IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

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<p><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> is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The <em>DiDi Chuxing</em> app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (12.8%), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (6.8%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> and <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>. </p><p>Didi has priced its IPO at $14.00 per ADS, which is at the top-end of the IPO price range of $13.00-14.00 per ADS, <a href="https://www.reuters.com/business/chinas-didi-raises-4-billion-us-ipo-source-2021-06-29/" target="_blank" rel="noopener">according to Reuters</a>. Reuters also noted that Didi sold a higher 317 million ADS versus the planned 288 million ADS (10% more), resulting in a fully-diluted market cap of $73 billion ($67.5 billion on a non-diluted basis).</p><div><p>In <a href="https://www.smartkarma.com/insights/didi-chuxing-xiaoju-kuaizhi-initiation-in-for-a-bumpy-ride" target="_blank" data-smartkarma-citation="insights:53014" rel="noopener">Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?</a>, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/xiaoju-kuaizhi-didi-chuxing-ipo-growth-vs-margin" target="_blank" data-smartkarma-citation="insights:53232" rel="noopener">Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin</a>, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, <a href="https://www.smartkarma.com/entities/lyft-inc" target="_blank" data-smartkarma-citation="entities:24423:1" rel="noopener">Lyft Inc (LYFT US)</a> and <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a>. Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.</p>
<p>In <a href="https://www.smartkarma.com/insights/didi-global-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:53626" rel="noopener">DiDi Global IPO: Valuation Insights</a>, we noted that the proposed IPO valuation is materially below the previously rumoured top-end valuation of $100 billion. In combination with our SoTP valuation, we opined that Didi is fairly valued at the IPO price range.   </p>
<div class="content-highlight"><p>Our relative valuation suggests that the IPO price is full. Updating for the final IPO raise and the latest peer multiples, our SoTP valuation is $13.54 per ADS, which is marginally below the IPO price of $14 per ADS. Consequently, we would take profits on any meaningful first day IPO pop.</p></div>
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DiDi Chuxing (DIDI US) is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The DiDi Chuxing app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), Uber (UBER US) (12.8%), Tencent (700 HK) (6.8%), Alibaba Group (BABA US) and Toyota Motor (7203 JP). Didi has priced its IPO at $14.00 per ADS, which is at the top-end of the IPO price range of $13.00-14.00 per ADS, according to Reuters. Reuters also noted that Didi sold a higher 317 million ADS versus the planned 288 million ADS (10% more), resulting in a fully-diluted market cap of $73 billion ($67.5 billion on a non-diluted basis).In Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. 
In Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, Lyft Inc (LYFT US) and Grab (0967655D SP). Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.
In DiDi Global IPO: Valuation Insights, we noted that the proposed IPO valuation is materially below the previously rumoured top-end valuation of $100 billion. In combination with our SoTP valuation, we opined that Didi is fairly valued at the IPO price range.   
Our relative valuation suggests that the IPO price is full. Updating for the final IPO raise and the latest peer multiples, our SoTP valuation is $13.54 per ADS, which is marginally below the IPO price of $14 per ADS. Consequently, we would take profits on any meaningful first day IPO pop.


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<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> is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The <em>DiDi Chuxing</em> app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (12.8%), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (6.8%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> and <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>. </div><div></div><div><p>At the mid-point of the proposed IPO price range of $13.00-14.00 per ADS, Didi will have a fully diluted market cap of $67.7 billion, materially below the rumoured top-end valuation of $100 billion. At the mid-point of the IPO price range, the net proceeds are $3,795.4 million, below the rumoured $10 billion raise target. Didi has received $1,250 million indications of interest (32.2% of the ADSs being offered) from Morgan Stanley Investment Management ($750 million) and Temasek ($500 million). </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/didi-chuxing-xiaoju-kuaizhi-initiation-in-for-a-bumpy-ride" target="_blank" data-smartkarma-citation="insights:53014" rel="noopener">Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?</a>, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. </p>
<p>In <a href="https://www.smartkarma.com/insights/xiaoju-kuaizhi-didi-chuxing-ipo-growth-vs-margin" target="_blank" data-smartkarma-citation="insights:53232" rel="noopener">Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin</a>, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, <a href="https://www.smartkarma.com/entities/lyft-inc" target="_blank" data-smartkarma-citation="entities:24423:1" rel="noopener">Lyft Inc (LYFT US)</a> and <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a>. Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.</p>
</div><div><div><div class="content-highlight"><p>Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that Didi is fairly valued at the IPO price range.   </p></div></div></div>


