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 Capital Markets

ZTO Express Cayman  / Equity Capital Markets

<p>We've been bearish on <a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a> for some time now. In addition to accounting issues the company has been unable to explain, we have long expected heavy downward pressure on profit margins and Operating Cash flow, as seen clearly in the company's weak Q220 results. </p><p>We appreciate the rationale for seeking a second listing in Hong Kong, though we admit we are surprised by the relatively large scale of the issue, rumored to be around US$2 bn (implying about 8% dilution). Given the continued deterioration of conditions in China's express sector, ZTO may be opportunistically raising a large sum on the expectation that doing so later will prove difficult.</p><p>In Q220, ZTO posted parcel volume growth of 48% -- well ahead of market growth -- yet EPS grew by only 6%. We believe such poor "conversion" will remain the norm for ZTO in the medium term, and we do not believe such a performance warrants a PER multiple of over 34 times. Retain SELL.</p>

We've been bearish on ZTO Express (ZTO US) for some time now. In addition to accounting issues the company has been unable to explain, we have long expected heavy downward pressure on profit margins and Operating Cash flow, as seen clearly in the company's weak Q220 results. We appreciate the rationale for seeking a second listing in Hong Kong, though we admit we are surprised by the relatively large scale of the issue, rumored to be around US$2 bn (implying about 8% dilution). Given the continued deterioration of conditions in China's express sector, ZTO may be opportunistically raising a large sum on the expectation that doing so later will prove difficult.In Q220, ZTO posted parcel volume growth of 48% -- well ahead of market growth -- yet EPS grew by only 6%. We believe such poor "conversion" will remain the norm for ZTO in the medium term, and we do not believe such a performance warrants a PER multiple of over 34 times. Retain SELL.

Thoughts on ZTO Express' HK Listing: Expensive & Struggling to Maintain Margins & Cash Flow

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.

