Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>In 1Q24, Revenues of Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY.</li>
<li>KE’s revenue decreased by 20% YoY in 1Q24 due to the weak property market.</li>
<li>Bilibili’s value added services revenue grew by 17% YoY and advertising revenue grew by 31% YoY.</li>
</ul>


In 1Q24, Revenues of Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY.
KE’s revenue decreased by 20% YoY in 1Q24 due to the weak property market.
Bilibili’s value added services revenue grew by 17% YoY and advertising revenue grew by 31% YoY.


China Consumption Weekly (27 May 2024): Xpeng, Tongcheng, Kanzhun, Gaotu, KE, Bilibili, and Weibo

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The announcement of "Draft for Comments on the Regulations on the Management of off-campus Training" has led to a 43.6% rebound of the education sector from the 2024 trough.</li>
<li>The "Draft" has cleared regulatory worries on after-school tutoring of high school students and non-academic subjects. For higher education space, we like <a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Techn (9901 HK)</a>, <a href="https://www.smartkarma.com/entities/tal-education-group" target="_blank" data-smartkarma-citation="entities:1124:1" rel="noopener">TAL Education (TAL US),</a> and <a href="https://www.smartkarma.com/entities/gaotu-techedu-inc" target="_blank" data-smartkarma-citation="entities:28069:1" rel="noopener">Gaotu Techedu (GOTU US)</a> are the most direct beneficiaries of the "Draft".</li>
</ul>


The announcement of "Draft for Comments on the Regulations on the Management of off-campus Training" has led to a 43.6% rebound of the education sector from the 2024 trough.
The "Draft" has cleared regulatory worries on after-school tutoring of high school students and non-academic subjects. For higher education space, we like China East Education (667 HK). 

New Oriental Education &amp; Techn (9901 HK), TAL Education (TAL US), and Gaotu Techedu (GOTU US) are the most direct beneficiaries of the "Draft".


China Private Education: Trigger for the Sharp Rebound, and What Follows......

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Grizzly Research's track record, especially with accusations against well-known Chinese ADRs like <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO (NIO US)</a>, <a href="https://www.smartkarma.com/entities/zto-express-cayman-inc-bc4e7cc1-66e0-4426-a8f1-edc72f314237" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express Cayman (ZTO US)</a>, and <a href="https://www.smartkarma.com/entities/gaotu-techedu-inc" target="_blank" data-smartkarma-citation="entities:28069:1" rel="noopener">Gaotu Techedu (GOTU US)</a>, hasn't been successful lately.</li>
<li>Despite past setbacks, the company has recently targeted another renowned Chinese ADR, <a href="https://www.smartkarma.com/entities/pdd-holdings-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">PDD Holdings (PDD US)</a>.</li>
<li>Grizzly Research alleges that Pinduoduo's shopping app, "TEMU," is a harmful malware/spyware secretly extracting user data.</li>
</ul>


Grizzly Research's track record, especially with accusations against well-known Chinese ADRs like NIO (NIO US), ZTO Express Cayman (ZTO US), and Gaotu Techedu (GOTU US), hasn't been successful lately.
Despite past setbacks, the company has recently targeted another renowned Chinese ADR, PDD Holdings (PDD US).
Grizzly Research alleges that Pinduoduo's shopping app, "TEMU," is a harmful malware/spyware secretly extracting user data.


Pinduoduo: Short Seller, Grizzly Research Raises Spyware Concerns About TEMU

<ul>
<li>Despite the 21% spike in share price, we believe good student enrollment outlook and earnings prospects of <a href="https://www.smartkarma.com/entities/china-education-group-holdin" target="_blank" data-smartkarma-citation="entities:18218:1" rel="noopener">China Education Group (839 HK)</a> are still yet to be fully reflected.</li>
<li>The 70.1% YoY surge in approved top-up degree program quotas in China and the guidance for substantial quota increase for bachelor’s degree and junior college programs are both exciting.</li>
<li>Its comprehensive cooperation agreement with Bank of China Jiangxi Branch adds another peace of mind as this suggests support from the state and lowers regulatory risks, in our view.</li>
</ul>


Despite the 21% spike in share price, we believe good student enrollment outlook and earnings prospects of China Education Group (839 HK) are still yet to be fully reflected.
The 70.1% YoY surge in approved top-up degree program quotas in China and the guidance for substantial quota increase for bachelor’s degree and junior college programs are both exciting.
Its comprehensive cooperation agreement with Bank of China Jiangxi Branch adds another peace of mind as this suggests support from the state and lowers regulatory risks, in our view.


China Education Group (839 HK): Further Evidences for Underlying Health

China

Gaotu Techedu inc develops educational software. The Company offers online K-12 large class after school tutoring as well as foreign language, professional and other courses. Gaotu Techedu serves students in China

Price Gauge
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Gaotu Techedu (GOTU US)

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

China Consumption Weekly (27 May 2024): Xpeng, Tongcheng, Kanzhun, Gaotu, KE, Bilibili, and Weibo

In 1Q24, Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY. KE’s revenue decreased by 20% YoY in 1Q24 due to the...

Ming Lu

China Private Education: Trigger for the Sharp Rebound, and What Follows......

The "Draft for Comments" of regulations on after-school tutoring has supported the rebound of the education sector. China East Education, New...

Osbert Tang, CFA

Pinduoduo: Short Seller, Grizzly Research Raises Spyware Concerns About TEMU

Grizzly Research published a short-seller report on PDD, primarily accusing the shopping app “TEMU” of being malware/spyware capable of...

Oshadhi Kumarasiri

China Education Group (839 HK): Further Evidences for Underlying Health

Solid growth in approved top-up degree quota brightens CEG's outlook. Even with share price spike, it still trades on cheap 7.1x PER for FY22, with...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

China Consumption Weekly (27 May 2024): Xpeng, Tongcheng, Kanzhun, Gaotu, KE, Bilibili, and Weibo

In 1Q24, Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY. KE’s revenue decreased by 20% YoY in 1Q24 due to the...

Ming Lu

China Private Education: Trigger for the Sharp Rebound, and What Follows......

​The "Draft for Comments" of regulations on after-school tutoring has supported the rebound of the education sector. China East Education, New...

Osbert Tang, CFA

Pinduoduo: Short Seller, Grizzly Research Raises Spyware Concerns About TEMU

Grizzly Research published a short-seller report on PDD, primarily accusing the shopping app “TEMU” of being malware/spyware capable of...

Oshadhi Kumarasiri

China Education Group (839 HK): Further Evidences for Underlying Health

Solid growth in approved top-up degree quota brightens CEG's outlook. Even with share price spike, it still trades on cheap 7.1x PER for FY22, with...

Osbert Tang, CFA

The "Draft for Comments" of regulations on after-school tutoring has supported the rebound of the education sector. China East Education, New...