DiDi Chuxing (DIDI US) is the world's largest mobility technology platform by annual active users and by average daily transactions for the twelve months ended 31 March 2021, according to CIC. The DiDi Chuxing app in China where consumers can access mobility and other essential services. Didi is backed by Softbank Vision Fund (21.5% stake), Uber (UBER US) (12.8%), Tencent (700 HK) (6.8%), Alibaba Group (BABA US) and Toyota Motor (7203 JP). At the mid-point of the proposed IPO price range of $13.00-14.00 per ADS, Didi will have a fully diluted market cap of $67.7 billion, materially below the rumoured top-end valuation of $100 billion. At the mid-point of the IPO price range, the net proceeds are $3,795.4 million, below the rumoured $10 billion raise target. Didi has received $1,250 million indications of interest (32.2% of the ADSs being offered) from Morgan Stanley Investment Management ($750 million) and Temasek ($500 million). 
In Didi Chuxing (Xiaoju Kuaizhi) Initiation: In for a Bumpy Ride?, we opined that Didi’s core china mobility business is heading on the right trajectory with rising growth and improving margin. However, Didi is saddled with two other businesses (international and other initiatives) which are driven by its global ambitions and its desire to provide a broad array of service offerings to consumers and drivers. This ecosystem strategy is sensible for a company that possesses a highly profitable and cash generative core business. Unfortunately, Didi’s core china mobility business is not close to achieving this status and the international and other initiatives business look like unnecessary and costly distractions. 
In Xiaoju Kuaizhi (Didi Chuxing) IPO: Growth Vs Margin, we examined the key financial metrics of Didi china mobility and international business to the relevant business units of its peers - Uber, Lyft Inc (LYFT US) and Grab (0967655D SP). Our analysis showed that Didi offered a trade-off between growth and profitability in comparison to its peers. We concluded that in combination with the ongoing regulatory overhang, we are inclined to remain on the sidelines.
Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that Didi is fairly valued at the IPO price range.   

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price range of $25.5 per share. </p><p>In our base case valuation, we used 2.0x EV/S multiple, using our estimated sales of 21.9 billion RMB in 2022. Our base case valuation multiple of 2.0x is at a 69% discount to the median EV/S multiple of the comps. The comps such as Meituan and Pinduoduo are much larger companies with greater economies of scale of better profitability.</p><p>However, we do believe that Dingdong should be given some credit since it generated a tremendous sales growth in 2020 (only DoorDash generated higher sales growth in 2020). In addition, despite some slowing sales growth in 1Q 2021, we expect its sales growth in 2022 (34%) to be relatively close to the comps' sales growth (36%). </p>

Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price range of $25.5 per share. In our base case valuation, we used 2.0x EV/S multiple, using our estimated sales of 21.9 billion RMB in 2022. Our base case valuation multiple of 2.0x is at a 69% discount to the median EV/S multiple of the comps. The comps such as Meituan and Pinduoduo are much larger companies with greater economies of scale of better profitability.However, we do believe that Dingdong should be given some credit since it generated a tremendous sales growth in 2020 (only DoorDash generated higher sales growth in 2020). In addition, despite some slowing sales growth in 1Q 2021, we expect its sales growth in 2022 (34%) to be relatively close to the comps' sales growth (36%). 

