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

<div>
<p>In our previous notes <a href="https://www.smartkarma.com/insights/china-adrs-kanzhun-full-truck-and-didi-regulators-sending-a-message" target="_blank" rel="noopener">China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message </a>and <a href="https://www.smartkarma.com/insights/china-adrs-now-the-message-is-loud-and-getting-clearer" target="_blank" rel="noopener">China ADRs - Now the Message Is Loud and Getting Clearer, </a>we spoke about the recent crackdown on the three US listed firms along with the general crackdown on overseas listings for Chinese companies. </p>
<p>The Cyberspace Administration of China (CAC) came out with draft cyber security review measures. </p>
</div><div><p>We have looked at the ADRs in the past, in our previous notes:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move</a>, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. </li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-sec-notice-instead-of-three-probably-have-four-years-till-2025-correction-overdone" target="_blank" rel="noopener">China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone, </a> we spoke about the new SEC notice and its implications. </li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-a-new-act-aims-to-put-an-end-to-china-adr-ipos" target="_blank" rel="noopener">China ADRs - A New Act Aims to Put an End to China ADR IPOs</a>, we spoke about the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S. exchanges for Chinese companies.</li>
</ul></div>


In our previous notes China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message and China ADRs - Now the Message Is Loud and Getting Clearer, we spoke about the recent crackdown on the three US listed firms along with the general crackdown on overseas listings for Chinese companies. 
The Cyberspace Administration of China (CAC) came out with draft cyber security review measures. 
We have looked at the ADRs in the past, in our previous notes:

China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. 
In China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone,  we spoke about the new SEC notice and its implications. 
In China ADRs - A New Act Aims to Put an End to China ADR IPOs, we spoke about the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S. exchanges for Chinese companies.


China ADRs - Draft Cyber Security Review Measures - ADRs Listing Likely Shut, HK Might Face Delay

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.

<p>Backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> and the South Korean Internet company <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (KAK KS)</a> started off as a mobile wallet/mobile payment service capable of handling payments, remittances, and P2P transactions. While the mobile wallet business is considered rather important, as it is the foundation for creating a cashless society, mobile wallet is not really a profitable venture capable of surviving on its own (it is unable to charge sufficient amounts from merchants and customers to offset high operating costs such as IPG costs). However, the payment business provides the platform to attract and retain customers for Kakao Pay’s financial services business, which is more profitable.</p><p>With 19.5m monthly active users (MAU) (around 45% of South Korea’s adult population) as of March 2021, alongside stiff competition from Naver Pay, Toss, Payco, and Samsung Pay, it is natural that Kakao Pay’s payment business may experience a deceleration in MAU growth in the next few years.</p><p>Nonetheless, we are unrattled by the payment business’ slower growth prospects, as the financial services business, which is just starting to gain momentum, is more than capable of replacing the payment business’ lost growth potential and that too in a profitable manner.</p>

Backed by Ant Financial Services Group (6688 HK) and the South Korean Internet company Kakao Corp (035720 KS), Kakao Pay (KAK KS) started off as a mobile wallet/mobile payment service capable of handling payments, remittances, and P2P transactions. While the mobile wallet business is considered rather important, as it is the foundation for creating a cashless society, mobile wallet is not really a profitable venture capable of surviving on its own (it is unable to charge sufficient amounts from merchants and customers to offset high operating costs such as IPG costs). However, the payment business provides the platform to attract and retain customers for Kakao Pay’s financial services business, which is more profitable.With 19.5m monthly active users (MAU) (around 45% of South Korea’s adult population) as of March 2021, alongside stiff competition from Naver Pay, Toss, Payco, and Samsung Pay, it is natural that Kakao Pay’s payment business may experience a deceleration in MAU growth in the next few years.Nonetheless, we are unrattled by the payment business’ slower growth prospects, as the financial services business, which is just starting to gain momentum, is more than capable of replacing the payment business’ lost growth potential and that too in a profitable manner.

