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

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ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.
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<div>We covered various aspects of the deal in our earlier notes,</div>
<div>
<ul>
<li>
<a href="https://www.smartkarma.com/compose/insight/59814/ANE%20Logistics%20Pre-IPO%20-%20Margins%20Expanding%20but%20Appears%20to%20Be%20Falling%20Behind" target="_blank" rel="noopener">ANE Logistics Pre-IPO - Margins expanding but appears to be falling behind,</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/ane-logistics-pre-ipo-phip-updates-underlying-growth-is-far-from-clear" target="_blank" rel="noopener">ANE Logistics Pre-IPO - PHIP updates - Underlying growth is far from clear</a> and</li>
<li><a href="https://www.smartkarma.com/insights/ane-logistics-ipo-weird-disclosures-continue" target="_blank" rel="noopener">ANE Logistics IPO - Weird Disclosures Continue</a></li>
</ul>
In this note, we will talk about updates since our last note
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ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.

We covered various aspects of the deal in our earlier notes,



ANE Logistics Pre-IPO - Margins expanding but appears to be falling behind, 

ANE Logistics Pre-IPO - PHIP updates - Underlying growth is far from clear and
ANE Logistics IPO - Weird Disclosures Continue

In this note, we will talk about updates since our last note


ANE Logistics IPO Trading - No Demand, We Would Stay Clear

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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Just plain horrible.
Following an indicative pre-market sell-off of 35%, <a href="https://www.smartkarma.com/entities/51-job-inc-adr" target="_blank" data-smartkarma-citation="entities:532:1" rel="noopener">51 Job Inc (JOBS US)</a> closed down 19.2%, and is now 20% adrift of the undisturbed price. 
The news? As per 51job's <a href="https://ir.51job.com/ir/php/2021/PreRelease20211108.php?1108" target="_blank" rel="noopener">announcement</a>:
<blockquote>
that certain members of the buyer consortium that formed Garnet Faith Limited to acquire the Company ... have been in consultation with Chinese regulators on recent regulatory changes in China that may be applicable to the Company and the Proposed Transaction. The consultation process by these buyer consortium members is currently ongoing and a clear timeline to its completion cannot be provided at this time. 
</blockquote>
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"Recent regulatory changes" emerged shortly after <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>'s listing in early July, and a broad regulatory crackdown followed, casting a net over sectors from education to technology. As quoted by Ministry of Industry and Information Technology spokesperson Zhao Zhiguo back in September: "we are guiding relevant companies to carry out self-examination and rectification".
Late last month State Administration for Market Regulation (SAMR) proposed a list of responsibilities it wanted internet platforms to uphold. This latest edict primarily targeted large platforms (such as <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>) and that they should (according to a Reuters <a href="https://www.reuters.com/world/china/china-proposes-guidelines-internet-platform-responsibilities-2021-10-29/" target="_blank" rel="noopener">article</a>) "abide by the principles of fairness when offering services and should open their services up to other platform operators. They should not obtain data without users' consent and should be transparent when using big data to recommend products."  The SAMR said these were draft guidelines that were open to public consultation until yesterday.
51job.com is the leading recruitment website/platform in China. Shares rolled over in July as the regulatory oversight on internet platforms ensnared more sectors/companies. 
Yet this latest announcement from 51job provides little new news to what was already known. Timing, admittedly, was not ideal, arriving shortly on the heels of last week's <a href="https://www.sec.gov/Archives/edgar/data/0001295484/000110465921132333/tm2131363d1_sc13da.htm" target="_blank" rel="noopener">announcement</a> that funding for the Offer had progressed.  
The significant price correction yesterday - which could all but be construed as a dealbreak - can ostensibly be put down to short-term investors piling into 51job on the financing news, then turning tail, exiting en-masse after the perceived financing head-fake.  
Yesterday's price movement appears overdone.  The gross spread to terms is now out to 45.8%.
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/535/original/image_87521874221636431612863.png?1636431613" class="editor-image img-responsive" data-smartkarma-image-id="240535"></figure>
More below the fold.
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Just plain horrible.
Following an indicative pre-market sell-off of 35%, 51 Job Inc (JOBS US) closed down 19.2%, and is now 20% adrift of the undisturbed price. 
The news? As per 51job's announcement:

that certain members of the buyer consortium that formed Garnet Faith Limited to acquire the Company ... have been in consultation with Chinese regulators on recent regulatory changes in China that may be applicable to the Company and the Proposed Transaction. The consultation process by these buyer consortium members is currently ongoing and a clear timeline to its completion cannot be provided at this time. 