<div>
<p><a href="https://www.smartkarma.com/entities/zai-lab-ltd" target="_blank" data-smartkarma-citation="entities:25877:1" rel="noopener">Zai Lab Ltd (ZLAB US)</a> plans to raise around US$1bn in its secondary listing in Hong Kong.</p>
</div>
<div>
<div>
<p>We have covered the company's listing and some of its prior deals in:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zai-lab-ipo-experienced-team-promising-in-licensing-drug-pipeline-part-1" target="_blank" rel="noopener">Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)</a></li>
<li><a href="https://www.smartkarma.com/insights/zai-lab-ipo-thoughts-on-valuation-risks-and-upsides-part-2" target="_blank" rel="noopener">Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)</a></li>
<li><a href="https://www.smartkarma.com/insights/zai-lab-placement-beware-of-performance-of-last-deal-despite-decent-fundamentals" target="_blank" rel="noopener">Zai Lab Placement: Beware of Performance of Last Deal Despite Decent Fundamentals</a></li>
<li><a href="https://www.smartkarma.com/insights/zai-lab-placement-positive-development-bodes-well-for-the-deal" target="_blank" rel="noopener">Zai Lab Placement: Positive Development Bodes Well for the Deal</a></li>
</ul>
</div>
</div>
<div>The company filed its PHIP on Friday, 11th Sep 2020, although it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I'll talk about the deal dynamics.</div>
<div>
<p></p>
<h2><strong>Links to my previous notes on the topic on Secondary listings:</strong></h2>
<ul>
<li><a href="https://www.smartkarma.com/insights/zto-express-secondary-listing-fast-growth-but-it-hasn-t-been-flowing-down-to-earnings" target="_blank" rel="noopener">ZTO Express Secondary Listing - Fast Growth but It Hasn’t Been Flowing Down to Earnings</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/huazhu-hk-secondary-listing-early-look-needs-the-cash-more-than-most-secondary-candidates" target="_blank" rel="noopener">Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates</a></li>
<li><a href="https://www.smartkarma.com/insights/huazhu-hk-secondary-listing-early-look-needs-the-cash-more-than-most-secondary-candidates" target="_blank" rel="noopener">Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates</a></li>
<li><a href="https://www.smartkarma.com/insights/yum-china-hk-ipo-trading-index-flows-to-the-rescue" target="_blank" rel="noopener">Yum China HK IPO Trading - Index Flows to the Rescue</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/yum-china-hk-listing-relatively-bigger-should-offer-a-bigger-discount" target="_blank" rel="noopener">Yum China HK Listing - Relatively Bigger, Should Offer a Bigger Discount</a>.</li>
<li><a href="https://www.smartkarma.com/insights/yum-china-hk-listing-early-look-relatively-bigger-deal-should-have-a-relatively-bigger-impact" target="_blank" rel="noopener">Yum China HK Listing - Early Look - Relatively Bigger Deal Should Have a Relatively Bigger Impact</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-netease-secondary-listings-what-to-do-with-the-adr-lessons-from-baba" target="_blank" rel="noopener">JD &amp; NetEase Secondary Listings - What to Do with the ADR? Lessons from Baba</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-netease-and-other-secondary-listing-index-ftse-msci-hsi-and-hscei-impact" target="_blank" rel="noopener">JD, NetEase and Other Secondary Listing - Index (FTSE, MSCI, HSI And HSCEI) Impact</a></li>
<li><a href="https://www.smartkarma.com/insights/jd-com-hk-listing-early-look-getting-the-ball-rolling" target="_blank" rel="noopener">JD.com HK Listing - Early Look - Getting the Ball Rolling</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-secondary-listing-early-to-file-but-late-to-launch-puts-it-in-a-peculiar-position" target="_blank" rel="noopener">JD Secondary Listing - Early to File but Late to Launch Puts It in a Peculiar Position</a></li>
<li><a href="https://www.smartkarma.com/insights/jd-secondary-listing-behaving-better-than-netease-so-far" target="_blank" rel="noopener">JD Secondary Listing - Behaving Better than NetEase, so Far</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-secondary-trading-update-strong-demand-but-won-t-have-any-index-flows" target="_blank" rel="noopener">JD Secondary Trading Update - Strong Demand but Won’t Have Any Index Flows</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/netease-hk-listing-early-look-follow-the-leader" target="_blank" rel="noopener">NetEase HK Listing - Early Look - Follow the Leader</a></li>
<li><a href="https://www.smartkarma.com/insights/netease-secondary-listing-relatively-bigger-than-baba-should-offer-relatively-bigger-discount" target="_blank" rel="noopener">NetEase Secondary Listing - Relatively Bigger than Baba, Should Offer Relatively Bigger Discount</a></li>
<li><a href="https://www.smartkarma.com/insights/netease-secondary-listing-doing-a-beigene-rather-than-a-baba-risk-reward-shifting" target="_blank" rel="noopener">NetEase Secondary Listing - Doing a BeiGene Rather than a Baba, Risk Reward Shifting</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/netease-secondary-trading-update-index-flows-to-provide-near-term-support" target="_blank" rel="noopener">NetEase Secondary Trading Update - Index Flows to Provide near Term Support</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-the-real-ipo-only-begins-on-the-11th-day-post-listing" target="_blank" rel="noopener">Alibaba IPO/​Secondary Listing - The Real IPO Only Begins on the 11th Day Post Listing</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li dir="ltr">
<p><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-proposed-stock-connect-changes-might-throw-a-spanner-in-the-works" target="_blank" rel="noopener">Alibaba IPO/​Secondary Listing - Proposed Stock Connect Changes Might Throw a Spanner in the Works</a></p>
</li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-what-to-do-with-the-us-adr-while-waiting-for-the-hk-listing" target="_blank" rel="noopener">Alibaba IPO/​​Secondary Listing - What to Do with the US ADR While Waiting for the HK Listing?</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-not-good-for-the-adr-should-have-put-a-price-range-to-it" target="_blank" rel="noopener">Alibaba IPO/​​​Secondary Listing -  Not Good for the ADR, Should Have Put a Price Range to It</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-neither-here-not-there-index-announcements-comparison-to-other-deals" target="_blank" rel="noopener">Alibaba IPO/​​​​Secondary -  Neither Here Nor There - Index Announcements, Comparison to Other Deals</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-trading-time-to-converge-that-s-it" target="_blank" rel="noopener">Alibaba IPO/​​​​​Secondary Listing Trading - Time to Converge, That’s It</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a></li>
</ul>
</div>


Zai Lab Ltd (ZLAB US) plans to raise around US$1bn in its secondary listing in Hong Kong.



We have covered the company's listing and some of its prior deals in:



Zai Lab IPO: Experienced Team, Promising In-Licensing Drug Pipeline (Part 1)
Zai Lab IPO: Thoughts on Valuation, Risks and Upsides (Part 2)
Zai Lab Placement: Beware of Performance of Last Deal Despite Decent Fundamentals
Zai Lab Placement: Positive Development Bodes Well for the Deal



The company filed its PHIP on Friday, 11th Sep 2020, although it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I'll talk about the deal dynamics.


