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.

Equity Capital Markets

<p>Kanzhun, an online recruitment platform in China, aims to raise around US$800m in its US IPO. The company is backed by Tencent. Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.</p><p>Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.</p><p>The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020.</p>

Kanzhun, an online recruitment platform in China, aims to raise around US$800m in its US IPO. The company is backed by Tencent. Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

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.

<p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> is the largest online recruitment platform in China, as measured by the average monthly active users (MAU) in 2020, according to CIC. Its <em>BOSS Zhipin</em> mobile app connects job seekers and enterprise users as is positioned in the mid-to-high-end segment (white and gold-collar users) compared to local peers.</p><p>Kanzhun is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (12.2% of outstanding shares), Banyan Partners (9.4%), Coatue Management (7.8%), <a href="https://www.smartkarma.com/entities/goldman-sachs-group-inc" target="_blank" data-smartkarma-citation="entities:785:1" rel="noopener">Goldman Sachs Group (GS US)</a> (7.3%), Sequoia Capital and Tiger Global. Kanzhun has filed for a Nasdaq IPO to raise proceeds of $800 million, according to press reports.  </p><p>Kanzhun is a play on the gradual shift of the China recruitment service market to online platforms. China’s online recruitment market size as measured by revenue is forecasted to increase from RMB55.1 billion in 2020 to RMB223.4 billion in 2025 (CAGR of 32.3%), according to CIC. The penetration rate of online recruitment to the total market is forecasted to increase from 32% in 2020 to 50% in 2025, according to CIC.</p><div class="content-highlight">
<p>Kanzhun is well-positioned to benefit from this sizeable market opportunity, in our view. At first sight, the strong growth in users and fast-paced revenue growth but ongoing losses suggests another “growth at all costs” strategy. In comparison, local listed peers such as <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> and <a href="https://www.smartkarma.com/entities/wise-talent-information-tech" target="_blank" data-smartkarma-citation="entities:27177:1" rel="noopener">Wise Talent Information Tech (6100 HK)</a> are growing much slower but are profitable.</p>
<p>Encouragingly, Kanzhun's high revenue visibility and declining loss margin suggest that Kanzhun can eventually deliver high growth with profits. The upfront payment model of the online recruitment market means that like its peers, Kanzhun is cash generative. For investors willing to brave the current market selloff in high growth stocks, we think that the Kanzhun story warrants a closer look.  </p>
</div>

Kanzhun (BZ US) is the largest online recruitment platform in China, as measured by the average monthly active users (MAU) in 2020, according to CIC. Its BOSS Zhipin mobile app connects job seekers and enterprise users as is positioned in the mid-to-high-end segment (white and gold-collar users) compared to local peers.Kanzhun is backed by Tencent (700 HK) (12.2% of outstanding shares), Banyan Partners (9.4%), Coatue Management (7.8%), Goldman Sachs Group (GS US) (7.3%), Sequoia Capital and Tiger Global. Kanzhun has filed for a Nasdaq IPO to raise proceeds of $800 million, according to press reports.  Kanzhun is a play on the gradual shift of the China recruitment service market to online platforms. China’s online recruitment market size as measured by revenue is forecasted to increase from RMB55.1 billion in 2020 to RMB223.4 billion in 2025 (CAGR of 32.3%), according to CIC. The penetration rate of online recruitment to the total market is forecasted to increase from 32% in 2020 to 50% in 2025, according to CIC.
Kanzhun is well-positioned to benefit from this sizeable market opportunity, in our view. At first sight, the strong growth in users and fast-paced revenue growth but ongoing losses suggests another “growth at all costs” strategy. In comparison, local listed peers such as 51 Job Inc Adr (JOBS US) and Wise Talent Information Tech (6100 HK) are growing much slower but are profitable.
Encouragingly, Kanzhun's high revenue visibility and declining loss margin suggest that Kanzhun can eventually deliver high growth with profits. The upfront payment model of the online recruitment market means that like its peers, Kanzhun is cash generative. For investors willing to brave the current market selloff in high growth stocks, we think that the Kanzhun story warrants a closer look.  


Kanzhun IPO Initiation: Search and Employ

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

<div>
<p>Back on the 17 September 2020, IR solutions provider <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> announced it had received a preliminary non-binding <a href="https://sec.report/Document/0001104659-20-105912/" target="_blank" rel="noopener">Proposal</a> from DCP Capital Partners to acquire all of its shares for US$79.05/common share, a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.</p>
<p>The company <a href="https://ir.51job.com/ir/php/2020/PreReleaseq09212020.php" target="_blank" rel="noopener">formed</a> a special committee on the 21 September to evaluate the proposal and an independent financial advisor was appointed on the <a href="https://ir.51job.com/ir/php/2020/PreReleaseq09302020.php" target="_blank" rel="noopener">30 September</a>.</p>
</div>
<div>
<p>Then crickets. Not even a mention in its <a href="https://ir.51job.com/ir/doc/2021/2020Form20FEDGARFINAL20210423.pdf" target="_blank" rel="noopener">2020 annual report</a> on the 23 April this year. One would have thought given the material nature of this proposal warranted at least a one-liner.</p>
<p>I reached out to the IR for clarification and was told:</p>
<blockquote>
<p>The evaluation is ongoing. When there is an update or development, a public press release will be issued.</p>
</blockquote>
<h3>The New News</h3>
<p>51job <a href="https://ir.51job.com/ir/php/2021/PreRelease20210504.php?0504" target="_blank" rel="noopener">announced</a> yesterday an updated non-binding proposal which sees Ocean Link and CEO Rick Yan joining DCP in the consortium to take the company private. The Offer price of US$79.05/common share remains the same.</p>
<p>More below the fold.</p>
</div>


Back on the 17 September 2020, IR solutions provider 51 Job Inc Adr (JOBS US) announced it had received a preliminary non-binding Proposal from DCP Capital Partners to acquire all of its shares for US$79.05/common share, a premium of 18.82% to 51job's 30-day VWAP, and a premium of 16.05% to 51job's last close.
The company formed a special committee on the 21 September to evaluate the proposal and an independent financial advisor was appointed on the 30 September.


