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

<a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL 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. <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a> is the controlling shareholder with a 79.12% stake. The other shareholders include Carlyle Group, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, Sequoia Capital and Hillhouse Capital. JD Logistics has filed for a Hong Kong IPO to raise as much as $4 billion, according to press reports. <div class="content-highlight">JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. JD Logistics should also benefit from favourable Chinese government policy support for developing integrated supply chain logistics services. Overall, we believe that JD Logistics fundamentals are attractive and remain well-placed to address consumers' demand for faster and more flexible supply chain logistics services. </div>

JD Logistics (JDL 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. JD.com (HK) (9618 HK) is the controlling shareholder with a 79.12% stake. The other shareholders include Carlyle Group, Tencent Holdings (700 HK), Sequoia Capital and Hillhouse Capital. JD Logistics has filed for a Hong Kong IPO to raise as much as $4 billion, according to press reports. JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. JD Logistics should also benefit from favourable Chinese government policy support for developing integrated supply chain logistics services. Overall, we believe that JD Logistics fundamentals are attractive and remain well-placed to address consumers' demand for faster and more flexible supply chain logistics services. 

JD Logistics IPO Initiation: The Flow of Things

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a> has announced it intends to <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0216/2021021600739.pdf" target="_blank" rel="noopener">spin-off JD Logistics</a> (JDL) by way of a separate listing on the Hong Kong Stock Exchange. The PN15 application proof is <a href="https://www1.hkexnews.hk/app/sehk/2021/103201/documents/sehk21021600660.pdf" target="_blank" rel="noopener">here</a>.
JD.com currently holds 79.12% of JDL. According to the China Insights Consultancy report, JDL is the largest player in China’s integrated supply chain service market, in terms of total revenue in 2019.
Upon completion of the proposed spin-off,  JD.com will continue to indirectly hold more than 50% of the shares in JDL.
There remain a few missing pieces to the spin-off - there are 991 "Redacted" spaces in the PN15. But this will be a big deal. What it may not be, is a big deal to JD.com in the grand scheme of things.
As always, more below the fold.

JD.com (HK) (9618 HK) has announced it intends to spin-off JD Logistics (JDL) by way of a separate listing on the Hong Kong Stock Exchange. The PN15 application proof is here.
JD.com currently holds 79.12% of JDL. According to the China Insights Consultancy report, JDL is the largest player in China’s integrated supply chain service market, in terms of total revenue in 2019.
Upon completion of the proposed spin-off,  JD.com will continue to indirectly hold more than 50% of the shares in JDL.
There remain a few missing pieces to the spin-off - there are 991 "Redacted" spaces in the PN15. But this will be a big deal. What it may not be, is a big deal to JD.com in the grand scheme of things.
As always, more below the fold. 

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Alibaba Group Holding  / Equity Bottom-Up

Given the significant uncertainty surrounding 1) the impact that a regulatory-induced restructuring could have on the eventually listed <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a>, and 2) the full final impact of increased anti-monopoly regulatory efforts from the State Administration for Market Regulation (SAMR) on the <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, it has been difficult to assess a fair valuation level for the company. Following the indefinite suspension of Ant Group’s IPO, in November 2020, we witnessed a c.30% sell-off (or $260bn!) in Alibaba Group’s share price, before starting its recovery back to current levels, triggered by the reappearance of Jack Ma and a solid earnings report for the quarter ended December 2020. The net result, however, has been a roughly 17% (or $140bn) decline in Alibaba’s listed value. In this insight, I take a deep dive into Alibaba’s Sum-of-The-Parts valuation to assess what implied value is currently priced in for their equity holding in Ant Group, and what can be deduced from the current valuation for their Core Commerce operations.

Given the significant uncertainty surrounding 1) the impact that a regulatory-induced restructuring could have on the eventually listed Ant Group (6688 HK), and 2) the full final impact of increased anti-monopoly regulatory efforts from the State Administration for Market Regulation (SAMR) on the Alibaba Group (9988 HK), it has been difficult to assess a fair valuation level for the company. Following the indefinite suspension of Ant Group’s IPO, in November 2020, we witnessed a c.30% sell-off (or $260bn!) in Alibaba Group’s share price, before starting its recovery back to current levels, triggered by the reappearance of Jack Ma and a solid earnings report for the quarter ended December 2020. The net result, however, has been a roughly 17% (or $140bn) decline in Alibaba’s listed value. In this insight, I take a deep dive into Alibaba’s Sum-of-The-Parts valuation to assess what implied value is currently priced in for their equity holding in Ant Group, and what can be deduced from the current valuation for their Core Commerce operations.