"Recent regulatory changes" emerged shortly after DiDi Global (DIDI US)'s listing in early July, and a broad regulatory crackdown followed, casting a net over sectors from education to technology. As quoted by Ministry of Industry and Information Technology spokesperson Zhao Zhiguo back in September: "we are guiding relevant companies to carry out self-examination and rectification".
Late last month State Administration for Market Regulation (SAMR) proposed a list of responsibilities it wanted internet platforms to uphold. This latest edict primarily targeted large platforms (such as Alibaba Group (9988 HK), Tencent (700 HK), and Meituan (3690 HK)) and that they should (according to a Reuters article) "abide by the principles of fairness when offering services and should open their services up to other platform operators. They should not obtain data without users' consent and should be transparent when using big data to recommend products."  The SAMR said these were draft guidelines that were open to public consultation until yesterday.
51job.com is the leading recruitment website/platform in China. Shares rolled over in July as the regulatory oversight on internet platforms ensnared more sectors/companies. 
Yet this latest announcement from 51job provides little new news to what was already known. Timing, admittedly, was not ideal, arriving shortly on the heels of last week's announcement that funding for the Offer had progressed.  
The significant price correction yesterday - which could all but be construed as a dealbreak - can ostensibly be put down to short-term investors piling into 51job on the financing news, then turning tail, exiting en-masse after the perceived financing head-fake.  
Yesterday's price movement appears overdone.  The gross spread to terms is now out to 45.8%.


More below the fold.


Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

These are our initial thoughts – we will write more about the quarter later – but we wanted to get our initial thoughts on the buyback out.This was a terrible print for <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>  which posted record investment losses for Vision Fund despite some fancy footwork on valuations in the private portfolio. That seems to make the announcement of a ¥1,000bn share buyback less surprising. No doubt it will attract interest as the shares trade near 52-week lows and at the high-end of the holding company discount range but there are some caveats that may temper enthusiasm whilst the longer-term risk is that the buyback is tied to completion of the Nvidia/ARM deal, which still faces regulatory scrutiny.

These are our initial thoughts – we will write more about the quarter later – but we wanted to get our initial thoughts on the buyback out.This was a terrible print for Softbank Group (9984 JP)  which posted record investment losses for Vision Fund despite some fancy footwork on valuations in the private portfolio. That seems to make the announcement of a ¥1,000bn share buyback less surprising. No doubt it will attract interest as the shares trade near 52-week lows and at the high-end of the holding company discount range but there are some caveats that may temper enthusiasm whilst the longer-term risk is that the buyback is tied to completion of the Nvidia/ARM deal, which still faces regulatory scrutiny.   

Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

On 20 August 2021, the Cyberspace Administration of China and the Ministry of Transport, together with other relevant authorities, jointly issued the Provisions on Management of Automotive Data Security (Trial) ("Auto Data Provisions"). 
The Auto Data Provisions since took effect on 1 October 2021 to limited fanfare, with media headlines instead focused on the Personal Information Protection Law ("PIPL"), which took effect on 1 November 2021, and specific affected sectors, such as <a href="https://www.reuters.com/business/chinese-online-brokers-futu-up-fintech-face-regulatory-risks-peoples-daily-2021-10-14/" target="_blank" rel="noopener">China online brokerages</a>. 
Further, on 29 October 2021, regulators issued <a href="https://asia.nikkei.com/Business/China-tech/China-to-tighten-rules-on-data-transfers-abroad-with-review-trigger" target="_blank" rel="noopener">draft data protection regulations</a> which provide that businesses in China face a national security review prior to transfers outside the country of personal information of 100,000 individuals or more.  The draft consultation period will last through 28 November 2021, following which the directives would likely take effect soon after. 
EVs of today are no longer a mere mode of transport that depend on analog platforms.  As EV companies race to develop autonomous driving technologies, most if not all EV companies now harness vast amounts of users and real-time mobility data.  Think <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>. 
Yet, apart from <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>, Chinese EV manufacturers (all listed in the US) such as <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a>, <a href="https://www.smartkarma.com/entities/xpeng-inc" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng (XPEV US)</a> and <a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" data-smartkarma-citation="entities:28812:1" rel="noopener">Li Auto Inc. (LI US)</a> have remained largely unscathed from the news flow and analysis surrounding data security in China. 
In this Insight, we discuss what the Auto Data Provisions entail, whether Chinese EV companies face any repercussions from tightening of data security laws, and which one is the most at risk.

