ECM

In this briefing:

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market

The Homeplus REIT IPO is surely a key landmark deal in the 20 year history of the Korean REIT market. We have a positive view on the Homeplus REIT IPO and believe it has a good chance of generating 6-9% return per year (including dividends and capital appreciation) in the next three years. The Homeplus REIT is geared towards the investors who are happy with 6-9% annual returns with relatively low downside risk. For the investors that are seeking 10%+ annual returns, this deal is probably not suitable for them. 

The following are the five major factors why we believe the Homeplus REIT market will be a success: 

• Stable dividend yield of 6-7%.
• Opportunity to get included in a global REIT index (such as EPRA Developed Asia Index).
• Supermarkets related REITs are viewed safer than residential and commercial office building related REITs globally.
• Global investors have wanted to invest in a big, liquid, safe retail REIT with stable dividends in Korea for a long time. The Homeplus REIT possesses many of these characteristics. 

2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.6% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Ruhnn (the U.S, ~US$200m)
• Sun Car Insurance (Hong Kong, >US$100m)
• Sichuan Languang Justbon Services (Hong Kong, ~US$100m)
• Mabpharm (Hong Kong, re-filed)
• Intellicentrics (Hong Kong, CLSA sole-sponsor, likely to be <US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Chinese drone maker EHang plans US IPO
• Airport REIT could finance Singapore’s massive infrastructure ambitions
• PNB MetLife Insurance IPO likely in Q2FY20

Smartkarma Community’s this week Analysis on Upcoming IPO

• Lyft IPO Preview
• Lyft IPO Preview: Maybe We’ll Just Walk?
• LYFT Pre-IPO – Drivers and Shared Rides Hold the Key But the Numbers Are Missing
• Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
• Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
• Polycab IPO: Largest Cables Player, Asset-Heavy Low ROE Model = Vulnerable to Govt Capex Slowdown
• Hyundai Autoever IPO Valuation Analysis

In this briefing:

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas
3. ESR Cayman Pre-IPO – A Giant in the Making

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market

The Homeplus REIT IPO is surely a key landmark deal in the 20 year history of the Korean REIT market. We have a positive view on the Homeplus REIT IPO and believe it has a good chance of generating 6-9% return per year (including dividends and capital appreciation) in the next three years. The Homeplus REIT is geared towards the investors who are happy with 6-9% annual returns with relatively low downside risk. For the investors that are seeking 10%+ annual returns, this deal is probably not suitable for them. 

The following are the five major factors why we believe the Homeplus REIT market will be a success: 

• Stable dividend yield of 6-7%.
• Opportunity to get included in a global REIT index (such as EPRA Developed Asia Index).
• Supermarkets related REITs are viewed safer than residential and commercial office building related REITs globally.
• Global investors have wanted to invest in a big, liquid, safe retail REIT with stable dividends in Korea for a long time. The Homeplus REIT possesses many of these characteristics. 

2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.6% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Ruhnn (the U.S, ~US$200m)
• Sun Car Insurance (Hong Kong, >US$100m)
• Sichuan Languang Justbon Services (Hong Kong, ~US$100m)
• Mabpharm (Hong Kong, re-filed)
• Intellicentrics (Hong Kong, CLSA sole-sponsor, likely to be <US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Chinese drone maker EHang plans US IPO
• Airport REIT could finance Singapore’s massive infrastructure ambitions
• PNB MetLife Insurance IPO likely in Q2FY20

Smartkarma Community’s this week Analysis on Upcoming IPO

• Lyft IPO Preview
• Lyft IPO Preview: Maybe We’ll Just Walk?
• LYFT Pre-IPO – Drivers and Shared Rides Hold the Key But the Numbers Are Missing
• Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
• Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
• Polycab IPO: Largest Cables Player, Asset-Heavy Low ROE Model = Vulnerable to Govt Capex Slowdown
• Hyundai Autoever IPO Valuation Analysis

3. ESR Cayman Pre-IPO – A Giant in the Making

ESR Cayman (ESR HK) aims to raise up to US$1.5bn in its planned Hong Kong listing, as per media reports. The company is backed by Warburg Pincus and counts APG, the Netherlands’ largest pension provider, as one of its main investors.

