Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

JD Health International  / Equity Bottom-Up

<ul class="">
<li>We believe JD Health will follow the accounting of JD.com, which Amazon originated.</li>
<li>We believe service is the main business, although product accounts for a large proportion in the nominal revenue.</li>
<li>The product plays a cornerstone role; therefore, it is fine to value the company by nominal revenue.</li>
<li>Service revenue growth is the important signal for the short-term stock price.</li>
</ul>


We believe JD Health will follow the accounting of JD.com, which Amazon originated.
We believe service is the main business, although product accounts for a large proportion in the nominal revenue.
The product plays a cornerstone role; therefore, it is fine to value the company by nominal revenue.
Service revenue growth is the important signal for the short-term stock price.


JD Health (6618 HK): Be Careful of Amazon Style Accounting

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

On Friday post market close, S&amp;P Dow Jones announced the results of the September review for the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> that will be effective after the close of trading on 17 September.There are 3 inclusion -  <a href="https://www.smartkarma.com/entities/match-group-inc" target="_blank" data-smartkarma-citation="entities:25903:1" rel="noopener">Match Group Inc (MTCH US)</a>, <a href="https://www.smartkarma.com/entities/ceridian-hcm-holding-inc" target="_blank" data-smartkarma-citation="entities:27122:1" rel="noopener">Ceridian HCM Holding Inc (CDAY US)</a> and <a href="https://www.smartkarma.com/entities/brown-brown-inc" target="_blank" data-smartkarma-citation="entities:19532:1" rel="noopener">Brown &amp; Brown (BRO US)</a>, while the exclusions are <a href="https://www.smartkarma.com/entities/unum-group" target="_blank" data-smartkarma-citation="entities:2521:1" rel="noopener">Unum Group (UNM US)</a>, <a href="https://www.smartkarma.com/entities/national-oilwell-varco-inc" target="_blank" data-smartkarma-citation="entities:3046:1" rel="noopener">National Oilwell Varco (NOV US)</a> and <a href="https://www.smartkarma.com/entities/perrigo-co-plc" target="_blank" data-smartkarma-citation="entities:869:1" rel="noopener">Perrigo Co Plc (PRGO US)</a>.There are inclusions/exclusions to the S&amp;P MidCap 400 and the S&amp;P SmallCap 600 as well.The stocks with the largest impact from passive buying are <a href="https://www.smartkarma.com/entities/match-group-inc" target="_blank" data-smartkarma-citation="entities:25903:1" rel="noopener">Match Group Inc (MTCH US)</a>, <a href="https://www.smartkarma.com/entities/tandem-diabetes-care-inc" target="_blank" data-smartkarma-citation="entities:20893:1" rel="noopener">Tandem Diabetes Care (TNDM US)</a>, <a href="https://www.smartkarma.com/entities/brown-brown-inc" target="_blank" data-smartkarma-citation="entities:19532:1" rel="noopener">Brown &amp; Brown (BRO US)</a>, UniqureNV (QURE US) and <a href="https://www.smartkarma.com/entities/ceridian-hcm-holding-inc" target="_blank" data-smartkarma-citation="entities:27122:1" rel="noopener">Ceridian HCM Holding Inc (CDAY US)</a>.The stocks with the largest impact from passive selling are <a href="https://www.smartkarma.com/entities/united-insurance-holdings-corp" target="_blank" data-smartkarma-citation="entities:19222:1" rel="noopener">United Insurance Holdings (UIHC US)</a>, <a href="https://www.smartkarma.com/entities/team-inc" target="_blank" data-smartkarma-citation="entities:6811:1" rel="noopener">Team Inc (TISI US)</a>, <a href="https://www.smartkarma.com/entities/unum-group" target="_blank" data-smartkarma-citation="entities:2521:1" rel="noopener">Unum Group (UNM US)</a>, <a href="https://www.smartkarma.com/entities/perrigo-co-plc" target="_blank" data-smartkarma-citation="entities:869:1" rel="noopener">Perrigo Co Plc (PRGO US)</a> and <a href="https://www.smartkarma.com/entities/national-oilwell-varco-inc" target="_blank" data-smartkarma-citation="entities:3046:1" rel="noopener">National Oilwell Varco (NOV US)</a>.There are a lot of other stocks that will have a lot to buy/sell from passive funds due to changes in the number of shares and free float and due to funding flows.

