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/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. At the mid-point of the IPO price range of HK$39.36-43.36 per share, the net proceeds are HK$24,713 million ($3.2 billion). JD Logistics will price its IPO this Friday (21 May). The offer has received a strong reception, with the retail offer oversubscribed 200x and the international offer fully subscribed, according to press reports. </p></div><div><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-prioritizing-market-share-gains-over-margins" target="_blank" data-smartkarma-citation="insights:50976" rel="noopener">JD Logistics IPO: Prioritizing Market Share Gains over Margins</a>, we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:51524" rel="noopener">JD Logistics IPO: Valuation Insights</a>, we noted that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. In this note, we present our base-case DCF valuation and present a valuation sensitivity analysis around market share and margin forecasts. </p></div></div></div>

JD Logistics (2618 HK) is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. At the mid-point of the IPO price range of HK$39.36-43.36 per share, the net proceeds are HK$24,713 million ($3.2 billion). JD Logistics will price its IPO this Friday (21 May). The offer has received a strong reception, with the retail offer oversubscribed 200x and the international offer fully subscribed, according to press reports. In JD Logistics IPO: Prioritizing Market Share Gains over Margins, we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. In JD Logistics IPO: Valuation Insights, we noted that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. In this note, we present our base-case DCF valuation and present a valuation sensitivity analysis around market share and margin forecasts. 

JD Logistics IPO: Valuation Scenario Analysis

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.

<p>ForU Worldwide (Foru), the largest technology-driven road freight transportation platform in China, aims to raise up to US$500m via a US listing.</p><p>The company provides freight-as-a-service (FaaS) via its platform to connect shippers and carriers. It digitalizes the entire road freight transportation process, including pricing, route planning, dispatching, transportation and fee settlement. </p><p>As of Mar 2021, ForU had delivered 3.2m loads cumulatively. It had cumulatively served 11,174 large and SME shippers and had approximately 905,000 registered drivers and 580,000 drivers who had completed orders.</p>

ForU Worldwide (Foru), the largest technology-driven road freight transportation platform in China, aims to raise up to US$500m via a US listing.The company provides freight-as-a-service (FaaS) via its platform to connect shippers and carriers. It digitalizes the entire road freight transportation process, including pricing, route planning, dispatching, transportation and fee settlement. As of Mar 2021, ForU had delivered 3.2m loads cumulatively. It had cumulatively served 11,174 large and SME shippers and had approximately 905,000 registered drivers and 580,000 drivers who had completed orders.

ForU Worldwide Pre-IPO - Mostly Negatives

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

<p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a>  has set the terms for its Hong Kong IPO where the company plans to issue 609.2m shares at an indicative IPO price range of HK$39.36-43.36 per share. At the midpoint of the IPO price range of HK$41.36 per share, JD Logistics will raise net proceeds of HK$24.7bn (US$3.18bn) at a market capitalisation of HK$251.9bn and post-money enterprise value of HK$234.0bn.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 256.0pt;"><p style="text-align: center;"><strong>JD Logistics IPO Details</strong></p></td></tr>
<tr>
<td style="width: 171.55pt;"><p>No. of Shares Issued</p></td>
<td style="width: 84.45pt;"><p style="text-align: right;">        609,160,800</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>IPO Price per Share (HK$)</p></td>
<td style="width: 84.45pt;"><p style="text-align: right;">39.36-43.36</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>Offer as a % of Outstanding Shares</p></td>
<td style="width: 84.45pt;"><p style="text-align: right;">10.0%</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>Total Shares Outstanding (m)</p></td>
<td style="width: 84.45pt;"><p style="text-align: right;">                 6,091.6</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>Net Proceeds (HK$m)</p></td>
<td style="width: 84.45pt;"><p style="text-align: right;">24713</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>Market Capitalisation (HK$m)</p></td>
<td style="text-align: right; width: 84.45pt;"><p>                251,949</p></td>
</tr>
<tr>
<td style="width: 171.55pt;"><p>Enterprise Value (HK$m)</p></td>
<td style="text-align: right; width: 84.45pt;"><p>                221,843</p></td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption"><em>Source: Company Disclosures, LSR (Enterprise Value is calculated after adjusting for net cash and net proceeds from the IPO)</em></div><p>The company also has entered into cornerstone investment agreements with 7 investors who have agreed to subscribe for approx. HK$11,882m (approx. 49% of the net proceeds at the midpoint of the IPO price) worth of shares offered at the IPO. These cornerstone investors include Softbank, Temasek, Tiger Global, China Structural Reform Fund and China Chengtong Investment, Blackstone, Mathew Funds and Oaktree.</p><p>JD Logistics (JDL) plans to use approx. 55% of the net IPO proceeds on upgrading and expanding its logistics network in the next 12-36 months while another 20% of the net proceeds will be spent on developing advanced technologies for supply chain solutions and logistics services.</p>

