Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

Almost a year ago, on 31 October 2019, the PBOC announced that after years of preparation (by the PBOC's Digital Currency Research Institute (央行数字货币研究所), established in 2017 and tasked with digital currency development and testing with counterparts, three years after the study effort was launched by then-Governor of the PBOC Xiaochuan Zhou in 2014), an official "digital renmimbi" would shortly be released. This "digital currency" is adapted to the world of cashless mobile payments, relevant for China as something like four out of every five payment transactions in China are now made through smartphone payment systems such as <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>'s AliPay and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>'s WeChat Pay according to a May 2020 <a href="https://www.scmp.com/economy/china-economy/article/3083952/what-chinas-cryptocurrency-sovereign-digital-currency-and-why" target="_blank" rel="noopener">article</a> in the SCMP.Known as the Digital Currency Electronic Payment (DC/EP or "DCEP"), this sovereign digital currency issued by the central bank is designed to replace cash circulation - called M0 in monetary system language - and pass through a PBOC-approved electronic wallet application, which would be linked to a bank card/account, and would allow payment or receipt of digital renmimbi through merchants the way AliPay and WeChat Pay are used, or ATMs the way a bank card is used. It turns the mobile phone into a payment terminal or ATM. Interestingly, the system is also designed to be used offline - by phones being bumped together.Ultimately, this digital currency (数字货币) is designed to track transactions between parties, providing the PBOC with a better understanding of the flow of money, credit, and person-to-person transfer of funds, allowing for more real-time understanding at the PBOC of money supply and money velocity. Eventually, it could also be used to track all money flow for regulatory and tax purposes. In addition, the concept can be expanded to use cases for international trade and the PBOC is not shy about proclaiming that use case.But what is it? How does it work? What is the purpose? Will it really mean the world moves to the RMB as a reserve currency?Much more discussion continues below the fold.

Almost a year ago, on 31 October 2019, the PBOC announced that after years of preparation (by the PBOC's Digital Currency Research Institute (央行数字货币研究所), established in 2017 and tasked with digital currency development and testing with counterparts, three years after the study effort was launched by then-Governor of the PBOC Xiaochuan Zhou in 2014), an official "digital renmimbi" would shortly be released. This "digital currency" is adapted to the world of cashless mobile payments, relevant for China as something like four out of every five payment transactions in China are now made through smartphone payment systems such as Alibaba Group (BABA US)'s AliPay and Tencent Holdings (700 HK)'s WeChat Pay according to a May 2020 article in the SCMP.Known as the Digital Currency Electronic Payment (DC/EP or "DCEP"), this sovereign digital currency issued by the central bank is designed to replace cash circulation - called M0 in monetary system language - and pass through a PBOC-approved electronic wallet application, which would be linked to a bank card/account, and would allow payment or receipt of digital renmimbi through merchants the way AliPay and WeChat Pay are used, or ATMs the way a bank card is used. It turns the mobile phone into a payment terminal or ATM. Interestingly, the system is also designed to be used offline - by phones being bumped together.Ultimately, this digital currency (数字货币) is designed to track transactions between parties, providing the PBOC with a better understanding of the flow of money, credit, and person-to-person transfer of funds, allowing for more real-time understanding at the PBOC of money supply and money velocity. Eventually, it could also be used to track all money flow for regulatory and tax purposes. In addition, the concept can be expanded to use cases for international trade and the PBOC is not shy about proclaiming that use case.But what is it? How does it work? What is the purpose? Will it really mean the world moves to the RMB as a reserve currency?Much more discussion continues below the fold.

The NEW Chinese CBDC (DCEP - 数字货币) - Not Quite All The Money in China

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

<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> plans to raise up to USD 30bn (now said to be US$35bn) via a dual listing on both Hong Kong Exchange and Shanghai STAR board. 
Ant Group is not only the largest third-party payment player in China, it is also the no.1 independent player in each of the three non-payment segments by key operating metrics. 
We have provided our thoughts on Ant Group from as early as 2018. We have since looked at the company’s past performance, individual segments and some of the regulatory issues. In this note, I’ll compare the company with some of its peers in the payments segment. 

