logistics firms linked to the eCommerce giant will have the same effect: to slow down growth. In the case of the Chinese express companies closely linked to Alibaba, regulators' actions merely add to existing pressures to pursue sector consolidation in 2021.</p><p>We recommend investors check out <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> as a potential acquisition target.</p>

In November, anti-monopoly regulators announced drafts of new rules that will apply to eCommerce 'platform' businesses. And last week authorities announced an anti-monopoly probe into some of Alibaba Group (BABA US)'s anti-competitive practices. We believe the probe could eventually extend to a range of logistics companies linked to Alibaba. The ongoing regulator action against Alibaba's "choose one from two" policy and potential future actions against logistics firms linked to the eCommerce giant will have the same effect: to slow down growth. In the case of the Chinese express companies closely linked to Alibaba, regulators' actions merely add to existing pressures to pursue sector consolidation in 2021.We recommend investors check out BEST Inc (BEST US) as a potential acquisition target.

Alibaba Anti-Trust Probe Could Slow Growth of Chinese Express Companies, Add to M&A Pressures

Equity Capital Markets

Kerry Express Thailand / Equity Capital Markets

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/974/original/BANNER-TTOtherDec20_GreyOrange.png?1608781028" class="editor-image img-responsive" data-smartkarma-image-id="179974"></figure></section><p>In a previous note we argued <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>, at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.</p><p>However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).</p><p>A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.</p><p>By the way, Merry Christmas!</p>

In a previous note we argued Kerry Express Thailand (KEX TB), at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.By the way, Merry Christmas!

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/178/841/original/BANNER-LOGISTICS.png?1608076389" class="editor-image img-responsive" data-smartkarma-image-id="178841"></figure></section><p>While still solid, YoY express parcel volume growth in China moderated somewhat in November. Slower growth came as a surprise, as November includes the big "11-11" online shopping holiday. </p><p>An ongoing price war drove down ASPs in November (again). We don't believe companies can offset YoY price declines of 20-30% with unit cost reductions, so margins are likely falling (again). </p><p>Our investment thesis for Chinese express is that growing financial pressures will result in consolidation in 2021. Under this scenario, struggling <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>, closely aligned with Alibaba's logistics efforts, becomes a potential acquisition target. We rate Best BUY.</p>

While still solid, YoY express parcel volume growth in China moderated somewhat in November. Slower growth came as a surprise, as November includes the big "11-11" online shopping holiday. An ongoing price war drove down ASPs in November (again). We don't believe companies can offset YoY price declines of 20-30% with unit cost reductions, so margins are likely falling (again). Our investment thesis for Chinese express is that growing financial pressures will result in consolidation in 2021. Under this scenario, struggling BEST Inc (BEST US), closely aligned with Alibaba's logistics efforts, becomes a potential acquisition target. We rate Best BUY.

TRACKING TRAFFIC/Chinese Express: Volume Growth Moderates | Pricing Stays Depressed

<p><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> recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. </p><p>In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. </p><p>In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends. </p>

Kerry Express Thailand (KEX TB) recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company BEST Inc (BEST US) announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends. 

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

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.

<div><p><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> is the leading express delivery company in Thailand. It is backed by <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (63.0% shareholder) and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> (23.0% shareholder).</p></div><div><p>Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Subscription will take place between 8-9 and 14 December for retail investors, and 16-18 December for institutional investors. The final price is expected to be announced on 15 December. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kerry-express-ipo-initiation-a-recovery-play" target="_blank" data-smartkarma-citation="insights:45446" rel="noopener">Kerry Express IPO Initiation: A Recovery Play?</a>, we stated that while the 3Q20 results are not ideal, we think that revenue decline is a short-term market-specific issue, and Kerry Express remains well-placed to ride an eventual recovery in Thai consumer confidence. Overall, we think that a reasonable P/E valuation, a market-leading business and solid cornerstone support makes Kerry Express tempting at the proposed pricing range. </p></div></div></div>

Kerry Express Thailand (KEX TB) is the leading express delivery company in Thailand. It is backed by Kerry Logistics Network (636 HK) (63.0% shareholder) and VGI PCL (VGI TB) (23.0% shareholder).Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Subscription will take place between 8-9 and 14 December for retail investors, and 16-18 December for institutional investors. The final price is expected to be announced on 15 December. In Kerry Express IPO Initiation: A Recovery Play?, we stated that while the 3Q20 results are not ideal, we think that revenue decline is a short-term market-specific issue, and Kerry Express remains well-placed to ride an eventual recovery in Thai consumer confidence. Overall, we think that a reasonable P/E valuation, a market-leading business and solid cornerstone support makes Kerry Express tempting at the proposed pricing range. 

China

YTO Express Group Co., Ltd. provides global express services. The Company also provides general cargo warehousing, domestic air transport agency, car rental, supply chain management, and other related services throughout China..

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

YTO Express (600233 CH)

Alibaba Anti-Trust Probe Could Slow Growth of Chinese Express Companies, Add to M&A Pressures

New scrutiny from regulators on Alibaba could result in increased financial pressures on the logistics firms linked to the eCommerce giant.

Tracking Traffic

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

After it jumped by 83% to 51.25 baht per share in its trading debut, it's suddenly much tougher to argue that KEX is attractively priced versus peers.

Tracking Traffic

TRACKING TRAFFIC/Chinese Express: Volume Growth Moderates | Pricing Stays Depressed

Recent strong volume growth moderated in November, and express industry revenue growth lagged the performance of leading eComm platforms....

Tracking Traffic

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

We update our views of KEX's IPO valuation ahead of its late December listing. We also highlight the potential sale of a domestic competitor. We...

Tracking Traffic

Kerry Express IPO: Valuation Insights

Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Overall, we...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)