JD Logistics (2618 HK)  has set the terms for its Hong Kong IPO where the company plans to issue 609.2m shares at an indicative IPO price range of HK$39.36-43.36 per share. At the midpoint of the IPO price range of HK$41.36 per share, JD Logistics will raise net proceeds of HK$24.7bn (US$3.18bn) at a market capitalisation of HK$251.9bn and post-money enterprise value of HK$234.0bn.
JD Logistics IPO Details

No. of Shares Issued
        609,160,800


IPO Price per Share (HK$)
39.36-43.36


Offer as a % of Outstanding Shares
10.0%


Total Shares Outstanding (m)
                 6,091.6


Net Proceeds (HK$m)
24713


Market Capitalisation (HK$m)
                251,949


Enterprise Value (HK$m)
                221,843

Source: Company Disclosures, LSR (Enterprise Value is calculated after adjusting for net cash and net proceeds from the IPO)The company also has entered into cornerstone investment agreements with 7 investors who have agreed to subscribe for approx. HK$11,882m (approx. 49% of the net proceeds at the midpoint of the IPO price) worth of shares offered at the IPO. These cornerstone investors include Softbank, Temasek, Tiger Global, China Structural Reform Fund and China Chengtong Investment, Blackstone, Mathew Funds and Oaktree.JD Logistics (JDL) plans to use approx. 55% of the net IPO proceeds on upgrading and expanding its logistics network in the next 12-36 months while another 20% of the net proceeds will be spent on developing advanced technologies for supply chain solutions and logistics services.

JD Logistics IPO Valuation: Implied Offer Multiples Are Not Cheap but Justifiable

<div><p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>’s in-house logistics department in 2007.</p></div><div><p>At the proposed IPO price range of HK$39.36-43.36 per share, JD Logistics will have a market cap of HK$239,766-264,132 million ($30.9-34.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$24,713 million ($3.2 billion). Seven cornerstone investors will purchase $1.5 billion worth of the offer shares (47.16% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>, Temasek, Tiger Global, China Structural Reform Fund, Blackstone,  Matthews Funds and Oaktree. </p></div><div><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-initiation-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:48279" rel="noopener">JD Logistics IPO Initiation: The Flow of Things</a>, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-prioritizing-market-share-gains-over-margins" target="_blank" data-smartkarma-citation="insights:50976" rel="noopener">JD Logistics IPO: Prioritizing Market Share Gains over Margins</a>,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. </p></div><div><div><div class="content-highlight"><p>Overall, based on valuation analysis, we think that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. </p></div></div></div>

JD Logistics (2618 HK) is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of JD.com Inc (ADR) (JD US)’s in-house logistics department in 2007.At the proposed IPO price range of HK$39.36-43.36 per share, JD Logistics will have a market cap of HK$239,766-264,132 million ($30.9-34.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$24,713 million ($3.2 billion). Seven cornerstone investors will purchase $1.5 billion worth of the offer shares (47.16% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Softbank Group (9984 JP), Temasek, Tiger Global, China Structural Reform Fund, Blackstone,  Matthews Funds and Oaktree. In JD Logistics IPO Initiation: The Flow of Things, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.In JD Logistics IPO: Prioritizing Market Share Gains over Margins,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. Overall, based on valuation analysis, we think that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. 