Kakao Pay IPO: Do Not Worry About Maturing MAU Growth

Shifara Samsudeen, FCMA, CGMA

Event-Driven

<div>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>  shares closed at HK$528 per share as at the end of Thursday’s trading, only 5.2% higher than the company’s 12-month low of HK$502 per share. The company’s shares have been on a downward trend on the back of increased regulatory scrutiny over Chinese internet stocks. As Chinese regulators have broadened their crackdown on the country’s internet tech platforms during the past few days, Tencent’s shares dropped almost 10% over the last one week (since the beginning of July).</div><div></div><div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/217/580/original/image_22041245221625797905092.png?1625797914" class="editor-image img-responsive" data-smartkarma-image-id="217580"></figure></div><div>There is no sign that China is slowing down with its antitrust crackdown on the country’s tech platforms, rather the regulators have broadened their investigation to include cybersecurity violations such as on the recently listed <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (DIDI US)</a> , <a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> and <a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a> .</div><div></div><div>According to the CNN, the People’s Bank of China has said that it would further regulate the countries’ payments companies after its massive overhaul of Ant Group. The Chinese online payment market is largely dominated by Alipay and WeChat Pay.</div>


Tencent (700 HK)  shares closed at HK$528 per share as at the end of Thursday’s trading, only 5.2% higher than the company’s 12-month low of HK$502 per share. The company’s shares have been on a downward trend on the back of increased regulatory scrutiny over Chinese internet stocks. As Chinese regulators have broadened their crackdown on the country’s internet tech platforms during the past few days, Tencent’s shares dropped almost 10% over the last one week (since the beginning of July).There is no sign that China is slowing down with its antitrust crackdown on the country’s tech platforms, rather the regulators have broadened their investigation to include cybersecurity violations such as on the recently listed DiDi Chuxing (DIDI US) , Kanzhun (BZ US) and Full Truck Alliance (YMM US) .According to the CNN, the People’s Bank of China has said that it would further regulate the countries’ payments companies after its massive overhaul of Ant Group. The Chinese online payment market is largely dominated by Alipay and WeChat Pay.

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/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato’s key shareholders are <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> (18.55% of outstanding shares), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (9.1%) and <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a>.  </p><p>Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%, according to press reports. The selling shareholder is Info Edge. </p><div class="content-highlight"><p>Zomato will be a landmark IPO in India as it the first large new economy technology platform to list. The food delivery market in India is attractive to the large addressable opportunity. While <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> entered the market last year, the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. Overall, we think that Zomato's fundamentals are attractive. </p></div>

Zomato (ZOM IN) is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato’s key shareholders are Info Edge India (INFOE IN) (18.55% of outstanding shares), Uber (UBER US) (9.1%) and Ant Financial Services Group (6688 HK).  Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%, according to press reports. The selling shareholder is Info Edge. Zomato will be a landmark IPO in India as it the first large new economy technology platform to list. The food delivery market in India is attractive to the large addressable opportunity. While Amazon.com Inc (AMZN US) entered the market last year, the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. Overall, we think that Zomato's fundamentals are attractive. 