<div>
<div>
<h3>Our previous coverage on Ant Group</h3>
</div>
</div>
<div>
<ul>
<li dir="ltr">
<a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-what-s-new-about-the-listing-news" target="_blank" rel="noopener">Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors</a>
</li>
<li dir="ltr">
<a href="https://www.smartkarma.com/insights/ant-financial-ipo-early-thought-understand-the-fintech-empire-growth-and-risk-factors" target="_blank" rel="noopener">Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News</a>
</li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-first-take-no-1-fintech-from-all-angles" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-ipo-numbers-suggest-it-s-more-tech-than-financials" target="_blank" rel="noopener">Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-things-to-clarify-questions-to-ask-falling-fees-margins-cash-flow" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-dual-listing-makes-early-index-inclusion-tricky" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky</a></li>
<li><a href="https://www.smartkarma.com/insights/alipay-s-advantage-over-wechat-pay-in-physical-stores" target="_blank" rel="noopener">AliPay’s Advantage over WeChat Pay in Physical Stores</a></li>
</ul>
</div>
<ul>
<li><a href="https://www.smartkarma.com/insights/ant-group-running-neck-and-neck-with-tencent-in-direct-financial-services" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services</a></li>
<li><a href="https://www.smartkarma.com/insights/ant-group-pre-ipo-impact-assessment-of-the-new-rule-for-financial-holding-companies" target="_blank" rel="noopener">Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies</a></li>
</ul>

Ant Financial (1051260D CH) plans to raise up to USD 30bn (now said to be US$35bn) via a dual listing on both Hong Kong Exchange and Shanghai STAR board. 
Ant Group is not only the largest third-party payment player in China, it is also the no.1 independent player in each of the three non-payment segments by key operating metrics. 
We have provided our thoughts on Ant Group from as early as 2018. We have since looked at the company’s past performance, individual segments and some of the regulatory issues. In this note, I’ll compare the company with some of its peers in the payments segment. 



Our previous coverage on Ant Group





Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors


Ant Financial (蚂蚁金服) IPO Early Thought: What’s New About the Listing News

Ant Group (蚂蚁集团) IPO First-Take: No. 1 Fintech from All Angles
Ant Group (蚂蚁集团) IPO: Numbers Suggest It’s More Tech than Financials
Ant Group (蚂蚁集团) Pre-IPO: Things to Clarify/​Questions to Ask - Falling Fees, Margins, Cash Flow
Ant Group (蚂蚁集团) Pre-IPO: Dual Listing Makes Early Index Inclusion Tricky
AliPay’s Advantage over WeChat Pay in Physical Stores



Ant Group (蚂蚁集团) Running Neck and Neck with Tencent in Direct Financial Services
Ant Group (蚂蚁集团) Pre-IPO: Impact Assessment of the New Rule for Financial Holding Companies


Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Event-Driven

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:
<ol>
<li>How things used to work in China's express sector</li>
<li>How the sector has begun changing in ways that may force consolidation</li>
<li>The 'Why?' &amp; 'How?' of Chinese express sector consolidation</li>
<li>Alibaba's critical role in potential M&amp;A activity</li>
<li>Some thoughts about the timing of expected changes</li>
<li>Conclusions</li>
</ol>

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:

How things used to work in China's express sector
How the sector has begun changing in ways that may force consolidation
The 'Why?' &amp; 'How?' of Chinese express sector consolidation
Alibaba's critical role in potential M&amp;A activity
Some thoughts about the timing of expected changes
Conclusions


Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

* ICIJ Points Fingers Post-Swedbank Fiasco: The International Consortium of Investigative Journalists (ICIJ) reviewed over 2,100 suspicious activity reports (SARs), which were filed with the US Treasury’s Financial Crimes Enforcement Network (FINCEN). The report suggests that there was about USD 2 tn in questionable transactions between 1999-2017, which were flagged by the sector’s internal compliance officers from over 90 financial institutions;  and*Expect An Active DOJ Under Biden/Harris: If Biden/Harris win, Deutsche and Turkey’s Halkbank (HALKB.TI) would appear to be most as risk with a more proactive Department of Justice (DOJ). However, not far behind are others including: HSBC Holdings (5.HK/HSBA/LN) and Standard Chartered (2888.HK/STAN.LN). In addition, when mainland Chinese-US relations materially deteriorate under a Biden administration, we would fully anticipate the entire mainland Chinese financial system to be under a magnifying glass.