Links to my previous notes on the topic on Secondary listings:

ZTO Express Secondary Listing - Fast Growth but It Hasn’t Been Flowing Down to Earnings




Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates
Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates
Yum China HK IPO Trading - Index Flows to the Rescue





Yum China HK Listing - Relatively Bigger, Should Offer a Bigger Discount.
Yum China HK Listing - Early Look - Relatively Bigger Deal Should Have a Relatively Bigger Impact




JD &amp; NetEase Secondary Listings - What to Do with the ADR? Lessons from Baba




JD, NetEase and Other Secondary Listing - Index (FTSE, MSCI, HSI And HSCEI) Impact
JD.com HK Listing - Early Look - Getting the Ball Rolling




JD Secondary Listing - Early to File but Late to Launch Puts It in a Peculiar Position
JD Secondary Listing - Behaving Better than NetEase, so Far




JD Secondary Trading Update - Strong Demand but Won’t Have Any Index Flows




NetEase HK Listing - Early Look - Follow the Leader
NetEase Secondary Listing - Relatively Bigger than Baba, Should Offer Relatively Bigger Discount
NetEase Secondary Listing - Doing a BeiGene Rather than a Baba, Risk Reward Shifting




NetEase Secondary Trading Update - Index Flows to Provide near Term Support




Alibaba IPO/​Secondary Listing - The Real IPO Only Begins on the 11th Day Post Listing





Alibaba IPO/​Secondary Listing - Proposed Stock Connect Changes Might Throw a Spanner in the Works

Alibaba IPO/​​Secondary Listing - What to Do with the US ADR While Waiting for the HK Listing?
Alibaba IPO/​​​Secondary Listing -  Not Good for the ADR, Should Have Put a Price Range to It
Alibaba IPO/​​​​Secondary -  Neither Here Nor There - Index Announcements, Comparison to Other Deals




Alibaba IPO/​​​​​Secondary Listing Trading - Time to Converge, That’s It
China ADRs Secondary Listing Deep-Dive: Yin and Yang
China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home
China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List



Zai Lab HK Secondary Listing - Large Deal to Digest but past Deals Have Done Well

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.

<p><a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a> is the leading express delivery company in China with a 19.1% market share of China’s express delivery service market as measured by total parcel volume, according to iResearch. ZTO Express passed its Hong Kong listing committee hearing last week and could raise up to $2 billion through a secondary listing, according to press reports. </p><div class="content-highlight"><p>ZTO joins the wave of Hong Kong secondary listings set to hit the screens in the coming months. We think that ZTO is an attractive equity story as it is a best-in-class logistics player which can capitalize on the opportunities presented by China’s relatively fragmented logistics industry, in our view. </p></div>

ZTO Express (ZTO US) is the leading express delivery company in China with a 19.1% market share of China’s express delivery service market as measured by total parcel volume, according to iResearch. ZTO Express passed its Hong Kong listing committee hearing last week and could raise up to $2 billion through a secondary listing, according to press reports. ZTO joins the wave of Hong Kong secondary listings set to hit the screens in the coming months. We think that ZTO is an attractive equity story as it is a best-in-class logistics player which can capitalize on the opportunities presented by China’s relatively fragmented logistics industry, in our view. 