ESR operates an end-to-end model starting from development of the asset to divesting it to one of its private funds and/or REITs. It operates in China, Japan, South Korea, Australia, Singapore and India. AUM has grown rapidly over the past few years as the company has undertaken a number of acquisitions in the recent past. 

In this insight, I’ll touch upon the company’s business model and provide an overview of its operations. 

In this briefing:

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market
2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas
3. ESR Cayman Pre-IPO – A Giant in the Making
4. China Gas Placement – Larger Deals Traded Flat but Good Track Record Should Help

1. Homeplus REIT IPO: A Key Landmark Deal in the History of the Korean REIT Market

The Homeplus REIT IPO is surely a key landmark deal in the 20 year history of the Korean REIT market. We have a positive view on the Homeplus REIT IPO and believe it has a good chance of generating 6-9% return per year (including dividends and capital appreciation) in the next three years. The Homeplus REIT is geared towards the investors who are happy with 6-9% annual returns with relatively low downside risk. For the investors that are seeking 10%+ annual returns, this deal is probably not suitable for them. 

The following are the five major factors why we believe the Homeplus REIT market will be a success: 

• Stable dividend yield of 6-7%.
• Opportunity to get included in a global REIT index (such as EPRA Developed Asia Index).
• Supermarkets related REITs are viewed safer than residential and commercial office building related REITs globally.
• Global investors have wanted to invest in a big, liquid, safe retail REIT with stable dividends in Korea for a long time. The Homeplus REIT possesses many of these characteristics. 

2. ECM Weekly (9 March 2019) – Lyft, Shenwan Hongyuan, RHB Bank, Sea Ltd, Xinyi Solar, China Gas

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.6% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Ruhnn (the U.S, ~US$200m)
• Sun Car Insurance (Hong Kong, >US$100m)
• Sichuan Languang Justbon Services (Hong Kong, ~US$100m)
• Mabpharm (Hong Kong, re-filed)
• Intellicentrics (Hong Kong, CLSA sole-sponsor, likely to be <US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Chinese drone maker EHang plans US IPO
• Airport REIT could finance Singapore’s massive infrastructure ambitions
• PNB MetLife Insurance IPO likely in Q2FY20

Smartkarma Community’s this week Analysis on Upcoming IPO

• Lyft IPO Preview
• Lyft IPO Preview: Maybe We’ll Just Walk?
• LYFT Pre-IPO – Drivers and Shared Rides Hold the Key But the Numbers Are Missing
• Embassy Office Parks REIT – Comparison with AIT and a Look at the Required Yield
• Shenwan Hongyuan (申万宏源) A+H: A Commoditized Broker Business
• Polycab IPO: Largest Cables Player, Asset-Heavy Low ROE Model = Vulnerable to Govt Capex Slowdown
• Hyundai Autoever IPO Valuation Analysis

3. ESR Cayman Pre-IPO – A Giant in the Making

ESR Cayman (ESR HK) aims to raise up to US$1.5bn in its planned Hong Kong listing, as per media reports. The company is backed by Warburg Pincus and counts APG, the Netherlands’ largest pension provider, as one of its main investors.

ESR operates an end-to-end model starting from development of the asset to divesting it to one of its private funds and/or REITs. It operates in China, Japan, South Korea, Australia, Singapore and India. AUM has grown rapidly over the past few years as the company has undertaken a number of acquisitions in the recent past. 

In this insight, I’ll touch upon the company’s business model and provide an overview of its operations. 

4. China Gas Placement – Larger Deals Traded Flat but Good Track Record Should Help

A shareholder of China Gas Holdings (384 HK) is looking to sell about 142m shares worth approximatel US$443m. This is a clean-up trade.

The deal scores well on our framework owing to its pristine track record of outperformance and decent earnings momentum. It is also a clean-up trade, hence, no overhang on its share price.

However, the performance of prev deals show that placements larger than HK$3bn tend to perform flat over one-month period whereas placements with smaller deal size did well. 