<div><p><a href="https://www.smartkarma.com/entities/missfresh-limited" target="_blank" data-smartkarma-citation="entities:33468:1" rel="noopener">Missfresh (MF US)</a> is an online grocery platform in China. Missfresh notes that it ranked first in China’s on-demand DMW (distributed mini-warehouse) retail industry in 2018 and 2019, respectively, and ranked second in 2020 as measured by GMV (gross merchandise value), according to iResearch. Missfresh is backed by Shunwei China Internet Fund IV (12.4% of outstanding shares, 3.8% of voting power) and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> (8.1% of outstanding shares, 2.5% of voting power). </p></div><div><p>At the mid-point of the proposed IPO price range of $13.00-16.00 per ADS, Missfresh will have a market cap of $3.4 billion. At the mid-point of the IPO price range, the net proceeds are $279.2 million, below the rumoured $500 million raise target. Missfresh has received $90 million indications of interest from CIC ($40 million), Tencent ($20 million), Davis Selected Partner Advisors ($10 million), Genesis Capital ($10 million) and Vision Plus Capital ($10 million). </p></div><div><p>In <a href="https://www.smartkarma.com/insights/missfresh-ipo-initiation-no-so-fresh" target="_blank" data-smartkarma-citation="insights:53139" rel="noopener">Missfresh IPO Initiation: No so Fresh</a>, we stated that Missfresh was a beneficiary of the COVID-19 pandemic resulting in an exceptional 1Q20. However, the performance since 1Q20 has been lacklustre as Missfresh is facing the twin challenges of tough competition and a partial reversal of consumer behaviour. While the recent fundraisings to support <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> (Duo Duo Maicai) and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>’s online grocery delivery platforms underscores the opportunity, it also suggests that Missfresh will find it harder to compete and generate shareholder returns. We concluded that Missfresh is a challenged business and we would pass on the IPO.</p></div><div><div><div class="content-highlight"><p>Our valuation analysis suggests that Missfresh is broadly fairly valued on a growth adjusted EV/Sales compared to its peers. For investors looking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform, we think that peer, <a href="https://www.smartkarma.com/entities/dingdong-maicai" target="_blank" data-smartkarma-citation="entities:33461:1" rel="noopener">Dingdong Maicai (DDL US)</a> which also launched its NYSE IPO, offers a better risk-reward profile.  </p></div></div></div><div><p><strong><em>For readers interested in peer</em></strong>, Dingdong, we highlight our notes - <a href="https://www.smartkarma.com/insights/dingdong-ipo-initiation-an-arms-race-is-brewing" target="_blank" data-smartkarma-citation="insights:53334" rel="noopener">Dingdong IPO Initiation: An Arms Race Is Brewing</a> and <a href="https://www.smartkarma.com/insights/dingdong-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:53568" rel="noopener">Dingdong IPO: Valuation Insights</a>. <a href="https://www.smartkarma.com/entities/wm-tech-corporation" target="_blank" data-smartkarma-citation="entities:32976:1" rel="noopener">WM Tech Corporation (WMT HK)</a> has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in <a href="https://www.smartkarma.com/insights/wm-tech-ipo-initiation-food-for-thought" target="_blank" data-smartkarma-citation="insights:49914" rel="noopener">WM Tech IPO Initiation: Food for Thought</a>. </p></div>