ZTO Express Secondary Listing: Home Delivery

<div>
<p><a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a> plans to raise around US$2bn in its secondary listing in Hong Kong.</p>
</div>
<div>
<p>While the company filed its PHIP on Friday, 11th Sep 2020, it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I'll talk about the deal dynamics and what to do with the ADR while waiting for the completion of the Hong Kong listing.</p>
</div>
<div>
<p>Links to my previous notes on the topic:</p>
<ul>
<li><a href="https://www.smartkarma.com/insights/huazhu-hk-secondary-listing-early-look-needs-the-cash-more-than-most-secondary-candidates" target="_blank" rel="noopener">Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates</a></li>
<li><a href="https://www.smartkarma.com/insights/huazhu-hk-secondary-listing-early-look-needs-the-cash-more-than-most-secondary-candidates" target="_blank" rel="noopener">Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates</a></li>
<li><a href="https://www.smartkarma.com/insights/yum-china-hk-ipo-trading-index-flows-to-the-rescue" target="_blank" rel="noopener">Yum China HK IPO Trading - Index Flows to the Rescue</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/yum-china-hk-listing-relatively-bigger-should-offer-a-bigger-discount" target="_blank" rel="noopener">Yum China HK Listing - Relatively Bigger, Should Offer a Bigger Discount</a>.</li>
<li><a href="https://www.smartkarma.com/insights/yum-china-hk-listing-early-look-relatively-bigger-deal-should-have-a-relatively-bigger-impact" target="_blank" rel="noopener">Yum China HK Listing - Early Look - Relatively Bigger Deal Should Have a Relatively Bigger Impact</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-netease-secondary-listings-what-to-do-with-the-adr-lessons-from-baba" target="_blank" rel="noopener">JD &amp; NetEase Secondary Listings - What to Do with the ADR? Lessons from Baba</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-netease-and-other-secondary-listing-index-ftse-msci-hsi-and-hscei-impact" target="_blank" rel="noopener">JD, NetEase and Other Secondary Listing - Index (FTSE, MSCI, HSI And HSCEI) Impact</a></li>
<li><a href="https://www.smartkarma.com/insights/jd-com-hk-listing-early-look-getting-the-ball-rolling" target="_blank" rel="noopener">JD.com HK Listing - Early Look - Getting the Ball Rolling</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-secondary-listing-early-to-file-but-late-to-launch-puts-it-in-a-peculiar-position" target="_blank" rel="noopener">JD Secondary Listing - Early to File but Late to Launch Puts It in a Peculiar Position</a></li>
<li><a href="https://www.smartkarma.com/insights/jd-secondary-listing-behaving-better-than-netease-so-far" target="_blank" rel="noopener">JD Secondary Listing - Behaving Better than NetEase, so Far</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/jd-secondary-trading-update-strong-demand-but-won-t-have-any-index-flows" target="_blank" rel="noopener">JD Secondary Trading Update - Strong Demand but Won’t Have Any Index Flows</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/netease-hk-listing-early-look-follow-the-leader" target="_blank" rel="noopener">NetEase HK Listing - Early Look - Follow the Leader</a></li>
<li><a href="https://www.smartkarma.com/insights/netease-secondary-listing-relatively-bigger-than-baba-should-offer-relatively-bigger-discount" target="_blank" rel="noopener">NetEase Secondary Listing - Relatively Bigger than Baba, Should Offer Relatively Bigger Discount</a></li>
<li><a href="https://www.smartkarma.com/insights/netease-secondary-listing-doing-a-beigene-rather-than-a-baba-risk-reward-shifting" target="_blank" rel="noopener">NetEase Secondary Listing - Doing a BeiGene Rather than a Baba, Risk Reward Shifting</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/netease-secondary-trading-update-index-flows-to-provide-near-term-support" target="_blank" rel="noopener">NetEase Secondary Trading Update - Index Flows to Provide near Term Support</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-the-real-ipo-only-begins-on-the-11th-day-post-listing" target="_blank" rel="noopener">Alibaba IPO/​Secondary Listing - The Real IPO Only Begins on the 11th Day Post Listing</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li dir="ltr">
<p><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-proposed-stock-connect-changes-might-throw-a-spanner-in-the-works" target="_blank" rel="noopener">Alibaba IPO/​Secondary Listing - Proposed Stock Connect Changes Might Throw a Spanner in the Works</a></p>
</li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-what-to-do-with-the-us-adr-while-waiting-for-the-hk-listing" target="_blank" rel="noopener">Alibaba IPO/​​Secondary Listing - What to Do with the US ADR While Waiting for the HK Listing?</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-not-good-for-the-adr-should-have-put-a-price-range-to-it" target="_blank" rel="noopener">Alibaba IPO/​​​Secondary Listing -  Not Good for the ADR, Should Have Put a Price Range to It</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-neither-here-not-there-index-announcements-comparison-to-other-deals" target="_blank" rel="noopener">Alibaba IPO/​​​​Secondary -  Neither Here Nor There - Index Announcements, Comparison to Other Deals</a></li>
</ul>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/alibaba-ipo-secondary-listing-trading-time-to-converge-that-s-it" target="_blank" rel="noopener">Alibaba IPO/​​​​​Secondary Listing Trading - Time to Converge, That’s It</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a></li>
<li><a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a></li>
</ul>
</div>


ZTO Express (ZTO US) plans to raise around US$2bn in its secondary listing in Hong Kong.


While the company filed its PHIP on Friday, 11th Sep 2020, it has yet to officially launch the deal. While waiting for the deal to be launched, in this insight, I'll talk about the deal dynamics and what to do with the ADR while waiting for the completion of the Hong Kong listing.


