Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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.

Event-Driven

<p>The Chinese food delivery giant <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> was imposed an antitrust fine of US$534m (RMB3.44bn) on Friday (8<sup>th</sup> October) for abusing its dominant market position and also ordered to make changes to its business operations. According to the regulators, Meituan was found guilty of pushing merchants to sign exclusive agreements (known as Picking One from Two) with the company and required them to only cooperate with the company and not with any of its rivals taking advantage of its market dominant position. In early August, several news media outlets reported that the antitrust regulators were planning to impose a fine of about US$1bn on the company, and the fine of RMB3.44bn accounts for 3.0% of Meituan’s FY03/2021 revenues of RMB115bn.</p><p>This all began when China’s State Administration for Market Regulation (SAMR) launched a probe on Alibaba over its suspected monopolistic practices in December last year. The investigation on Alibaba was concluded on 10th April and the company was fined RMB18.2bn (3.6% of its consolidated FY2020 revenues) for breaching anti-monopoly rules where investigations revealed that Alibaba was abusing its market dominance to prevent other merchants from using other platforms since 2015.</p><p>In our previous insight, we highlighted that Meituan was unlikely to be fined anything more than Alibaba’s antitrust fine and mentioned that Meituan would be imposed a fine of around 3-3.5% of its FY2020 revenues (around RMB3.4-4.0bn).</p>

The Chinese food delivery giant Meituan (3690 HK) was imposed an antitrust fine of US$534m (RMB3.44bn) on Friday (8th October) for abusing its dominant market position and also ordered to make changes to its business operations. According to the regulators, Meituan was found guilty of pushing merchants to sign exclusive agreements (known as Picking One from Two) with the company and required them to only cooperate with the company and not with any of its rivals taking advantage of its market dominant position. In early August, several news media outlets reported that the antitrust regulators were planning to impose a fine of about US$1bn on the company, and the fine of RMB3.44bn accounts for 3.0% of Meituan’s FY03/2021 revenues of RMB115bn.This all began when China’s State Administration for Market Regulation (SAMR) launched a probe on Alibaba over its suspected monopolistic practices in December last year. The investigation on Alibaba was concluded on 10th April and the company was fined RMB18.2bn (3.6% of its consolidated FY2020 revenues) for breaching anti-monopoly rules where investigations revealed that Alibaba was abusing its market dominance to prevent other merchants from using other platforms since 2015.In our previous insight, we highlighted that Meituan was unlikely to be fined anything more than Alibaba’s antitrust fine and mentioned that Meituan would be imposed a fine of around 3-3.5% of its FY2020 revenues (around RMB3.4-4.0bn).

Meituan Fined RMB3.44bn; Expect Short-Term Gains with Positive Shift in Sentiment

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>TDCX Inc, a Singapore-headquartered digital customer experience (CX) provider, raised around US$338m in its US IPO.</p>
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<div>
<p>TDCX provides outsourcing services to clients in new economy sectors and traditional blue-chip clients undergoing digital transformation. As of Jun 21, it served 43 global clients and with 114 active campaigns. The firm has offices located in 10 geographies across Asia, Europe and Latin America, namely, Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India, Columbia and Romania.</p>
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<div>
<p>We have covered various aspects of the deal in our earlier note <a href="https://www.smartkarma.com/insights/tdcx-inc-pre-ipo-tearsheet" target="_blank" rel="noopener">TDCX Inc. Pre-IPO Tearsheet</a>, <a href="https://www.smartkarma.com/insights/tdcx-inc-pre-ipo-past-growth-looks-good-the-rest-is-iffy-including-the-founders-s-325m-payout" target="_blank" rel="noopener">TDCX Inc. Pre-IPO - Past Growth Looks Good, the Rest Is Iffy, Including the Founders S$325m Payout</a> and <a href="https://www.smartkarma.com/insights/tdcx-inc-pre-ipo-largest-client-is-growing-faster-and-trading-cheaper" target="_blank" rel="noopener">TDCX Inc. Pre-IPO - Largest Client Is Growing Faster and Trading Cheaper</a>.</p>
</div>
<div>
<p>In this note, we will talk about the trading dynamics.</p>
</div>


TDCX Inc, a Singapore-headquartered digital customer experience (CX) provider, raised around US$338m in its US IPO.


TDCX provides outsourcing services to clients in new economy sectors and traditional blue-chip clients undergoing digital transformation. As of Jun 21, it served 43 global clients and with 114 active campaigns. The firm has offices located in 10 geographies across Asia, Europe and Latin America, namely, Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India, Columbia and Romania.


We have covered various aspects of the deal in our earlier note TDCX Inc. Pre-IPO Tearsheet, TDCX Inc. Pre-IPO - Past Growth Looks Good, the Rest Is Iffy, Including the Founders S$325m Payout and TDCX Inc. Pre-IPO - Largest Client Is Growing Faster and Trading Cheaper.


In this note, we will talk about the trading dynamics.