In this briefing:

1. ECM Weekly (6 April 2019) – Bilibili, Huya, Qutoutiao, Polycab, PNB Metlife, CIMC Vehicle
2. Japan Post Insurance Placement – 3x the IPO Size – Basics and Index Impact
3. Huya Offering: Everyone Else Was Doing It Excuse
4. Huya Placement: Best Performing Live Streaming Stock but Beware Douyu Is Catching Up
5. Ruhnn (如涵) Trading Update – Worst First-Day Performance Out of Recent US ADR Listings

1. ECM Weekly (6 April 2019) – Bilibili, Huya, Qutoutiao, Polycab, PNB Metlife, CIMC Vehicle

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.4% for IPOs and 63.5% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Changliao AKA 派派(Hong Kong, ~US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• Leong Hup – comeback sunny side up
• Polycab India eyes to raise around Rs 1,345 crore through IPO
• Carlyle-backed Metropolis Healthcare’s IPO nears halfway mark on second day
• Eagle Hospitality Trust eyes Singapore IPO to raise up to US$575m
• Cancer Treatment Firm Plans Hong Kong IPO
• Goldman-Backed Chinese Online Pet Store Boqii Plans IPO
• China drone maker EHang delays IPO plan, eyes private funding-sources

This week Analysis on Upcoming IPO

• Map Aktif Follow-On Offering – Lace up for a Potential Long Run
• Zhongliang (中梁地产) Pre-IPO Review – Incredible Growth Bogged Down by Related Party Transactions
• CIMC Vehicle (中集车辆): Market Leader of Semi-Trailers but Little Growth Ahead
• PNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
• Polycab India Limited IPO – Probably Near Peak Margins, Improvements Unexplained

2. Japan Post Insurance Placement – 3x the IPO Size – Basics and Index Impact

Yesterday, post-market close, Japan Post Holdings (6178 JP)(JPH) announced that it will sell 185m shares (including over-allotment) or 30.8% of Japan Post Insurance (7181 JP)(JPI) amounting to US$4bn. JPI plans to buy back up to 50m shares out of these, leaving around US$3.1bn worth of stock to be placed. Out of these 185m shares, 30% will be placed with foreigners.

The selldown is part of the government’s plan for privatization under which JPH is supposed to reduce its stake in JPI and Japan Post Bank (7182 JP)(JPB) to around 50%. This was highlighted in the IPO of the three entities in 2015. Thus, the deal is not totally unexpected but the timing of it was never certain. For people interested in more about the history and background, we’ve covered the IPO and JPH sell down in the below series of insights:

• All three IPOs: When the bank is cheap and holdco discount makes the mothership cheaper, then who needs insurance?
• JPI IPO: Three’s a crowd – A minnow amongst giants risks getting lost in the chatter
• JPB IPO: Dividend yield looks enticing versus JGBs yield, while risks are similar
• JPH IPO: Final call to board the mothership. They don’t come much cheaper than this.
• JPH Placement: Japan Post Holdings Placement – Similar Reasons, Similar Price Will Probably Yield Similar Returns

In this insight, I’ll comment on some of the deal dynamics and index weighting impact.

3. Huya Offering: Everyone Else Was Doing It Excuse

Follow-on offerings by Chinese ADRs are the flavour of the day. Hot on the heels of Qutoutiao Inc (QTT US) and Bilibili Inc (BILI US), HUYA Inc (HUYA US) filed for a potential $550 million public offering without presenting any details on the new ADS being offered. Also, certain selling shareholders will offer shares in the offering.

4. Huya Placement: Best Performing Live Streaming Stock but Beware Douyu Is Catching Up

Huya, a leading live streaming player in China, announced share placement of USD 550 million after market close on April 3rd. In this insight, we will look at recent developments of Huya and score the deal in our ECM Framework.

5. Ruhnn (如涵) Trading Update – Worst First-Day Performance Out of Recent US ADR Listings

Ruhnn Holding Ltd (RUHN US) raised US$125m at US$12.50 per share, the mid-point of the price range. We have previously analyzed the IPO in:

• Ruhnn (如涵) IPO Review – Expensive Influence
• Ruhnn (如涵) Pre-IPO Review- Significant Concentration Risk

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

In this briefing:

1. Naspers: Addressing the Discount (Again). New Moves to Realize Value Are Having an Impact
2. Ronshine (融信集团) Placement – Back for a Equity Raise
3. Polycab India Limited IPO – Probably Near Peak Margins, Improvements Unexplained
4. Dongzheng Auto Finance (东正汽车金融) Trading Update – Could Be Worth Setting up a Trade
5. Bilibili Offering: Unnecessary and Opportunistic

1. Naspers: Addressing the Discount (Again). New Moves to Realize Value Are Having an Impact

Naspers (NPN SJ) recently announced another attempt to reduce the holdco discount which has remained stubbornly high despite previous attempts by management to reduce it. Since the announcement there has been movement, so perhaps this time it really is different!