On Friday post market close, S&amp;P Dow Jones announced the results of the September review for the S&amp;P 500 (SPX INDEX) that will be effective after the close of trading on 17 September.There are 3 inclusion -  Match Group Inc (MTCH US), Ceridian HCM Holding Inc (CDAY US) and Brown &amp; Brown (BRO US), while the exclusions are Unum Group (UNM US), National Oilwell Varco (NOV US) and Perrigo Co Plc (PRGO US).There are inclusions/exclusions to the S&amp;P MidCap 400 and the S&amp;P SmallCap 600 as well.The stocks with the largest impact from passive buying are Match Group Inc (MTCH US), Tandem Diabetes Care (TNDM US), Brown &amp; Brown (BRO US), UniqureNV (QURE US) and Ceridian HCM Holding Inc (CDAY US).The stocks with the largest impact from passive selling are United Insurance Holdings (UIHC US), Team Inc (TISI US), Unum Group (UNM US), Perrigo Co Plc (PRGO US) and National Oilwell Varco (NOV US).There are a lot of other stocks that will have a lot to buy/sell from passive funds due to changes in the number of shares and free float and due to funding flows.

S&P500 Index Rebalance: Swiping Right on Match

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

In this insight, we discuss the combination of the end of the lock-up period for Coupang on September 7th and the start of the Amazon Global Store Korea will likely to put further negative pressures on <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>'s shares in the coming days. Starting September 7th, there is a whopping 83% of outstanding shares that could be sold due to the end of the lock-down period.
<div class="content-highlight">
In our view, Softbank may try to sell as much of $3 billion in Coupang shares over the next 6-12 months, which represents nearly 5.8% of current market cap. We do believe that Softbank will try to recoup at least its original investment of nearly $3 billion.
A $3 billion investment is a big amount of money. If we assume a 30% per annum ROI required by Softbank (taking into consideration the time value of money of the two investments made in 2015 and 2018), this means that AT MINIMUM, Coupang's market cap would need to be $28 billion (which would suggest $16 per share). At $16 per share, this would represent a further 46% lower levels than the current price of $29.65.
</div>

In this insight, we discuss the combination of the end of the lock-up period for Coupang on September 7th and the start of the Amazon Global Store Korea will likely to put further negative pressures on Coupang (CPNG US)'s shares in the coming days. Starting September 7th, there is a whopping 83% of outstanding shares that could be sold due to the end of the lock-down period.

In our view, Softbank may try to sell as much of $3 billion in Coupang shares over the next 6-12 months, which represents nearly 5.8% of current market cap. We do believe that Softbank will try to recoup at least its original investment of nearly $3 billion.
A $3 billion investment is a big amount of money. If we assume a 30% per annum ROI required by Softbank (taking into consideration the time value of money of the two investments made in 2015 and 2018), this means that AT MINIMUM, Coupang's market cap would need to be $28 billion (which would suggest $16 per share). At $16 per share, this would represent a further 46% lower levels than the current price of $29.65.


End of Lock Up Period + Start of Amazon Global Store Korea = Lower Share Price Likely for Coupang

On 31 August, <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> finally launched its 'Amazon Global Store' in South Korea in partnership with <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>'s e-commerce platform 11th. Amazon and 11th have been working on the details of this new service for many months and it has finally become available for millions of consumers in Korea.<div class="content-highlight">
With the launch of Amazon Global Store Korea, this has been the end of a long decade plus journey of when Amazon would enter Korea. For now, Amazon has joined hands with SK Telecom although this partnership could change several years from now when Amazon could decide to operate alone Korea. In the next few months, we see millions of Korean consumers flocking to the Amazon Global Store Korean website (<a href="https://www.11st.co.kr/amazon/best" target="_blank" rel="noopener">https://www.11st.co.kr/amazon/best).</a> 11st (SK Telecom) will play a pivotal role in this roll-out as a key partner. 
Trading Ideas - In our view, we like a long-short trading idea of long <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> and short <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US) </a>at current levels. With the launch of Amazon Global Store in Korea, this will directly threat Coupang and likely to result in lower sales growth for the company for the rest of 2021. We also continue to have a positive view of <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>.
</div>

