Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Back on the 30 October 2020, <a href="https://www.smartkarma.com/entities/icar-asia-ltd" target="_blank" data-smartkarma-citation="entities:17682:1" rel="noopener">iCar Asia Ltd (ICQ AU)</a>, owner and operator of automotive portals in Malaysia, Indonesia, and Thailand, <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02301823-3A554168?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it had received a non-binding proposal from China-based <a href="https://www.smartkarma.com/entities/autohome-inc" target="_blank" data-smartkarma-citation="entities:33492:1" rel="noopener">Autohome (2518 HK)</a>, another auto internet platform, to acquire 100% of iCar's shares for A$0.50/share by way of a Scheme of Arrangement.
A trading update on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02347131-3A562420?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">26 February</a> said discussions were still ongoing regarding Autohome's proposal, with similar wording in the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02369968-3A566377?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 April</a> update, and the 2020 annual report (<a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02370430-3A566432?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">page 34</a>).
<h3>The New News</h3>
iCar has now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02394670-3A570637?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it has received a non-binding proposal from privately-held Carsome Group to acquire 100% of iCar's shares for A$0.55/share by way of a Scheme.
Separately Malaysian-based Carsome has entered into an agreement with Catcha Group, iCar's largest shareholder, to acquire 19.9% of shares out in iCar via the issuance of shares in Carsome. That side agreement and the proposal are conditional on ASIC relief.
Provided the agreement completes, Carsome and Catcha will jointly acquire the remaining shares not owned in iCar.
This agreement/proposal appears an initial step towards listing Carsome/Catcha. 
The announcement also says discussions remain ongoing with Autohome. 
More below the fold.

Back on the 30 October 2020, iCar Asia Ltd (ICQ AU), owner and operator of automotive portals in Malaysia, Indonesia, and Thailand, announced it had received a non-binding proposal from China-based Autohome (2518 HK), another auto internet platform, to acquire 100% of iCar's shares for A$0.50/share by way of a Scheme of Arrangement.
A trading update on the 26 February said discussions were still ongoing regarding Autohome's proposal, with similar wording in the 30 April update, and the 2020 annual report (page 34).
The New News
iCar has now announced it has received a non-binding proposal from privately-held Carsome Group to acquire 100% of iCar's shares for A$0.55/share by way of a Scheme.
Separately Malaysian-based Carsome has entered into an agreement with Catcha Group, iCar's largest shareholder, to acquire 19.9% of shares out in iCar via the issuance of shares in Carsome. That side agreement and the proposal are conditional on ASIC relief.
Provided the agreement completes, Carsome and Catcha will jointly acquire the remaining shares not owned in iCar.
This agreement/proposal appears an initial step towards listing Carsome/Catcha. 
The announcement also says discussions remain ongoing with Autohome. 
More below the fold. 

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

Autohome Inc (Adr) / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/autohome-inc-adr" target="_blank" data-smartkarma-citation="entities:20234:1" rel="noopener">Autohome Inc (Adr) (ATHM US)</a> is a leading online destination for auto consumers in China, ranking first among automotive service platforms as measured by mobile daily active users as of 31 December 2020 according to QuestMobile. Autohome passed its Hong Kong listing committee hearing and could raise up to $1 billion through a secondary listing, according to press reports. <div class="content-highlight">Autohome joins the second wave of Hong Kong secondary listings set to hit the screens in the coming months. Autohome like several companies which pursued secondary listings in the past, does not require the funds as its cash-rich and highly cash generative. Autohome is an attractive equity story as it is a leading online auto platform that can capitalise on the opportunities presented by China’s recovering auto market, in our view. </div>

Autohome Inc (Adr) (ATHM US) is a leading online destination for auto consumers in China, ranking first among automotive service platforms as measured by mobile daily active users as of 31 December 2020 according to QuestMobile. Autohome passed its Hong Kong listing committee hearing and could raise up to $1 billion through a secondary listing, according to press reports. Autohome joins the second wave of Hong Kong secondary listings set to hit the screens in the coming months. Autohome like several companies which pursued secondary listings in the past, does not require the funds as its cash-rich and highly cash generative. Autohome is an attractive equity story as it is a leading online auto platform that can capitalise on the opportunities presented by China’s recovering auto market, in our view. 

Autohome Secondary Listing: Motoring Online

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/carsales-com-ltd" target="_blank" data-smartkarma-citation="entities:701:1" rel="noopener">Carsales.Com Ltd (CAR AU)</a> is the leading online car sales platform in Australia, with meaningful consolidated operations in South Korea, China, Malaysia, Indonesia, Argentina, Chile, and Mexico. This is an extremely high-quality company, having delivered an average Return on Invested Capital of 20% and an average Free Cash Flow margin (post-M&amp;A) of 18.5%, over the past 5yrs. At 1.6x Net Debt to EBITDA, its balance sheet also remains strong, despite acquisitive international expansion efforts over the last 5yrs.   The company has a strong sustainable competitive advantage (moat) through the network effect it has created by being the market-leading platform in almost all the geographies in which they operate. Carsales.com’s core advertising revenue streams should be a beneficiary of a cyclical upswing in economic growth, from an incredibly low base, going into next year. The key controversy, however, on the stock is whether they will be able to accelerate their domestic digital advertising revenue growth in light of still-weak, albeit recovering, vehicle sales despite increased economic activity following a year heavily impacted by the COVID-19 pandemic AND whether this accelerating growth will be sufficient to surprise the lofty expectations already set by the Buy-side as indicated by its current 31x NTM PE ratio (a premium of more than 2 standard deviations above its 10yr historical average trading range).