Then crickets. Not even a mention in its 2020 annual report on the 23 April this year. One would have thought given the material nature of this proposal warranted at least a one-liner.
I reached out to the IR for clarification and was told:

The evaluation is ongoing. When there is an update or development, a public press release will be issued.

The New News
51job announced yesterday an updated non-binding proposal which sees Ocean Link and CEO Rick Yan joining DCP in the consortium to take the company private. The Offer price of US$79.05/common share remains the same.
More below the fold.


51job's Buyout: Offer Price Unchanged In Updated Proposal

<p><a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc Adr (JOBS US)</a> announced an updated non-binding privatisation proposal. As a reminder, on 17 September 2020, 51job disclosed a non-binding privatisation proposal from DCP Capital Partners, a PE firm in Asia, at $79.05 in cash per common share. The updated proposal keeps the bid price unchanged but discloses the formation of a consortium. The initial consortium members are DCP, Ocean Link Partners and Mr Rick Yan, the CEO since 2000. </p><p>The unchanged offer price is a premium of 25.38% to the VWAP during the last 30 days and an 18.82% premium to the VWAP during the last 30 days preceding the original proposal (on 17 September 2020). The press release mentions that the initial consortium members hold 17.62% of the total voting power of the issued and outstanding shares. The initial consortium members will not sell their shares in any other competing transaction.</p><p>As 51job is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. Reaching the two-thirds threshold rests on the consortium’s ability to rope in <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> which holds 34.8% of outstanding shares. We think that the use of the phrase “<em>initial consortium members</em>” suggests that Recruit is close to joining the consortium or selling into the bid. We also note that Ocean Link’s successful privatisation of <a href="https://www.smartkarma.com/entities/58-com-inc-adr" target="_blank" data-smartkarma-citation="entities:2563:1" rel="noopener">58.Com Inc Adr (WUBA US)</a> through a consortium bodes well for roping in Recruit. </p><div class="content-highlight"><p>Our analysis suggests that the initial consortium members along with supporting shareholders and/or additional consortium members could potentially hold 39.4 million shares representing 58.5% of outstanding shares. This level of support should be enough to get past the two-thirds shareholder approval threshold. At the current share price of $67.60, the gross spread is 17%.</p></div>

51 Job Inc Adr (JOBS US) announced an updated non-binding privatisation proposal. As a reminder, on 17 September 2020, 51job disclosed a non-binding privatisation proposal from DCP Capital Partners, a PE firm in Asia, at $79.05 in cash per common share. The updated proposal keeps the bid price unchanged but discloses the formation of a consortium. The initial consortium members are DCP, Ocean Link Partners and Mr Rick Yan, the CEO since 2000. The unchanged offer price is a premium of 25.38% to the VWAP during the last 30 days and an 18.82% premium to the VWAP during the last 30 days preceding the original proposal (on 17 September 2020). The press release mentions that the initial consortium members hold 17.62% of the total voting power of the issued and outstanding shares. The initial consortium members will not sell their shares in any other competing transaction.As 51job is incorporated in the Cayman Islands, for the privatisation to succeed, shareholders representing two-thirds of shares present and voting need to approve the deal. Reaching the two-thirds threshold rests on the consortium’s ability to rope in Recruit Holdings (6098 JP) which holds 34.8% of outstanding shares. We think that the use of the phrase “initial consortium members” suggests that Recruit is close to joining the consortium or selling into the bid. We also note that Ocean Link’s successful privatisation of 58.Com Inc Adr (WUBA US) through a consortium bodes well for roping in Recruit. Our analysis suggests that the initial consortium members along with supporting shareholders and/or additional consortium members could potentially hold 39.4 million shares representing 58.5% of outstanding shares. This level of support should be enough to get past the two-thirds shareholder approval threshold. At the current share price of $67.60, the gross spread is 17%.

China

51job, Inc. provides integrated human resource services in China, with a strong focus on recruitment related services.  The Company's recruitment related services are delivered in both print and online formats.

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51 Job Inc Adr (JOBS US)

Kanzhun Pre-IPO - Bumble Meets Linkedin

Kanzhun, an online recruitment platform in China, aims to raise around US$800m in its US IPO. The company is backed by Tencent. Kanzhun runs BOSS...

Sumeet Singh

Kanzhun IPO Initiation: Search and Employ

Kanzhun has filed for an $800 m raise, according to press reports. For investors willing to brave the current market selloff in high growth stocks,...

Arun George

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

51job's Buyout: Offer Price Unchanged In Updated Proposal

Trading at a gross spread of 15.9%. With a seasoned player such as Ocean Link now in the mix, plus the CEO, a definitive agreement looks more...

David Blennerhassett

51job’s Updated Privatisation Bid

The updated non-binding privatisation proposal keeps the $79.05 offer price unchanged but introduces a consortium. At the current share price of...

Arun George

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