* ICIJ Points Fingers Post-Swedbank Fiasco: The International Consortium of Investigative Journalists (ICIJ) reviewed over 2,100 suspicious activity reports (SARs), which were filed with the US Treasury’s Financial Crimes Enforcement Network (FINCEN). The report suggests that there was about USD 2 tn in questionable transactions between 1999-2017, which were flagged by the sector’s internal compliance officers from over 90 financial institutions;  and*Expect An Active DOJ Under Biden/Harris: If Biden/Harris win, Deutsche and Turkey’s Halkbank (HALKB.TI) would appear to be most as risk with a more proactive Department of Justice (DOJ). However, not far behind are others including: HSBC Holdings (5.HK/HSBA/LN) and Standard Chartered (2888.HK/STAN.LN). In addition, when mainland Chinese-US relations materially deteriorate under a Biden administration, we would fully anticipate the entire mainland Chinese financial system to be under a magnifying glass.

Asia Banks – Watch Your Anti-Money Laundering Risk Again

Equity Analyst, LightStream Research

Supun Walpola

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.

Chinese e-commerce “service provider”, <a href="https://www.smartkarma.com/entities/baozun-inc" target="_blank" data-smartkarma-citation="entities:24184:1" rel="noopener">Baozun Inc. (BZUN US)</a>, is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we take a quick look at Baozun’s fundamentals ahead of its HKEX offer.Baozun’s HKEX offer will have two tranches; a HongKong offer and an international offer. The maximum offer price for the HongKong offer is set at HKD103.90. Baozun is expected to set the international offer price by September 23, 2020 (Wednesday). The final HongKong offer price will the lower of the international offer price and the maximum offer price above.Baozun will issue 40m new shares equivalent to around 17.5% of the company’s ordinary shares outstanding (after the HKEX listing). At the maximum offer price above (for the HongKong tranche), Baozun is expected to raise around HKD 4,156m (USD 536m).

Chinese e-commerce “service provider”, Baozun Inc. (BZUN US), is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we take a quick look at Baozun’s fundamentals ahead of its HKEX offer.Baozun’s HKEX offer will have two tranches; a HongKong offer and an international offer. The maximum offer price for the HongKong offer is set at HKD103.90. Baozun is expected to set the international offer price by September 23, 2020 (Wednesday). The final HongKong offer price will the lower of the international offer price and the maximum offer price above.Baozun will issue 40m new shares equivalent to around 17.5% of the company’s ordinary shares outstanding (after the HKEX listing). At the maximum offer price above (for the HongKong tranche), Baozun is expected to raise around HKD 4,156m (USD 536m).

Baozun: A Quick Look at Fundamentals Ahead of the HKEX Listing

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba (BABA US)

The NEW Chinese CBDC (DCEP - 数字货币) - Not Quite All The Money in China

Almost a year ago, on 31 October 2019, the PBOC announced that after years of preparation, an official "digital renmimbi" would bre releas

Travis Lundy

Ant Group Pre-IPO: Peer Comparison - Payments - Baffling Scale, Small Tweaks for Large Profits

Our previous coverage on Ant Group Ant Financial IPO Early Thought: Understand the Fintech Empire, Growth and Risk Factors Ant Financial...

Sumeet Singh

Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

Objective of this note: How things used to work How the sector has begun changing

Tracking Traffic

Asia Banks – Watch Your Anti-Money Laundering Risk Again

* ICIJ Points Fingers Post-Swedbank Fiasco: The International Consortium of Investigative Journalists (ICIJ) reviewed over 2,100 suspicious...

Thomas J. Monaco

Baozun: A Quick Look at Fundamentals Ahead of the HKEX Listing

Chinese e-commerce “service provider”, $baoz, is the latest US-listed Chinese company to launch a secondary listing on the HKEX. In this note, we...

Supun Walpola

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