IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

Baidu Secondary Listing: Searching for the Next Big Thing

Baidu Secondary Listing: Do the Fundamentals Stack Up?

An Analysis of ADR/HKEX Discount Behavior As The US Listed Chinese Tech Rush To Hong Kong

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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

<p><a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> launched a $3 billion secondary listing in Hong Kong last Thursday evening. Bookbuilding is scheduled to run until the pricing on 17 March. The secondary listing has received good early demand with the books covered on the first day, according to press reports. The H-shares will begin trading on 23 March. </p><p>In <a href="https://www.smartkarma.com/insights/baidu-secondary-listing-searching-for-the-next-big-thing" target="_blank" data-smartkarma-citation="insights:49043" rel="noopener">Baidu Secondary Listing: Searching for the Next Big Thing</a>, we outlined our views on Baidu’ fundamentals and valuation. Baidu is making great strides in expanding its total addressable market (TAM) through ongoing investments. In combination with the potential valuation upside to the last close price (based on SoTP), we concluded that the equity story is attractive. </p><div class="content-highlight"><p>In this note, we will look at Baidu’s potential HK-ADS premium/(discount). Baidu will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. However, market conditions remain volatile and there remains a possibility of a renewed global equity sell-off. Consequently, Baidu will likely price its H-shares at a wider discount than the median HK-ADS discount of previous secondary listings. Overall, Baidu pricing its H-shares at a discount range of 3% to 4% to its ADSs will be reasonable.</p></div>

Baidu (BIDU US) launched a $3 billion secondary listing in Hong Kong last Thursday evening. Bookbuilding is scheduled to run until the pricing on 17 March. The secondary listing has received good early demand with the books covered on the first day, according to press reports. The H-shares will begin trading on 23 March. In Baidu Secondary Listing: Searching for the Next Big Thing, we outlined our views on Baidu’ fundamentals and valuation. Baidu is making great strides in expanding its total addressable market (TAM) through ongoing investments. In combination with the potential valuation upside to the last close price (based on SoTP), we concluded that the equity story is attractive. In this note, we will look at Baidu’s potential HK-ADS premium/(discount). Baidu will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. However, market conditions remain volatile and there remains a possibility of a renewed global equity sell-off. Consequently, Baidu will likely price its H-shares at a wider discount than the median HK-ADS discount of previous secondary listings. Overall, Baidu pricing its H-shares at a discount range of 3% to 4% to its ADSs will be reasonable.

Baidu Secondary Listing: HK-ADS Premium/​(Discount) Views

Baidu

Baidu Secondary Listing: HK-ADS Premium/​(Discount) Views

Baidu Secondary Listing: HK-ADS Premium/(Discount) Views