On 20 August 2021, the Cyberspace Administration of China and the Ministry of Transport, together with other relevant authorities, jointly issued the Provisions on Management of Automotive Data Security (Trial) ("Auto Data Provisions"). 
The Auto Data Provisions since took effect on 1 October 2021 to limited fanfare, with media headlines instead focused on the Personal Information Protection Law ("PIPL"), which took effect on 1 November 2021, and specific affected sectors, such as China online brokerages. 
Further, on 29 October 2021, regulators issued draft data protection regulations which provide that businesses in China face a national security review prior to transfers outside the country of personal information of 100,000 individuals or more.  The draft consultation period will last through 28 November 2021, following which the directives would likely take effect soon after. 
EVs of today are no longer a mere mode of transport that depend on analog platforms.  As EV companies race to develop autonomous driving technologies, most if not all EV companies now harness vast amounts of users and real-time mobility data.  Think DiDi Global (DIDI US). 
Yet, apart from Tesla Motors (TSLA US), Chinese EV manufacturers (all listed in the US) such as NIO Inc (NIO US), Xpeng (XPEV US) and Li Auto Inc. (LI US) have remained largely unscathed from the news flow and analysis surrounding data security in China. 
In this Insight, we discuss what the Auto Data Provisions entail, whether Chinese EV companies face any repercussions from tightening of data security laws, and which one is the most at risk. 

Nio Inc (Nio US) - Automotive Data Security, Delivery Declines and Hefei Investors

Equity Research in HK and Mainland China

Li Tang

Thematic (Sector/Industry)

<ul>
<li>The Cyberspace Administration of China (CAC) drafted a security evaluation guideline on data outbound transfer and released it for public comment.</li>
<li>The upshot of the draft rules seems to be that regulators will tend to be closely involved in approving any internet company that wishes to transfer data overseas.</li>
<li> We think the guideline, once effective, would move data security evaluation to the implementation stage soon</li>
<li>We think <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a> could be a major potential target for the trial run. </li>
</ul>


The Cyberspace Administration of China (CAC) drafted a security evaluation guideline on data outbound transfer and released it for public comment.
The upshot of the draft rules seems to be that regulators will tend to be closely involved in approving any internet company that wishes to transfer data overseas.
 We think the guideline, once effective, would move data security evaluation to the implementation stage soon
We think DiDi Global (DIDI US) could be a major potential target for the trial run. 


China Issued Draft Rules on Outbound Data Transfers

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)

ANE Logistics IPO Trading - No Demand, We Would Stay Clear

ANE, an express freight network operator in China for less-than-truckload (LTL) market, raised around US$143m in its Hong Kong IPO. The company is...

Sumeet Singh

51job (JOB US): That Was An Overreaction

Trading at a gross spread of 45.8%. I expect this spread to stay wide given the opaqueness of the regulatory overlay, the (likely) vacuum of...

David Blennerhassett

Softbank Group Q2 21 Results Reaction: Softbank May Intend to Use ARM Proceeds for Buyback

Softbank's share buyback may have as much to do with delays to Nvidia/ARM regulatory approval as record losses for Vision Fund in Q2. We look at...

Kirk Boodry

Nio Inc (Nio US) - Automotive Data Security, Delivery Declines and Hefei Investors

In this Insight, we discuss the impact of tightening auto data security laws, Oct 2021 delivery declines and residual Hefei investors risks on Nio...

Jason Yap, CFA

China Issued Draft Rules on Outbound Data Transfers

The upshot of the draft rules seems to be that regulators will tend to be closely involved in approving any internet company that wishes to...

Li Tang

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