So what is being done? Naspers will spin off its international internet assets, which account for >99% of its value, into a newco. They will then list 25% of newco on the Euronext in Amsterdam by issuing these shares to Naspers’ shareholders. The intention is to create a vehicle which can attract increased foreign and tech investors without the complication of a South African listing. The company believes this has been a key factor behind the wide holdco discount. The move also reduces Naspers weighting in South African indices which is another contributing factor.

Alastair Jones sees the announcement as a positive, although there are still issues with the main listing being in South Africa. He still believes a buyback would be the most effective way to reduce the discount, but Naspers is also keen to keep investing. 

2. Ronshine (融信集团) Placement – Back for a Equity Raise

Ronshine China Holdings (3301 HK) is looking to raise about US$122m in a top-up placement.

The deal scores marginally positive on our framework owing to its decent track record, and price and earnings momentum.

Its past deals have done well in the long run. Even though it did not perform well over the one-month period, its first week returns have tend to hold up above the deal price.

3. Polycab India Limited IPO – Probably Near Peak Margins, Improvements Unexplained

Polycab India (POLY IN) plans to raise around US$190m in its IPO through a mix of selling primary and secondary shares. It is the largest manufacturer of wires and cables in India with a 12% market share, as per CRISIL research. The company also recently entered the consumer electrical segments. 

I covered the company background and past financial performance in my previous insight, Polycab India Limited Pre-IPO – Market Leader with Steady Growth but with a Few Unanswered Question.

In this insight, I’ll run the deal through our IPO framework, and comment on valuation and updates since the previous filing.

4. Dongzheng Auto Finance (东正汽车金融) Trading Update – Could Be Worth Setting up a Trade

Dongzheng Automotive Finance (2718 HK) raised US$208m at a fixed price of HK$3.06 per share. We have covered the IPO extensively in:

• Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth
• Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent
• Dongzheng Auto Finance (东正汽车金融) IPO Review – Relaunched at Lower Price

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

5. Bilibili Offering: Unnecessary and Opportunistic

On Monday, Bilibili Inc (BILI US) unveiled plans to raise around $192 million (based on the closing price of $18.95 per ADS) through a public offering of 10.6 million ADS and a concurrent offering of $300 million convertible senior notes. Also, certain selling shareholders will offer 6.5 ADS in the offering.

In this briefing:

1. NIO (NIO US): Lock-Up Expiry – This Could Get Messy

1. NIO (NIO US): Lock-Up Expiry – This Could Get Messy

Yesterday, NIO Inc (NIO US)’s share tumbled 20% on the back of poor 1Q19 guidance. NIO warned that deliveries of ES8, its electric SUV, have been sluggish so far in 2019 and scrapped plans to build its Shanghai Manufacturing Plant. NIO blamed the slump on uncertainty over government subsidies for electric vehicles, China’s slowing economy and disruption caused by the Chinese New Year holidays.

In this briefing:

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update

Yincheng International Holdi (1902 HK) raised US$100m in at HK$2.38 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

In this briefing:

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update
2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update

Yincheng International Holdi (1902 HK) raised US$100m in at HK$2.38 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?

Despite burning through $700mn in cash in 2018, investors decided to give another $1.3bn to Sea Ltd (SE US) . We believe investors should treat Sea Ltd with caution for the following reasons:

A significant slowdown in e-commerce

Is the gaming division a one-hit wonder?

Expecting another 800mn cash burn into 2019

Consensus has priced in further upgrades while cash flow metrics worst in the sector

NB. Our team has taken both sides of the Sea Ltd investment case as we think this makes for better decision making and encourages unique thinking within our team. We strongly recommend that investors read my colleague Arun’s positive notes on the company listed below, if you have not already done so.

