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.

Equity Capital Markets

Beijing Airdoc Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/beijing-airdoc-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:33524:1" rel="noopener">Beijing Airdoc Technology (2251 HK)</a><span> is a global market leader and pioneer in providing AI-empowered retina-based early detection, auxiliary diagnosis and health risk assessment solutions. The core product is Airdoc-AIFUNDUS which is an AI-based Software-as-a-Medical Device (SaMD) that uses deep learning algorithms to accurately detect and diagnose chronic diseases from retinal images. Airdoc-AIFUNDUS (1.0), the first version of the core product, was commercialised at the start of 2021. </span></p></div><div><p>At the proposed IPO price range of HK$75.10-81.30 per share, Airdoc will have a market cap of HK$7,778-8,420 million ($1.0-1.1 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,632.7 million ($210 million).</p></div><div><p>Eight cornerstone investors will purchase $69.5 million worth of the offer shares (31.0% of the offer shares at the mid-point of the IPO price range). Three out of the eight cornerstones are existing investors. They are LAV Group, Lake Bleu Capital and OrbiMed. The remaining cornerstones which are not existing shareholders are CloudAlpha Capital, GF Fund, IvyRock Funds, LMR Fund and WT Funds.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/airdoc-technology-ipo-initiation-seeing-the-light" target="_blank" data-smartkarma-citation="insights:58501" rel="noopener">Airdoc Technology IPO Initiation: Seeing the Light</a>, we opined that, unlike most healthcare IPO hopefuls, Airdoc has recently commercially launched a version of its core product. With industry-leading sensitivity and specificity achieved in multi-centre clinical trials, Airdoc-AIFUNDUS has the potential to succeed in a competitive market. We concluded that Airdoc is worth a closer look.</p></div><div><div><div class="content-highlight"><p>Our valuation analysis suggests that the IPO price range is attractive. We also note that the mid-point of the IPO price range is a modest 5.7% discount to the last valuation round (Series D to raise $38 million on 30 April 2021).  </p></div></div></div>

Beijing Airdoc Technology (2251 HK) is a global market leader and pioneer in providing AI-empowered retina-based early detection, auxiliary diagnosis and health risk assessment solutions. The core product is Airdoc-AIFUNDUS which is an AI-based Software-as-a-Medical Device (SaMD) that uses deep learning algorithms to accurately detect and diagnose chronic diseases from retinal images. Airdoc-AIFUNDUS (1.0), the first version of the core product, was commercialised at the start of 2021. At the proposed IPO price range of HK$75.10-81.30 per share, Airdoc will have a market cap of HK$7,778-8,420 million ($1.0-1.1 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,632.7 million ($210 million).Eight cornerstone investors will purchase $69.5 million worth of the offer shares (31.0% of the offer shares at the mid-point of the IPO price range). Three out of the eight cornerstones are existing investors. They are LAV Group, Lake Bleu Capital and OrbiMed. The remaining cornerstones which are not existing shareholders are CloudAlpha Capital, GF Fund, IvyRock Funds, LMR Fund and WT Funds.In Airdoc Technology IPO Initiation: Seeing the Light, we opined that, unlike most healthcare IPO hopefuls, Airdoc has recently commercially launched a version of its core product. With industry-leading sensitivity and specificity achieved in multi-centre clinical trials, Airdoc-AIFUNDUS has the potential to succeed in a competitive market. We concluded that Airdoc is worth a closer look.Our valuation analysis suggests that the IPO price range is attractive. We also note that the mid-point of the IPO price range is a modest 5.7% discount to the last valuation round (Series D to raise $38 million on 30 April 2021).  

Airdoc Technology IPO: Valuation Insights

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

Equity Bottom-Up

<p><em><strong>*Why Do They Always Do This?:</strong></em> At a competitor conference, management ridiculously diminished government allegations. Tencent Holdings (700.HK) [Tencent] should simply answer “yes, we made mistakes and pushed the envelope but we are actively rectifying these issues. Its going to be painful for investors as we address the government's numerous over the near-term”;  </p>
<p><strong><em>*Elephant In The Room: </em></strong>Mainland China's crackdown on capital markets activities has rapidly expanded under the broad narrative of "financial stability". There remains no doubt, in our view, that Tencent will follow Alibaba Group (BABA.US) [Alibaba] in the formation of a financial holding company. It’s pretty surprising that Tencent refuses to discuss this matter when financial services are the largest component of earnings and growth; and    </p>
<p><strong>*<em>Results Have Also Deteriorated As Distractions Mount:</em><em> </em></strong>Tencent’s 2Q21 GAAP net income declined CNY 5.2 bn (10.8%) linked quarter – and were of poor quality. Results were challenged by: cost of revenue increase; operating expense increase; losses in associates; higher impairment charges; and weaker online games. Were it not for the artificially lower tax rate, results would have been even more challenged.       </p>