On 31 August, Amazon.com Inc (AMZN US) finally launched its 'Amazon Global Store' in South Korea in partnership with SK Telecom (017670 KS)'s e-commerce platform 11th. Amazon and 11th have been working on the details of this new service for many months and it has finally become available for millions of consumers in Korea.
With the launch of Amazon Global Store Korea, this has been the end of a long decade plus journey of when Amazon would enter Korea. For now, Amazon has joined hands with SK Telecom although this partnership could change several years from now when Amazon could decide to operate alone Korea. In the next few months, we see millions of Korean consumers flocking to the Amazon Global Store Korean website (https://www.11st.co.kr/amazon/best). 11st (SK Telecom) will play a pivotal role in this roll-out as a key partner. 
Trading Ideas - In our view, we like a long-short trading idea of long SK Telecom (017670 KS) and short Coupang (CPNG US) at current levels. With the launch of Amazon Global Store in Korea, this will directly threat Coupang and likely to result in lower sales growth for the company for the rest of 2021. We also continue to have a positive view of SK Telecom (017670 KS).


Amazon Global Store Finally Launches in Korea - In Partnership with 11st (SK Telecom)

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Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

Headline Developments As has been widely expected, China has moved to greatly reduce the time under-18s spend playing computer games.  Under the new rule, younger gamers will be restricted to one hour (8 pm - 9 pm) of online games on Fridays, weekends and holidays, with online gaming companies barred from providing gaming services to minors in any form outside of those hours.

Headline Developments As has been widely expected, China has moved to greatly reduce the time under-18s spend playing computer games.  Under the new rule, younger gamers will be restricted to one hour (8 pm - 9 pm) of online games on Fridays, weekends and holidays, with online gaming companies barred from providing gaming services to minors in any form outside of those hours.

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon (AMZN US)

JD Health (6618 HK): Be Careful of Amazon Style Accounting

We believe JD Health will follow the accounting of JDc.om, which is the originated by Amazon. We believe service is the main business, although...

Ming Lu

S&P500 Index Rebalance: Swiping Right on Match

There are 3 changes to the S&P500 that will be implemented at the close on 17 Sep. There are changes to the S&P400 & S&P600 as well. There will be...

Brian Freitas

Amazon Global Store Finally Launches in Korea - In Partnership with 11st (SK Telecom)

Amazon Global Store Korea has finally launched (in partnership with SK Telecom's 11st) and this is likely to lead to a big increase in millions of...

Douglas Kim

Weekly Innovation Review (WIRE) #47

Headline Developments: As has been widely expected, China has moved to greatly reduce the time under-18s spend playing computer games. Under the...

Granite Bay Capital

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

JD Health (6618 HK): Be Careful of Amazon Style Accounting

We believe JD Health will follow the accounting of JDc.om, which is the originated by Amazon. We believe service is the main business, although...

Ming Lu

S&P500 Index Rebalance: Swiping Right on Match

There are 3 changes to the S&P500 that will be implemented at the close on 17 Sep. There are changes to the S&P400 & S&P600 as well. There will be...

Brian Freitas

End of Lock Up Period + Start of Amazon Global Store Korea = Lower Share Price Likely for Coupang

The combination of the end of the lock-up period for Coupang on September 7th and the start of the Amazon Global Store Korea are likely to put...

Douglas Kim

Amazon Global Store Finally Launches in Korea - In Partnership with 11st (SK Telecom)

Amazon Global Store Korea has finally launched (in partnership with SK Telecom's 11st) and this is likely to lead to a big increase in millions of...

Douglas Kim

Weekly Innovation Review (WIRE) #47

Headline Developments: As has been widely expected, China has moved to greatly reduce the time under-18s spend playing computer games. Under the...

Granite Bay Capital