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>Logistics companies’ revenue grew by over 10%, which reflects the recovery of e-commerce.</li>
<li>The market size of Chinese online game continued to shrink in July.</li>
<li>Alibaba’s Ele.me sets up a mini-program on TikTok to fight Meituan.</li>
</ul>


Logistics companies’ revenue grew by over 10%, which reflects the recovery of e-commerce.
The market size of Chinese online game continued to shrink in July.
Alibaba’s Ele.me sets up a mini-program on TikTok to fight Meituan.


China Internet Weekly (22Aug22): E-Commerce, Logistics, Online Game, Food Delivery

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman Inc (2057 HK)</a> has outperformed industry volume growth in 1Q22 and such trend continues into 2Q22 with good ASP improvement and cost control. </li>
<li>Its strong operating cash flow and declining capex will lead to an accumulation of cash over the next few years, adding to the 1Q22 net cash position of Rmb4.1bn. </li>
<li>We think the stock's underperformance against peers not warranted. With a below-sector earnings multiple, leadership position and successful business model, we consider ZTO a "Growth at a reasonable price".</li>
</ul>



ZTO Express Cayman Inc (2057 HK) has outperformed industry volume growth in 1Q22 and such trend continues into 2Q22 with good ASP improvement and cost control. 
Its strong operating cash flow and declining capex will lead to an accumulation of cash over the next few years, adding to the 1Q22 net cash position of Rmb4.1bn. 
We think the stock's underperformance against peers not warranted. With a below-sector earnings multiple, leadership position and successful business model, we consider ZTO a "Growth at a reasonable price".


ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price

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

<ul>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-delivering-losses" target="_blank" data-smartkarma-citation="insights:61272" rel="noopener">SF Intra-City Industrial IPO: Delivering Losses</a>, we noted that SF Intra-city’s fundamentals are less than inspiring. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:61939" rel="noopener">SF Intra-City Industrial IPO: Valuation Insights</a>, we noted that the IPO price is unattractive in the context of its unappetizing mix of high growth at the cost of losses.  </li>
<li>The IPO price is HK$16.42 and it closed -9% lower in the grey market. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.  </li>
</ul>


In SF Intra-City Industrial IPO: Delivering Losses, we noted that SF Intra-city’s fundamentals are less than inspiring. 
In SF Intra-City Industrial IPO: Valuation Insights, we noted that the IPO price is unattractive in the context of its unappetizing mix of high growth at the cost of losses.  
The IPO price is HK$16.42 and it closed -9% lower in the grey market. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.  


SF Intra-City Industrial IPO: Trading Debut

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hangzhou-sf-intra-city-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:34916:1" rel="noopener">SF Intra-City (9699 HK)</a> is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-delivering-losses" target="_blank" data-smartkarma-citation="insights:61272" rel="noopener">SF Intra-City Industrial IPO: Delivering Losses</a>, we noted that SF Intra-city’s fundamentals are less than inspiring. </li>
<li>While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   </li>
</ul>



SF Intra-City (9699 HK) is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. 
In SF Intra-City Industrial IPO: Delivering Losses, we noted that SF Intra-city’s fundamentals are less than inspiring. 
While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   


SF Intra-City Industrial IPO: Valuation Insights

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.

<a href="https://www.smartkarma.com/entities/ane-logistics" target="_blank" data-smartkarma-citation="entities:34119:1" rel="noopener">ANE Logistics (1292621D CH)</a> has announced the terms for its IPO where it plans to sell 80.2m shares (6.9% of the total outstanding shares) at an indicative IPO price range of HK$13.88-16.88 per share. At the midpoint of the IPO price range of HK$15.38 per share, ANE will raise net proceeds of HK$1,124.1m (US$114.5m) at a market capitalisation of HK$17.9bn and a post-money enterprise value of HK$16.3bn. Bloomberg previously reported that the company plans to raise net proceeds of US$500m through the IPO, however, the offer was significantly downsized.The company plans to use approx. 40.0% of the net IPO proceeds on building, upgrading and potential acquisitions of 5-10 key transit hubs in strategic locations over the next 24-36 months. ANE plans to allocate 30.0% of the net IPO proceeds for investing in its line-haul truck fleet and another 20% for technology innovations.The company has entered into cornerstone investment agreement with Harvest International Premium Value Fund SPC for an aggregate of US$12.5m (approx. HK$97.23m) which represents about 7.88% of the offer shares at the midpoint of the IPO price range.

ANE Logistics (1292621D CH) has announced the terms for its IPO where it plans to sell 80.2m shares (6.9% of the total outstanding shares) at an indicative IPO price range of HK$13.88-16.88 per share. At the midpoint of the IPO price range of HK$15.38 per share, ANE will raise net proceeds of HK$1,124.1m (US$114.5m) at a market capitalisation of HK$17.9bn and a post-money enterprise value of HK$16.3bn. Bloomberg previously reported that the company plans to raise net proceeds of US$500m through the IPO, however, the offer was significantly downsized.The company plans to use approx. 40.0% of the net IPO proceeds on building, upgrading and potential acquisitions of 5-10 key transit hubs in strategic locations over the next 24-36 months. ANE plans to allocate 30.0% of the net IPO proceeds for investing in its line-haul truck fleet and another 20% for technology innovations.The company has entered into cornerstone investment agreement with Harvest International Premium Value Fund SPC for an aggregate of US$12.5m (approx. HK$97.23m) which represents about 7.88% of the offer shares at the midpoint of the IPO price range.

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)

China Internet Weekly (22Aug22): E-Commerce, Logistics, Online Game, Food Delivery

Logistics companies’ revenue grew by over 10%, which reflects the recovery of e-commerce. The market size of Chinese online game continued to...

Ming Lu

ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price

ZTO Express has outperformed industry volume growth with healthy pricing levels so far into FY22. We anticipate it will continue to add net cash to...

Osbert Tang, CFA

SF Intra-City Industrial IPO: Trading Debut

The IPO price is HK$16.42 and shares will be listed on 14 Dec. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.

Arun George

SF Intra-City Industrial IPO: Valuation Insights

While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of...

Arun George

ANE IPO: Forecasts and Valuation

At the midpoint, ANE will raise US$114.5m, a significant downsize of its offer. Our valuation suggests ANE's IPO pricing is expensive and absence...

Shifara Samsudeen, ACMA, CGMA

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