Carsales.Com Ltd (CAR AU) is the leading online car sales platform in Australia, with meaningful consolidated operations in South Korea, China, Malaysia, Indonesia, Argentina, Chile, and Mexico. This is an extremely high-quality company, having delivered an average Return on Invested Capital of 20% and an average Free Cash Flow margin (post-M&amp;A) of 18.5%, over the past 5yrs. At 1.6x Net Debt to EBITDA, its balance sheet also remains strong, despite acquisitive international expansion efforts over the last 5yrs.   The company has a strong sustainable competitive advantage (moat) through the network effect it has created by being the market-leading platform in almost all the geographies in which they operate. Carsales.com’s core advertising revenue streams should be a beneficiary of a cyclical upswing in economic growth, from an incredibly low base, going into next year. The key controversy, however, on the stock is whether they will be able to accelerate their domestic digital advertising revenue growth in light of still-weak, albeit recovering, vehicle sales despite increased economic activity following a year heavily impacted by the COVID-19 pandemic AND whether this accelerating growth will be sufficient to surprise the lofty expectations already set by the Buy-side as indicated by its current 31x NTM PE ratio (a premium of more than 2 standard deviations above its 10yr historical average trading range).

Carsales.com: High Growth Recovery Expectations Already Baked In

Last Week in Event SPACE: Nichii Gakkan, Car Inc, Mcdonalds, Lynas, Casetek, Unicom, Evergrande

<a href="https://www.smartkarma.com/entities/propertyguru-ltd" target="_blank" data-smartkarma-citation="entities:28149:1" rel="noopener">PropertyGuru (PGU AH)</a> is an online property classifieds marketplace with presence in five countries across South East Asia – Singapore, Vietnam, Malaysia, Thailand and Indonesia. PropertyGuru's retail offer period opened today and will run to 22 October. The final price will be announced on 24 October.In <a href="https://www.smartkarma.com/insights/propertyguru-ipo-initiation-rose-tinted-glasses-required" target="_blank" rel="noopener">our initiation note</a>, we stated that while PropertyGuru is a good company, we believe that the forecasts are based on a bull scenario, leaving little room for any setbacks. <a href="https://www.smartkarma.com/insights/propertyguru-ipo-valuation-guru-at-frothy-valuations" target="_blank" rel="noopener">Our valuation note</a> stated that the proposed IPO price range is unattractive. <div class="content-highlight">We dug deeper into website traffic data to get a more balanced perspective on PropertyGuru’s competitive positioning in Singapore – the core geography, which accounts for most of the profit. Our analysis of website traffic data points to three areas of caution for the core Singapore business.</div>

PropertyGuru (PGU AH) is an online property classifieds marketplace with presence in five countries across South East Asia – Singapore, Vietnam, Malaysia, Thailand and Indonesia. PropertyGuru's retail offer period opened today and will run to 22 October. The final price will be announced on 24 October.In our initiation note, we stated that while PropertyGuru is a good company, we believe that the forecasts are based on a bull scenario, leaving little room for any setbacks. Our valuation note stated that the proposed IPO price range is unattractive. We dug deeper into website traffic data to get a more balanced perspective on PropertyGuru’s competitive positioning in Singapore – the core geography, which accounts for most of the profit. Our analysis of website traffic data points to three areas of caution for the core Singapore business.

PropertyGuru IPO: Website Traffic Analysis Undermines Premium Rating

Australia

CAR Group Limited operates as a digital marketplace for vehicles. The Company provides a diversified portfolio of brands to sell and buy cars. CAR Group serves customers worldwide.

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CAR Group (CAR AU)

ICar (ICQ AU): Carsome & Catcha Carpool

This looks like a knock-out bid. I suspect it is trading wide to terms - 25% gross spread - given the downside to a deal break, and the low...

David Blennerhassett

Autohome Secondary Listing: Motoring Online

Autohome passed its HK listing hearing for a $1 billion secondary listing. Autohome is an attractive equity story that can capitalise on the...

Arun George

Carsales.com: High Growth Recovery Expectations Already Baked In

Carsales.com is the leading online car sales platform in Australia and should be a benefit from a cyclical upswing in economic growth, but at 31x...

Wium Malan, CFA

Last Week in Event SPACE: Nichii Gakkan, Car Inc, Mcdonalds, Lynas, Casetek, Unicom, Evergrande

Last Week in Event SPACE ... At Nichii Gakkan Co (9792 JP) forthcoming EGM, investors will get squeezed out; but most of the ugliness about...

David Blennerhassett

PropertyGuru IPO: Website Traffic Analysis Undermines Premium Rating

PropertyGuru (PGU AH) is an online property classifieds marketplace with presence in five countries across South East Asia – Singapore, Vietnam,...

Arun George

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