Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

An inquisitive investment analyst with background in both finance and computing. Covering ECM research, biotech, market data analytics.

Asia Pac IPO & Placement Research, China biotech

17 Edu & Tech (一起教育) Pre-IPO: Far from Profitability

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 Capital Markets

17 Education & Technology Grou / Equity Capital Markets

<p>17 Education is a leading online tuition provider in China. The company was founded by former regional head of New Oriental Education and launched book building to raise up to USD 315m to list in the US.</p><p>In our previous note we discussed that 17 Education has a unique business model whereby it provides a free in-school solution to teachers, students and parents and upsells after-school paid tuition. On one hand, it has a large pool of verified students to upsell its paid after-school tuition. On the other hand, its conversion and market share is low, relative to its addressable market. While a majority of the paid-enrollment came from the in-school pools of students, it still needs to spend the majority of its gross profit as the promotional course expenses. We think it is so far a hard business. Our preliminary assessment suggests that it could take the company until the end of 2022 to reach breakeven. The company had a negative newsflow of administrative warning for its collection of personal data as well as unauthorized in-app purchases for homework related online games. </p><p>In this note, we compared the company's financial performance with its peers. We think the deal is overvalued for its operation, though its business model of user acquisition by providing free in-school solutions is interesting.</p><h2>Our previous coverage on 17 Edu &amp; Tech</h2><ul><li dir="ltr"><p><a href="https://www.smartkarma.com/insights/17-edu-tech-pre-ipo-far-from-profitability" target="_blank" rel="noopener">17 Edu &amp; Tech (一起教育) Pre-IPO: Far from profitability</a></p></li></ul>

17 Education is a leading online tuition provider in China. The company was founded by former regional head of New Oriental Education and launched book building to raise up to USD 315m to list in the US.In our previous note we discussed that 17 Education has a unique business model whereby it provides a free in-school solution to teachers, students and parents and upsells after-school paid tuition. On one hand, it has a large pool of verified students to upsell its paid after-school tuition. On the other hand, its conversion and market share is low, relative to its addressable market. While a majority of the paid-enrollment came from the in-school pools of students, it still needs to spend the majority of its gross profit as the promotional course expenses. We think it is so far a hard business. Our preliminary assessment suggests that it could take the company until the end of 2022 to reach breakeven. The company had a negative newsflow of administrative warning for its collection of personal data as well as unauthorized in-app purchases for homework related online games. In this note, we compared the company's financial performance with its peers. We think the deal is overvalued for its operation, though its business model of user acquisition by providing free in-school solutions is interesting.Our previous coverage on 17 Edu &amp; Tech17 Edu &amp; Tech (一起教育) Pre-IPO: Far from profitability

17 Edu & Tech (一起教育) IPO: Inferior Cost Structure, Overvalued Deal