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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> has launched a conditional share buyback offer to acquire a maximum of 46.9m Class A ordinary shares (15.93% of outstanding shares) at HK$9.11 (US$3.50 per ADS).</li>
<li>The offer is conditional on shareholder approval by a majority of votes cast at the EGM. There is no minimum acceptance condition. The EGM vote is done due to irrevocables. </li>
<li>Zhihu’s share buyback returns 19% of cash not subject to government controls, below <a href="https://www.smartkarma.com/entities/douyu-international-hold-adr" target="_blank" data-smartkarma-citation="entities:28045:1" rel="noopener">Douyu International Holdings (DOYU US)</a>’s comparable 34%. The minimum pro-ration is expected to be around 34%. </li>
</ul>



Zhihu Technology (ZH US) has launched a conditional share buyback offer to acquire a maximum of 46.9m Class A ordinary shares (15.93% of outstanding shares) at HK$9.11 (US$3.50 per ADS).
The offer is conditional on shareholder approval by a majority of votes cast at the EGM. There is no minimum acceptance condition. The EGM vote is done due to irrevocables. 
Zhihu’s share buyback returns 19% of cash not subject to government controls, below Douyu International Holdings (DOYU US)’s comparable 34%. The minimum pro-ration is expected to be around 34%. 


Zhihu (ZH US/2390 HK): Negative EV Play Launches a Share Buyback at HK$9.11/US$3.50

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Zhihu delivered better-than-feared 1Q24 results, with upbeat topline and bottom line. Vocational training was resilient at +36% YoY in 1Q24, while membership decelerated at +1% YoY.</li><li>As Zhihu prioritizes on higher efficiency and quarterly breakeven in 4Q24E, we expect its users metrics and revenue to bear shortterm volatility.</li><li>2Q24E topline might see low-teens YoY decline, dragged by macro challenges and active transition in CCS &amp; vocational training.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zhihu delivered better-than-feared 1Q24 results, with upbeat topline and bottom line. Vocational training was resilient at +36% YoY in 1Q24, while membership decelerated at +1% YoY.As Zhihu prioritizes on higher efficiency and quarterly breakeven in 4Q24E, we expect its users metrics and revenue to bear shortterm volatility.2Q24E topline might see low-teens YoY decline, dragged by macro challenges and active transition in CCS &amp; vocational training.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zhihu (ZH US) - Transition year with efficiency improvement

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.

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

<ul><li>Zhihu’s 4Q23 results were better-than-feared, with strong vocational training and narrowing loss.</li><li>For FY24E, mgmt. emphasized more on margin improvement with disciplined expenses, and restated its quarterly breakeven target by 4Q24E.</li><li>With shrinking S&amp;M investment, we expect prudent user trend and top line growth ahead (forecasting total revenue to decline 10% YoY in FY24E, in which marketing services/membership /vocational training -20%/+0%/+5% YoY). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zhihu’s 4Q23 results were better-than-feared, with strong vocational training and narrowing loss.For FY24E, mgmt. emphasized more on margin improvement with disciplined expenses, and restated its quarterly breakeven target by 4Q24E.With shrinking S&amp;M investment, we expect prudent user trend and top line growth ahead (forecasting total revenue to decline 10% YoY in FY24E, in which marketing services/membership /vocational training -20%/+0%/+5% YoY). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zhihu (ZH US) - Prioritizing Breakeven Target

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Back on the 19th July, online Q&amp;A play <a href="https://www.smartkarma.com/entities/zhihu-inc" target="_blank" data-smartkarma-citation="entities:36660:1" rel="noopener">Zhihu (2390 HK/</a><a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">ZH US)</a> announced the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0719/2024071901181.pdf" target="_blank" rel="noopener">buyback</a> of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS). </li>
<li>Assuming the buyback is fully taken up, chairman Yuan Zhou's stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares). </li>
<li>The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on  net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated. </li>
</ul>


Back on the 19th July, online Q&amp;A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS). 
Assuming the buyback is fully taken up, chairman Yuan Zhou's stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares). 
The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on  net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated. 


China

Zhihu Inc. operates as an online share knowledge community. The Company provides a socialized website for questions and answers which enables users to obtain information through questions that provoke the opinions and views from answerers as individuals. Zhihu conducts businesses in China.

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Zhihu Technology (ZH US)

Zhihu (ZH US) - Transition year with efficiency improvement

Zhihu delivered better-than-feared 1Q24 results, with upbeat topline and bottom line. Vocational training was resilient at +36% YoY in 1Q24, while...

CMB International

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Zhihu (ZH US) - Prioritizing Breakeven Target

For FY24E, mgmt. emphasized more on margin improvement with disciplined expenses, and restated its quarterly breakeven target by 4Q24E.

CMB International

Zhihu (2390 HK/ZH US)'s Cheeky Buyback

This is an interesting, albeit illiquid, Partial Offer. The final pro-ration was ~45% in the partial for Hengdeli, in which the Offer price was...

David Blennerhassett

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Zhihu (ZH US/2390 HK): Negative EV Play Launches a Share Buyback at HK$9.11/US$3.50

Zhihu aims to return 19% of cash not subject to PRC government control, below Douyu’s comparable return of 34%. Expect more cash-rich US-China...

Arun George

Zhihu (ZH US) - Transition year with efficiency improvement

Zhihu delivered better-than-feared 1Q24 results, with upbeat topline and bottom line. Vocational training was resilient at +36% YoY in 1Q24, while...

CMB International

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Zhihu (ZH US) - Prioritizing Breakeven Target

For FY24E, mgmt. emphasized more on margin improvement with disciplined expenses, and restated its quarterly breakeven target by 4Q24E.

CMB International

Zhihu (2390 HK/ZH US)'s Cheeky Buyback

This is an interesting, albeit illiquid, Partial Offer. The final pro-ration was ~45% in the partial for Hengdeli, in which the Offer price was...

David Blennerhassett