Sea Ltd (SE US): Placing Price Leaves Money on the Table

Sea Ltd (SE US): Placement a Good Opportunity to Enter an Attractive Story

In this briefing:

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update
2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?
3. Sea Ltd (SE US): Placing Price Leaves Money on the Table

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update

Yincheng International Holdi (1902 HK) raised US$100m in at HK$2.38 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?

Despite burning through $700mn in cash in 2018, investors decided to give another $1.3bn to Sea Ltd (SE US) . We believe investors should treat Sea Ltd with caution for the following reasons:

A significant slowdown in e-commerce

Is the gaming division a one-hit wonder?

Expecting another 800mn cash burn into 2019

Consensus has priced in further upgrades while cash flow metrics worst in the sector

NB. Our team has taken both sides of the Sea Ltd investment case as we think this makes for better decision making and encourages unique thinking within our team. We strongly recommend that investors read my colleague Arun’s positive notes on the company listed below, if you have not already done so.

Sea Ltd (SE US): Placing Price Leaves Money on the Table

Sea Ltd (SE US): Placement a Good Opportunity to Enter an Attractive Story

3. Sea Ltd (SE US): Placing Price Leaves Money on the Table

Sea Ltd (SE US) announced that it would raise gross proceeds of $1.35 billion after increasing the size of its placement from 50 million to 60 million ADS. The placement is priced at $22.50 per ADS, 6.5% discount to its last close price. Tencent Holdings (700 HK), as well as one of Sea’s directors, are expected to buy 6.3 million ADS in the placement. The placing is expected to close on or about 8 March 2019.

In this briefing:

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update
2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?
3. Sea Ltd (SE US): Placing Price Leaves Money on the Table
4. Meituan Dianping (美团点评): Thoughts Before Lock-Up Expiry

1. Yingcheng Intl (银城国际) – Quick Post-IPO Trading Update

Yincheng International Holdi (1902 HK) raised US$100m in at HK$2.38 per share, at the mid-point of its IPO price range. We have previously covered the IPO in:

• Yincheng Intl (银城国际) IPO Quick Note: A Highly Levered Nanjing Developer Bet

In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

2. Sea Ltd (SE US): The Bear Case – A One-Hit Wonder?

Despite burning through $700mn in cash in 2018, investors decided to give another $1.3bn to Sea Ltd (SE US) . We believe investors should treat Sea Ltd with caution for the following reasons:

A significant slowdown in e-commerce

Is the gaming division a one-hit wonder?

Expecting another 800mn cash burn into 2019

Consensus has priced in further upgrades while cash flow metrics worst in the sector

NB. Our team has taken both sides of the Sea Ltd investment case as we think this makes for better decision making and encourages unique thinking within our team. We strongly recommend that investors read my colleague Arun’s positive notes on the company listed below, if you have not already done so.

Sea Ltd (SE US): Placing Price Leaves Money on the Table

Sea Ltd (SE US): Placement a Good Opportunity to Enter an Attractive Story

3. Sea Ltd (SE US): Placing Price Leaves Money on the Table

Sea Ltd (SE US) announced that it would raise gross proceeds of $1.35 billion after increasing the size of its placement from 50 million to 60 million ADS. The placement is priced at $22.50 per ADS, 6.5% discount to its last close price. Tencent Holdings (700 HK), as well as one of Sea’s directors, are expected to buy 6.3 million ADS in the placement. The placing is expected to close on or about 8 March 2019.

4. Meituan Dianping (美团点评): Thoughts Before Lock-Up Expiry

Meituan Dianping, the largest O2O platform in China, was listed on September 20th last year and lock-up expiry will be on March 20th. The stock has returned -13% since listing. 

• As it heads into lock-up expiry on March 20th, we will examine Meituan Dianping shareholder structure and potential shares up for sale.
• Meituan was included by MSCI recently and will be eligible for the Hong Kong Connect soon thanks to rule amendment.
• The company delivered a decent topline growth in 3Q2018 but its profit fell short of expectation. We highlight potentials from the food supply chain solution. We also discuss implication from MoBike acquisition.
• We review our SOTP valuation of Meituan and believe there is an upside.