Missfresh (MF US) is an online grocery platform in China. Missfresh notes that it ranked first in China’s on-demand DMW (distributed mini-warehouse) retail industry in 2018 and 2019, respectively, and ranked second in 2020 as measured by GMV (gross merchandise value), according to iResearch. Missfresh is backed by Shunwei China Internet Fund IV (12.4% of outstanding shares, 3.8% of voting power) and Tencent (700 HK) (8.1% of outstanding shares, 2.5% of voting power). At the mid-point of the proposed IPO price range of $13.00-16.00 per ADS, Missfresh will have a market cap of $3.4 billion. At the mid-point of the IPO price range, the net proceeds are $279.2 million, below the rumoured $500 million raise target. Missfresh has received $90 million indications of interest from CIC ($40 million), Tencent ($20 million), Davis Selected Partner Advisors ($10 million), Genesis Capital ($10 million) and Vision Plus Capital ($10 million). In Missfresh IPO Initiation: No so Fresh, we stated that Missfresh was a beneficiary of the COVID-19 pandemic resulting in an exceptional 1Q20. However, the performance since 1Q20 has been lacklustre as Missfresh is facing the twin challenges of tough competition and a partial reversal of consumer behaviour. While the recent fundraisings to support Pinduoduo (PDD US) (Duo Duo Maicai) and Meituan (3690 HK)’s online grocery delivery platforms underscores the opportunity, it also suggests that Missfresh will find it harder to compete and generate shareholder returns. We concluded that Missfresh is a challenged business and we would pass on the IPO.Our valuation analysis suggests that Missfresh is broadly fairly valued on a growth adjusted EV/Sales compared to its peers. For investors looking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform, we think that peer, Dingdong Maicai (DDL US) which also launched its NYSE IPO, offers a better risk-reward profile.  For readers interested in peer, Dingdong, we highlight our notes - Dingdong IPO Initiation: An Arms Race Is Brewing and Dingdong IPO: Valuation Insights. WM Tech Corporation (WMT HK) has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in WM Tech IPO Initiation: Food for Thought. 

<div><p><a href="https://www.smartkarma.com/entities/dingdong-maicai" target="_blank" data-smartkarma-citation="entities:33461:1" rel="noopener">Dingdong Maicai (DDL US)</a> is an online grocery platform in China. The <em>Dingdong Fresh</em> mobile app and mini-programs enable Chinese consumer to shop online for groceries and other products. Dingdong notes that its market share in the on-demand e-commerce industry as measured by GMV (gross merchandise value) was 10.1% in 2020, according to CIC. Dingdong is backed by Shunwei China Internet Fund V (5.7% of outstanding shares), General Atlantic (5.6%), SoftBank Vision Fund (5.6%), CMC Capital (5.3%) and DST Asia (5.1%). </p></div><div><p>At the mid-point of the proposed IPO price range of $23.50-25.50 per ADS, Dingdong will have a market cap of $6.0 billion. At the mid-point of the IPO price range, the net proceeds are $314.9 million, below the rumoured $500 million raise target. Dingdong has received $200 million indications of interest from existing shareholders Aspex Master Fund ($50 million), Coatue ($50 million), SoftBank Vision Fund ($50 million) and Tiger Global ($500 million). </p></div><div><p>In <a href="https://www.smartkarma.com/insights/dingdong-ipo-initiation-an-arms-race-is-brewing" target="_blank" data-smartkarma-citation="insights:53334" rel="noopener">Dingdong IPO Initiation: An Arms Race Is Brewing</a>,  we stated that t<span>he current frenzy around the online grocery delivery market in China is reminiscent of the bike-sharing frenzy a few years.</span><span> The resulting arms race has led to specialists (such as Dingdong and <a href="https://www.smartkarma.com/entities/missfresh-limited" target="_blank" data-smartkarma-citation="entities:33468:1" rel="noopener">Missfresh (MF US)</a>), tech goliaths (<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</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 traditional offline stores (such as <a href="https://www.smartkarma.com/entities/wm-tech-corporation" target="_blank" data-smartkarma-citation="entities:32976:1" rel="noopener">WM Tech Corporation (WMT HK)</a>) reporting heavy losses for their online grocery segments in the quest to grab market share. </span><span>The online grocery delivery market is set for a shakeout which means that like bike-sharing, it will result in significant shareholder value destruction. We concluded that we would pass on the IPO and wait on the sidelines to see how this plays out.</span></p></div><div><div class="content-highlight"><p>Our valuation analysis suggests that Dingdong trades at attractive multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. The strong indications of interest suggest ongoing support from shareholders. While the fundamentals are less than ideal, the undemanding rating implied by the IPO price range offers a reasonable risk-reward profile. We think that Dingdong is worth a punt for investors seeking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform. </p></div></div><div><p><strong><em>For readers interested in peer</em></strong>, Missfresh, which also launched its Nasdaq IPO, we highlight our note - <a href="https://www.smartkarma.com/insights/missfresh-ipo-initiation-no-so-fresh" target="_blank" data-smartkarma-citation="insights:53139" rel="noopener">Missfresh IPO Initiation: No so Fresh</a>. WM Tech has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in <a href="https://www.smartkarma.com/insights/wm-tech-ipo-initiation-food-for-thought" target="_blank" data-smartkarma-citation="insights:49914" rel="noopener">WM Tech IPO Initiation: Food for Thought</a>. </p></div>