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> , the delivery arm of China’s second largest e-commerce platform JD.com has filed for an IPO to list its shares on the Hong Kong Stock Exchange. According to news media outlets, JD Logistics is looking to raise about US$3-4bn through the IPO. The company won the approval for its HKEX listing and released its post-hearing information pack (PHIP) on Sunday (02<sup>nd</sup> May). On Thursday (13<sup>th</sup> May), JD Logistics released its revised PHIP and this insight focuses on new data points from the revised filing.</p>

JD Logistics (JDL HK) , the delivery arm of China’s second largest e-commerce platform JD.com has filed for an IPO to list its shares on the Hong Kong Stock Exchange. According to news media outlets, JD Logistics is looking to raise about US$3-4bn through the IPO. The company won the approval for its HKEX listing and released its post-hearing information pack (PHIP) on Sunday (02nd May). On Thursday (13th May), JD Logistics released its revised PHIP and this insight focuses on new data points from the revised filing.

JD Logistics: Margins Sink as JDL Prioritises Market Share but Peer Margins Shrink Too in 1Q21

China

STO Express Co Ltd. develops, manufactures and markets valves, pipe fittings and plumbing equipment. The Company's business encompasses the    development, manufacturing, sales and servicing of plumbing equipment, valves,  pipe fittings, metal construction materials, home automation, environmental protection and energy control systems.

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STO Express (002468 CH)

JD Logistics IPO: Valuation Scenario Analysis

JD Logistics will price its IPO this Friday (21 May). We present our base-case DCF valuation and present a valuation sensitivity analysis around...

Arun George

ForU Worldwide Pre-IPO - Mostly Negatives

ForU Worldwide (Foru) aims to raise up to US$500m via a US listing. The company provides freight-as-a-service (FaaS) via its platform to connect...

Sumeet Singh

JD Logistics IPO Valuation: Implied Offer Multiples Are Not Cheap but Justifiable

JDL’s valuation multiples are not exceedingly cheap but for a company that is the market leader and growing at higher rates than peers, we believe...

Shifara Samsudeen, ACMA, CGMA

JD Logistics IPO: Valuation Insights

The net proceeds are $3.2 billion at the mid-point of the IPO price range. We think that the IPO price range is attractive due to JD Logistics'...

Arun George

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JD Logistics IPO: Valuation Scenario Analysis

JD Logistics will price its IPO this Friday (21 May). We present our base-case DCF valuation and present a valuation sensitivity analysis around...

Arun George

ForU Worldwide Pre-IPO - Mostly Negatives

ForU Worldwide (Foru) aims to raise up to US$500m via a US listing. The company provides freight-as-a-service (FaaS) via its platform to connect...

Sumeet Singh

JD Logistics IPO Valuation: Implied Offer Multiples Are Not Cheap but Justifiable

JDL’s valuation multiples are not exceedingly cheap but for a company that is the market leader and growing at higher rates than peers, we believe...

Shifara Samsudeen, ACMA, CGMA

JD Logistics IPO: Valuation Insights

The net proceeds are $3.2 billion at the mid-point of the IPO price range. We think that the IPO price range is attractive due to JD Logistics'...

Arun George

JD Logistics: Margins Sink as JDL Prioritises Market Share but Peer Margins Shrink Too in 1Q21

JDL's GPM for 1Q2021 was 1% compared to 6.2% for 1Q2020 and drop in peer GPM in implies that the logistics industry as a whole was affected during...

Shifara Samsudeen, ACMA, CGMA