Alibaba: A Detailed Look at the SOTP, and What that Tells Us About the Ant Group and Core Commerce

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

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<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> is well-known for its car leasing business in Indonesia, as one of the largest players in long-term car leasing through ASSA Rent, with around 13% market share. It is less well appreciated as a major player in logistics and for its technology-based express logistics company Anteraja, which services the booming e-commerce space in Indonesia. 
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The company is also the no.1 used car auction player through JBA, with around 40% market share, providing a service for the majority of Indonesia's auto finance companies.
<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> also has a complementary C2C online marketplace selling vehicles, which is connected to its used car and auction business. 
The company's core car rental business will see growth of +10-15% as the economy recovers but Anteraja will see stronger growth driving the top line to grow +25% in 2021. Management expects Anteraja to account for more than 50% of sales in 1-2 years. 
<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> currently trades on an FY21E PER multiple of 20.1x and F22E PER of 16.9x, which does not look expensive given the potential digital transformation ahead.


Adi Sarana Armada (ASSA IJ) is well-known for its car leasing business in Indonesia, as one of the largest players in long-term car leasing through ASSA Rent, with around 13% market share. It is less well appreciated as a major player in logistics and for its technology-based express logistics company Anteraja, which services the booming e-commerce space in Indonesia. 

The company is also the no.1 used car auction player through JBA, with around 40% market share, providing a service for the majority of Indonesia's auto finance companies.
Adi Sarana Armada (ASSA IJ) also has a complementary C2C online marketplace selling vehicles, which is connected to its used car and auction business. 
The company's core car rental business will see growth of +10-15% as the economy recovers but Anteraja will see stronger growth driving the top line to grow +25% in 2021. Management expects Anteraja to account for more than 50% of sales in 1-2 years. 
Adi Sarana Armada (ASSA IJ) currently trades on an FY21E PER multiple of 20.1x and F22E PER of 16.9x, which does not look expensive given the potential digital transformation ahead. 

Adi Sarana Armada (ASSA IJ) - Auto Leasing, Logistics, and the Last Mile

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

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Although slightly weaker than the exceptional growth reported in September and October, Chinese express parcel volume growth remained strong in December, up 37% YoY. 
Unfortunately, pricing remained weak in December, with some companies reporting YoY unit  declines of more than 25%. Such sharp declines can quickly erode profit margins and cash flow. 
Our investment thesis for the sector remains intact: growing financial pressures within China's express sector will lead to necessary industry consolidation, probably in 2021.




Although slightly weaker than the exceptional growth reported in September and October, Chinese express parcel volume growth remained strong in December, up 37% YoY. 
Unfortunately, pricing remained weak in December, with some companies reporting YoY unit  declines of more than 25%. Such sharp declines can quickly erode profit margins and cash flow. 
Our investment thesis for the sector remains intact: growing financial pressures within China's express sector will lead to necessary industry consolidation, probably in 2021. 

TRACKING TRAFFIC/Chinese Express: Volumes UP | Pricing DOWN | Time for Consolidation

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)

JD Logistics IPO Initiation: The Flow of Things

JD Logistics has filed for a Hong Kong IPO to raise as much as $4 billion, according to press reports. Overall, we believe that JD Logistics...

Arun George

JD.Com: Logistics Ops Spin-Off

Since JDH's listing, the stub has increased ~US$18.5bn., equivalent to ~12% of the market cap. The consensus target price is up around 8%. I would...

David Blennerhassett

Alibaba: A Detailed Look at the SOTP, and What that Tells Us About the Ant Group and Core Commerce

In this insight, I take a deep dive into Alibaba’s Sum-of-The-Parts to assess the implied value for their equity holding in Ant Group, and what can...

Wium Malan, CFA

Adi Sarana Armada (ASSA IJ) - Auto Leasing, Logistics, and the Last Mile

ASSA is Indonesia's leading B2B car leasing company moving aggressively into related businesses of auto auctions, logistics, and the last mile...

Angus Mackintosh

TRACKING TRAFFIC/Chinese Express: Volumes UP | Pricing DOWN | Time for Consolidation

Although express parcel volume growth remained strong in December, unit pricing was still weak, and we expect more companies to report losses in Q4...

Tracking Traffic

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