Research on Tech Companies

Evelyn Zhang

Thematic (Sector/Industry)

<ul>
<li> More difficult for companies to obtain and accumulate data;</li>
<li>Digital advertising alliance will be impacted, precision advertising ROI will decline</li>
<li>Mobility service provider like Didi, Ctrip will no longer able to offer differentiate pricing through user profile, also restricted for containing  on national geographic information security</li>
<li>Public Cloud market will transfer from current internet cloud provider to state-owned cloud, benefit infrastructure and service providers</li>
<li>Facial Recognition AI such as in-car camera for autonomous driving assistance will be impacted</li>
<li>Short video content platform will have restrictions on the use of recommendation algorithms, which may cause a decline in user time, and the ecommerce product recommendation accuracy</li>
<li>Internet companies with more than 1mn users that have plans to list in US will have to reconsider</li>
</ul>


 More difficult for companies to obtain and accumulate data;
Digital advertising alliance will be impacted, precision advertising ROI will decline
Mobility service provider like Didi, Ctrip will no longer able to offer differentiate pricing through user profile, also restricted for containing  on national geographic information security
Public Cloud market will transfer from current internet cloud provider to state-owned cloud, benefit infrastructure and service providers
Facial Recognition AI such as in-car camera for autonomous driving assistance will be impacted
Short video content platform will have restrictions on the use of recommendation algorithms, which may cause a decline in user time, and the ecommerce product recommendation accuracy
Internet companies with more than 1mn users that have plans to list in US will have to reconsider


Law & Order: What the New Data Security Laws Mean for China's Tech Sector?

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>Aukus makes a ruckus</li>
<li>Comprehensive and progressive? Sign us up.</li>
<li>Crackdowns leave China with no top ten firms </li>
<li>The red Shaanxi sun in our hearts</li>
<li>A nuclear revolution cranks up in the Gobi</li>
</ul><div class="content-remarks"><ul style="list-style-type: none;"><li><div>In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</div></li></ul></div>

China News That Matters
Aukus makes a ruckus
Comprehensive and progressive? Sign us up.
Crackdowns leave China with no top ten firms 
The red Shaanxi sun in our hearts
A nuclear revolution cranks up in the Gobi
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

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><strong><em>*Being “Seriously Dealt” With:</em></strong> No sooner than Tencent Holdings’ (700.HK) [Tencent] virtual call ended with a competitor dismissing new gaming restrictions did the mainland Chinese regulator haul in gaming industry executives for a complete dressing down. It’s probably fair to say, Tencent’s recent hubris was their Jack Ma moment. It kind of makes one wonder what the authorities have planned next for Tencent. As the screws continue to tighten, the question becomes whether or not Tencent can narrow the regulatory discount, or whether these issues will remain a persistent overhang?; </p><p><em><strong>*As We’ve Just Learned - Ignoring It, Doesn’t Make It Go Away: </strong></em>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><em><strong>*Prior To The War On Gaming, </strong><strong><em>Resu</em>lts Have Already Deteriorated: </strong></em>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>

*Being “Seriously Dealt” With: No sooner than Tencent Holdings’ (700.HK) [Tencent] virtual call ended with a competitor dismissing new gaming restrictions did the mainland Chinese regulator haul in gaming industry executives for a complete dressing down. It’s probably fair to say, Tencent’s recent hubris was their Jack Ma moment. It kind of makes one wonder what the authorities have planned next for Tencent. As the screws continue to tighten, the question becomes whether or not Tencent can narrow the regulatory discount, or whether these issues will remain a persistent overhang?; *As We’ve Just Learned - Ignoring It, Doesn’t Make It Go Away: 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 *Prior To The War On Gaming, Results Have Already Deteriorated: 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 – Modern Day Opium War

China

DiDi Chuxing Inc operates passenger transportation platforms. The Company provides mobility solutions, cloud computing, and other application based services. DiDi Chuxing serves customers worldwide.

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DiDi Global (DIDIY US)

Meituan Fined RMB3.44bn; Expect Short-Term Gains with Positive Shift in Sentiment

Meituan was imposed an antitrust fine of US$534m (RMB3.44bn) on Friday and we expect the company’s shares to see gains in the short-term as there...

Shifara Samsudeen, FCMA, CGMA

TDCX Inc. IPO Trading - Won't Be Buyers

TDCX Inc, a Singapore-headquartered digital customer experience (CX) provider, raised around US$338m in its US IPO. In this note we will talk...

Sumeet Singh

Law & Order: What the New Data Security Laws Mean for China's Tech Sector?

China's recent new sweeping data security and protection laws have set the tech sector in turmoil, We examin what are the impact way forward.

Evelyn Zhang

AUKUS/ CPTPP/ Crackdowns/ CCP/ TMSR-LF1

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Tencent Holdings – Modern Day Opium War

TENCENT HOLDINGS: The mainland Chinese regulator hauled in gaming industry executives for a complete dressing down over the recent August gaming...

Thomas J. Monaco

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