*Why Do They Always Do This?: At a competitor conference, management ridiculously diminished government allegations. Tencent Holdings (700.HK) [Tencent] should simply answer “yes, we made mistakes and pushed the envelope but we are actively rectifying these issues. Its going to be painful for investors as we address the government's numerous over the near-term”;  
*Elephant In The Room: Mainland China's crackdown on capital markets activities has rapidly expanded under the broad narrative of "financial stability". There remains no doubt, in our view, that Tencent will follow Alibaba Group (BABA.US) [Alibaba] in the formation of a financial holding company. It’s pretty surprising that Tencent refuses to discuss this matter when financial services are the largest component of earnings and growth; and    
*Results Have Also Deteriorated As Distractions Mount: Tencent’s 2Q21 GAAP net income declined CNY 5.2 bn (10.8%) linked quarter – and were of poor quality. Results were challenged by: cost of revenue increase; operating expense increase; losses in associates; higher impairment charges; and weaker online games. Were it not for the artificially lower tax rate, results would have been even more challenged.       

Tencent Holdings – Incredulous Management

<p><strong><em>*The Hits Just Keep On Coming: </em></strong>Various media outlets have reported that Alibaba Holdings (BABA.US) [BABA] is planning to spend CNY 100 bn (USD 15.4 bn or nearly 2/3 of 2020 earnings) through 2025 in order to support the government's "common prosperity" initiatives – implying another significant earnings hit; and</p>
<p><strong><em>*FHC Challenges Ahead As Well: </em></strong>BABA’s Ant Group subsidiary is also reorganizing as a financial holding company, and will now be regulated more along the lines of a commercial bank by the China Bank and Insurance Regulatory Commission (CBIRC). As a result, Ant Financial needs to adhere to minimum CAR capital requirements, and follow other bank regulatory guidelines.</p>

*The Hits Just Keep On Coming: Various media outlets have reported that Alibaba Holdings (BABA.US) [BABA] is planning to spend CNY 100 bn (USD 15.4 bn or nearly 2/3 of 2020 earnings) through 2025 in order to support the government's "common prosperity" initiatives – implying another significant earnings hit; and
*FHC Challenges Ahead As Well: BABA’s Ant Group subsidiary is also reorganizing as a financial holding company, and will now be regulated more along the lines of a commercial bank by the China Bank and Insurance Regulatory Commission (CBIRC). As a result, Ant Financial needs to adhere to minimum CAR capital requirements, and follow other bank regulatory guidelines.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Singtel (Singapore Telecommunications) / Event-Driven

Last Week in Event SPACE: SingTel, Bharti Airtel, Kerry Logistics, Milton, Jardine Matheson

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Ping An Healthcare and Technology / Equity Bottom-Up

<p>On August 24, 2021, <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK) </a>(PAGD) released its 2021 interim results. The revenue was RMB3.82 billion, up 39% YoY. Gross profit was RMB1.025 billion, up 24.8% YoY. Net loss was RMB879.3 million, up 312% YoY. After the financial report was released, PAGD’s share price fell about 13.7% for three consecutive days from August 25, reflecting the attitude of the market. This insight mainly analyzed PAGD in terms of its performance in 2021/1H, the business and the underlying logic, the concerns and the outlook of the Company.</p>

On August 24, 2021, Ping An Healthcare and Technology Company Limited (1833 HK) (PAGD) released its 2021 interim results. The revenue was RMB3.82 billion, up 39% YoY. Gross profit was RMB1.025 billion, up 24.8% YoY. Net loss was RMB879.3 million, up 312% YoY. After the financial report was released, PAGD’s share price fell about 13.7% for three consecutive days from August 25, reflecting the attitude of the market. This insight mainly analyzed PAGD in terms of its performance in 2021/1H, the business and the underlying logic, the concerns and the outlook of the Company.

Ping An Good Doctor (1833.HK) - A Vicious Cycle?

China

Alibaba Health Information Technology Limited is an integrated healthcare information and content service provider. The Company uses product identification, authentication, and tracking system data for its healthcare information.

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Alibaba Health Information Tec (241 HK)

Airdoc Technology IPO: Valuation Insights

Our valuation analysis suggests that the IPO price range is attractive. We also note that the mid-point of the IPO price range is a modest 5.7%...

Arun George

Tencent Holdings – Incredulous Management

TENCENT: At a competitor virtual conference, Tencent discussed the impact of regulatory changes but didn’t discuss its targeted financial services...

Thomas J. Monaco

Alibaba Group Holdings - Penance

ALIBABA: BABA is apparently launching a plan to spend CNY 100 bn (nearly 2/3 of 2020 earnings) by 2025 to the "common prosperity" – implying a...

Thomas J. Monaco

Last Week in Event SPACE: SingTel, Bharti Airtel, Kerry Logistics, Milton, Jardine Matheson

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

Ping An Good Doctor (1833.HK) - A Vicious Cycle?

This article mainly analyzed Ping An Good Doctor in terms of its performance in 2021/1H, the business and the underlying logic, the comparison with...

Xinyao (Criss) Wang

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