Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

JD Logistics: An Attractive IPO With a 40% Upside

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Capital Markets

In this insight, we analyze the impact of market caps and share based compensation schemes on the 20 major Chinese IPOs so far in 2021. Some of the major Chinese IPOs that have been completed so far in 2021 include <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a>, and <a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a>.These 20 IPOs currently have combined market caps of US$219 billion. Twelve of these IPOs are listed in HK and eight of them are listed in the US. Investors have been very selective in their pickings of Chinese IPOs this year unlike in 2020 when there was a much bullish sentiment. <div class="content-highlight">
Impact of Market Caps on Chinese IPOs in 2021 - The larger sized market cap Chinese IPOs have done much better as compared to the smaller market cap IPOs in 2021.
Impact of Share Based Compensation Costs on Chinese IPOs in 2021 - Share based compensation expenses accounted for on average 9.9% of their total sales in 2019 and 2020. Among the 20 Chinese companies that completed their IPOs in 2021 above, we included 12 companies (see below) that provided specific breakdowns of their share based compensation costs in the past couple of years. On average, these 12 stocks returned 70.9% on their first day of trading after the IPO. This was higher than the average first day return of 28% for the remaining 8 companies. 
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In this insight, we analyze the impact of market caps and share based compensation schemes on the 20 major Chinese IPOs so far in 2021. Some of the major Chinese IPOs that have been completed so far in 2021 include Kuaishou Technology (1024 HK), JD Logistics (2618 HK), and Kanzhun (BZ US).These 20 IPOs currently have combined market caps of US$219 billion. Twelve of these IPOs are listed in HK and eight of them are listed in the US. Investors have been very selective in their pickings of Chinese IPOs this year unlike in 2020 when there was a much bullish sentiment. 
Impact of Market Caps on Chinese IPOs in 2021 - The larger sized market cap Chinese IPOs have done much better as compared to the smaller market cap IPOs in 2021.
Impact of Share Based Compensation Costs on Chinese IPOs in 2021 - Share based compensation expenses accounted for on average 9.9% of their total sales in 2019 and 2020. Among the 20 Chinese companies that completed their IPOs in 2021 above, we included 12 companies (see below) that provided specific breakdowns of their share based compensation costs in the past couple of years. On average, these 12 stocks returned 70.9% on their first day of trading after the IPO. This was higher than the average first day return of 28% for the remaining 8 companies. 


Impact of Market Caps & Share Based Compensation Schemes on Chinese IPOs in 2021