Zomato IPO Initiation: Emerging Appetites

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p>Kakao Pay is offering 17 million shares in the IPO at the price range of 63,000 won to 96,000 won per share. The IPO deal size range is from $948 million to $1.4 billion. According to the bankers' valuation, the expected market cap range would be from 8.6 trillion won to 13.0 trillion won.</p>
<p>At the high end of the market cap range (13.0 trillion won), this would represent the 31st largest market cap in KOSPI. Samsung Securities, Goldman Sachs, and JP Morgan are the lead underwriters of this IPO. </p>
<p>According to the company, it plans to use 381 billion won of the IPO proceeds in business operations/working capital. It plans to use the remaining 680 billion won in IPO proceeds for M&amp;A purposes. </p>
</div><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="width: 214pt;"><div>Deal Specifics of the Kakao Pay IPO:</div></td>
<td style="width: 292pt;"> </td>
</tr>
<tr>
<td>Lead underwriters of the IPO: </td>
<td style="width: 292pt;">Samsung Securities, Goldman Sachs, JP Morgan, Daishin Securities</td>
</tr>
<tr>
<td>Expected IPO price per share: </td>
<td style="width: 292pt;">63,000 won (low)/96,000 won (high)</td>
</tr>
<tr>
<td>Number of Shares for IPO:</td>
<td style="width: 292pt;">17m shares (new shares)</td>
</tr>
<tr>
<td>IPO base deal size: </td>
<td style="width: 292pt;">US$948 mn (low);  US$1,444 mn (high)</td>
</tr>
<tr>
<td>Expected common shares outstanding, fully diluted (post-IPO):  </td>
<td style="width: 292pt;">135.9m shares</td>
</tr>
<tr>
<td>Expected market cap after IPO:</td>
<td style="width: 292pt;">8,562 billion won (low)/13,046 billion won (high)</td>
</tr>
<tr>
<td>Book open: </td>
<td style="text-align: left; width: 292pt;">29-Jul-21</td>
</tr>
<tr>
<td>Book closed:</td>
<td style="text-align: left; width: 292pt;">20-Jul-21</td>
</tr>
<tr>
<td>Listing date: </td>
<td style="text-align: left; width: 292pt;">12-Aug-21</td>
</tr>
<tr>
<td>Source: Company data</td>
<td style="width: 292pt;"> </td>
</tr>
</tbody>
</table>


Kakao Pay is offering 17 million shares in the IPO at the price range of 63,000 won to 96,000 won per share. The IPO deal size range is from $948 million to $1.4 billion. According to the bankers' valuation, the expected market cap range would be from 8.6 trillion won to 13.0 trillion won.
At the high end of the market cap range (13.0 trillion won), this would represent the 31st largest market cap in KOSPI. Samsung Securities, Goldman Sachs, and JP Morgan are the lead underwriters of this IPO. 
According to the company, it plans to use 381 billion won of the IPO proceeds in business operations/working capital. It plans to use the remaining 680 billion won in IPO proceeds for M&amp;A purposes. 







Deal Specifics of the Kakao Pay IPO:
 


Lead underwriters of the IPO: 
Samsung Securities, Goldman Sachs, JP Morgan, Daishin Securities


Expected IPO price per share: 
63,000 won (low)/96,000 won (high)


Number of Shares for IPO:
17m shares (new shares)


IPO base deal size: 
US$948 mn (low);  US$1,444 mn (high)


Expected common shares outstanding, fully diluted (post-IPO):  
135.9m shares


Expected market cap after IPO:
8,562 billion won (low)/13,046 billion won (high)


Book open: 
29-Jul-21


Book closed:
20-Jul-21


Listing date: 
12-Aug-21


Source: Company data
 




China

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

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Ant Group (6688 HK)

China ADRs - Draft Cyber Security Review Measures - ADRs Listing Likely Shut, HK Might Face Delay

In our previous notes we spoke about the recent crackdown on the three US listed firms. The Cyberspace Administration of China (CAC) recently came...

Sumeet Singh

Kakao Pay IPO: Do Not Worry About Maturing MAU Growth

We are unrattled by the payment business’ slower growth prospects, as the financial services business, which is just starting to gain momentum, is...

Oshadhi Kumarasiri

Tencent: Are We There Yet?

Compared to Alibaba, it has only been bits and pieces for Tencent so far when comes to regulatory crackdown. It seems obvious that Tencent will...

Shifara Samsudeen, FCMA, CGMA

Zomato IPO Initiation: Emerging Appetites

Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion). Overall, we think that Zomato's fundamentals are...

Arun George

Kakao Pay IPO Preview

Kakao Pay is offering 17 million shares in the IPO at the price range of 63,000 won to 96,000 won per share. The IPO deal size range is from $948...

Douglas Kim

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