Links to my previous notes on the topic:

Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates
Huazhu HK Secondary Listing - Early Look - Needs the Cash More than Most Secondary Candidates
Yum China HK IPO Trading - Index Flows to the Rescue





Yum China HK Listing - Relatively Bigger, Should Offer a Bigger Discount.
Yum China HK Listing - Early Look - Relatively Bigger Deal Should Have a Relatively Bigger Impact




JD &amp; NetEase Secondary Listings - What to Do with the ADR? Lessons from Baba




JD, NetEase and Other Secondary Listing - Index (FTSE, MSCI, HSI And HSCEI) Impact
JD.com HK Listing - Early Look - Getting the Ball Rolling




JD Secondary Listing - Early to File but Late to Launch Puts It in a Peculiar Position
JD Secondary Listing - Behaving Better than NetEase, so Far




JD Secondary Trading Update - Strong Demand but Won’t Have Any Index Flows




NetEase HK Listing - Early Look - Follow the Leader
NetEase Secondary Listing - Relatively Bigger than Baba, Should Offer Relatively Bigger Discount
NetEase Secondary Listing - Doing a BeiGene Rather than a Baba, Risk Reward Shifting




NetEase Secondary Trading Update - Index Flows to Provide near Term Support




Alibaba IPO/​Secondary Listing - The Real IPO Only Begins on the 11th Day Post Listing





Alibaba IPO/​Secondary Listing - Proposed Stock Connect Changes Might Throw a Spanner in the Works

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ZTO Express Secondary Listing - Fast Growth but It Hasn't Been Flowing Down to Earnings

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/dada-nexus-ltd" target="_blank" data-smartkarma-citation="entities:28961:1" rel="noopener">Dada Nexus Ltd (DADA US)</a> recently reported Q2 results that showed strong YoY revenue growth at its two main business units and solid progress on raising margins. Still, Dada posted a net loss of 457 mn RMB on revenue of 1.32 bn RMB, and its shares in the US have fallen since it reported. </p><p>An examination of average revenue per order in its <em>Dada Now</em> business line suggests the company actually handles little 'real' on-demand traffic. Instead, by volume it appears <em>Dada Now</em> mostly handles last-mile delivery duties for JD Logistics and traditional (2-4 day) express delivery firms. </p><p>In this note we remind readers there is more to Dada than its hyped on-demand retail and on-demand delivery -- and less, too. We say this because Dada still appears to have substantial exposure to traditional eCommerce fulfillment, which features slower growth, entrenched rivals, and thin margins. </p>

Dada Nexus Ltd (DADA US) recently reported Q2 results that showed strong YoY revenue growth at its two main business units and solid progress on raising margins. Still, Dada posted a net loss of 457 mn RMB on revenue of 1.32 bn RMB, and its shares in the US have fallen since it reported. An examination of average revenue per order in its Dada Now business line suggests the company actually handles little 'real' on-demand traffic. Instead, by volume it appears Dada Now mostly handles last-mile delivery duties for JD Logistics and traditional (2-4 day) express delivery firms. In this note we remind readers there is more to Dada than its hyped on-demand retail and on-demand delivery -- and less, too. We say this because Dada still appears to have substantial exposure to traditional eCommerce fulfillment, which features slower growth, entrenched rivals, and thin margins. 

Dada-Nexus: More -- And Less -- Than Meets the Eye

China

ZTO Express (Cayman) Inc. operates as an express delivery company. The Company provides express delivery service through their nationwide network, as well as other value-added logistics services. ZTO Express serves customers globally.

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ZTO Express Cayman (ZTO US)

Thoughts on ZTO Express' HK Listing: Expensive & Struggling to Maintain Margins & Cash Flow

We've been bearish on ZTO Express (ZTO US) for some time now. Beyond some accout

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Zai Lab HK Secondary Listing - Large Deal to Digest but past Deals Have Done Well

ZTO Express (ZTO US) plans to raise around US$2bn in its secondary listing in Hong Kong. While the company filed its PHIP on Friday, 11th Sep...

Sumeet Singh

ZTO Express Secondary Listing: Home Delivery

$zto eZTO is the leading express delivery company in China with a 19.1% market share of China’s express delivery service market as measured by...

Arun George

ZTO Express Secondary Listing - Fast Growth but It Hasn't Been Flowing Down to Earnings

Huazhu Group (HTHT US) plans to raise around US$900m in its secondary listing in Hong Kong. I have covered the background of the deal in my...

Sumeet Singh

Dada-Nexus: More -- And Less -- Than Meets the Eye

Point 1:

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