Dingdong Maicai (DDL US) is an online grocery platform in China. The Dingdong Fresh mobile app and mini-programs enable Chinese consumer to shop online for groceries and other products. Dingdong notes that its market share in the on-demand e-commerce industry as measured by GMV (gross merchandise value) was 10.1% in 2020, according to CIC. Dingdong is backed by Shunwei China Internet Fund V (5.7% of outstanding shares), General Atlantic (5.6%), SoftBank Vision Fund (5.6%), CMC Capital (5.3%) and DST Asia (5.1%). At the mid-point of the proposed IPO price range of $23.50-25.50 per ADS, Dingdong will have a market cap of $6.0 billion. At the mid-point of the IPO price range, the net proceeds are $314.9 million, below the rumoured $500 million raise target. Dingdong has received $200 million indications of interest from existing shareholders Aspex Master Fund ($50 million), Coatue ($50 million), SoftBank Vision Fund ($50 million) and Tiger Global ($500 million). In Dingdong IPO Initiation: An Arms Race Is Brewing,  we stated that the current frenzy around the online grocery delivery market in China is reminiscent of the bike-sharing frenzy a few years. The resulting arms race has led to specialists (such as Dingdong and Missfresh (MF US)), tech goliaths (Pinduoduo (PDD US) and Meituan (3690 HK)) and traditional offline stores (such as WM Tech Corporation (WMT HK)) reporting heavy losses for their online grocery segments in the quest to grab market share. The online grocery delivery market is set for a shakeout which means that like bike-sharing, it will result in significant shareholder value destruction. We concluded that we would pass on the IPO and wait on the sidelines to see how this plays out.Our valuation analysis suggests that Dingdong trades at attractive multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. The strong indications of interest suggest ongoing support from shareholders. While the fundamentals are less than ideal, the undemanding rating implied by the IPO price range offers a reasonable risk-reward profile. We think that Dingdong is worth a punt for investors seeking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform. For readers interested in peer, Missfresh, which also launched its Nasdaq IPO, we highlight our note - Missfresh IPO Initiation: No so Fresh. WM Tech has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in WM Tech IPO Initiation: Food for Thought. 

United States

DoorDash, Inc. provides restaurant food delivery services. The Company develops technology to connect customers with merchants through an on-demand food delivery application. DoorDash serves customers in the United States.

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DoorDash (DASH US)

DiDi Global IPO: Trading Debut

Didi has priced its IPO at $14 per ADS and sold 10% more ADSs than planned. Our relative valuation and SoTP valuation suggests a full price. We...

Arun George

DiDi Global IPO: Valuation Insights

Our SoTP valuation is $13.96 per ADS, which is a 3.4% upside to the mid-point of the IPO price range of $13-14 per ADS. Consequently, we think that...

Arun George

Dingdong Maicai IPO Valuation Analysis

Our base case valuation of Dingdong is $30.9 per share or market cap of $7.6 billion. This would suggest a 21% upside from the high end IPO price...

Douglas Kim

Missfresh IPO: Valuation Insights

Our valuation analysis suggests that Missfresh is broadly fairly valued on a growth adjusted EV/Sales compared to its peers. We think that Dingdong...

Arun George

Dingdong IPO: Valuation Insights

The undemanding rating offers a reasonable risk-reward profile. Dingdong is worth a punt for investors seeking to play the first-day pops or gain...

Arun George

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