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

Huitongda Network / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huitongda" target="_blank" data-smartkarma-citation="entities:33789:1" rel="noopener">Huitongda (1566215D CH)</a> is a fast-growing commerce and service platform focused on China’s lower-tier retail market. It will launch an HKEx IPO on Monday to raise up to US$318 million.</li>
<li>In <a href="https://www.smartkarma.com/insights/huitongda-network-ipo-initiation-clicks-to-bricks" target="_blank" data-smartkarma-citation="insights:63428" rel="noopener">Huitongda Network IPO Initiation: Clicks to Bricks</a>, we noted the positives (addressable market, solid growth and profitability) and key negatives (low margins which reflect a fragmented and competitive market).   </li>
<li>For investors willing to brave the gloomy IPO market, our valuation analysis suggests that the IPO price range is attractive at the low end of the price range. </li>
</ul>



Huitongda (1566215D CH) is a fast-growing commerce and service platform focused on China’s lower-tier retail market. It will launch an HKEx IPO on Monday to raise up to US$318 million.
In Huitongda Network IPO Initiation: Clicks to Bricks, we noted the positives (addressable market, solid growth and profitability) and key negatives (low margins which reflect a fragmented and competitive market).   
For investors willing to brave the gloomy IPO market, our valuation analysis suggests that the IPO price range is attractive at the low end of the price range. 


Huitongda Network IPO: Valuation Insights

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Equity Bottom-Up

<ul>
<li>Qoo10 has become one of the most popular Japanese malls among young women for all things Korean, particularly cosmetics and fashion.</li>
<li>The online mall now wants to exploit this by creating a new dedicated fashion mall with better promotional opportunities for merchants of all nationalities.</li>
<li>This should bring more competition to <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> and <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a>.</li>
</ul>


Qoo10 has become one of the most popular Japanese malls among young women for all things Korean, particularly cosmetics and fashion.
The online mall now wants to exploit this by creating a new dedicated fashion mall with better promotional opportunities for merchants of all nationalities.
This should bring more competition to ZOZO Inc (3092 JP) and Rakuten Inc (4755 JP).


Qoo10 Japan to Launch ¥10 Billion Fashion Mall Rival to Zozo

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.

<div><p>Kakao Bank (KB), South Korea’s largest digital bank, raised up to US$2.2bn in its South Korean IPO. Kakao will hold a 27.26% stake post listing. The share will begin to trade on 6th Aug 2021.</p></div><div><p>Even though Kakao started operations only in July 2017, by 2020 it had already garnered more than 1% market share of overall loans and deposits in South Korea. KB’s loans have grown by 138% over 2018 to 1Q21 to reach KRW21.6tn, while its deposits have grown by 197% over the same period to reach KRW24.2tn. </p></div><div><p>Over 2018-20, its total income (Net interest income plus net fee income) grew by 216%, while it went from booking a loss in 2018 to reporting a 26% profit margin by 2020. KB’s total income was up another 60% YoY in 1Q21, while PAT was up 153% YoY.</p></div><div><p>We have covered various aspects of the deal in our previous notes, <a href="https://www.smartkarma.com/insights/kakao-bank-ipo-riding-on-parent-s-network-but-boundaries-with-kakao-pay-remain-unclear" target="_blank" rel="noopener">Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear</a>, <a href="https://www.smartkarma.com/insights/kakao-bank-ipo-pricey-as-it-should-be" target="_blank" rel="noopener">Kakao Bank IPO - Pricey as It Should Be </a>and <a href="https://www.smartkarma.com/insights/kakao-bank-ipo-lack-of-lock-up-and-msci-ftse-index-implications" target="_blank" rel="noopener">Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications</a>.</p></div><div><p>In this note, we will talk about the deal's trading dynamics.</p></div>

Kakao Bank (KB), South Korea’s largest digital bank, raised up to US$2.2bn in its South Korean IPO. Kakao will hold a 27.26% stake post listing. The share will begin to trade on 6th Aug 2021.Even though Kakao started operations only in July 2017, by 2020 it had already garnered more than 1% market share of overall loans and deposits in South Korea. KB’s loans have grown by 138% over 2018 to 1Q21 to reach KRW21.6tn, while its deposits have grown by 197% over the same period to reach KRW24.2tn. Over 2018-20, its total income (Net interest income plus net fee income) grew by 216%, while it went from booking a loss in 2018 to reporting a 26% profit margin by 2020. KB’s total income was up another 60% YoY in 1Q21, while PAT was up 153% YoY.We have covered various aspects of the deal in our previous notes, Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear, Kakao Bank IPO - Pricey as It Should Be and Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications.In this note, we will talk about the deal's trading dynamics.

Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<p>The headline for Amazon’s quarter was that its revenue growth decelerated 1700bps to 24% YoY , and appears set to decelerate another 1000bps in 3Q. Tough comps people. Tough comps.</p><p>The company has to invest more and more money to keep up with demand…historically, these are the times you invest in Amazon, when its going through capacity buildouts…its just never happened before that Amazon has had ongoing investment cycles for multiple years. In the end…the absolute size and profitability of the business will be larger. It might just take 2-3 quarters to prove out.</p><p>In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. AWS on a $59B runrate, growing 37% (500bps acceleration QoQ), Advertising on a $32B runrate, growing 87% (1400bps acceleration). We value these two businesses at ~2T….which is 30% ahead of the current market cap. We think retail is also worth ~$1T, which is what get us to our $3T valuation, which equates to $6,000 a share. </p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

The headline for Amazon’s quarter was that its revenue growth decelerated 1700bps to 24% YoY , and appears set to decelerate another 1000bps in 3Q. Tough comps people. Tough comps.The company has to invest more and more money to keep up with demand…historically, these are the times you invest in Amazon, when its going through capacity buildouts…its just never happened before that Amazon has had ongoing investment cycles for multiple years. In the end…the absolute size and profitability of the business will be larger. It might just take 2-3 quarters to prove out.In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. AWS on a $59B runrate, growing 37% (500bps acceleration QoQ), Advertising on a $32B runrate, growing 87% (1400bps acceleration). We value these two businesses at ~2T….which is 30% ahead of the current market cap. We think retail is also worth ~$1T, which is what get us to our $3T valuation, which equates to $6,000 a share. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Amazon 2Q21: Pay Attention to AWS and Advertising

<div>
<p><a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a>, which means 'opening a kiosk' in Indonesian, is a leading e-commerce player in non-Tier 1 cities in Indonesia, with a market share of 35% in 2020 based on GMV (gross merchandise value), according to Frost &amp; Sullivan. </p>
<p>Bukalapak will price its IPO at the top-end of its indicative price range of Rp750-850 per share, according to press reports. Bukalapak will raise Rp22 trillion ($1.5 billion) which will be Indonesia's largest-ever IPO. The shares are set to list on 6 August. </p>
</div><div><p>In <a href="https://www.smartkarma.com/insights/bukalapak-ipo-initiation-island-shopping" target="_blank" data-smartkarma-citation="insights:54584" rel="noopener">Bukalapak IPO Initiation: Island Shopping</a>, we noted that like its peers, Bukalapak is benefiting from the accelerating adoption of e-commerce in Indonesia. Bukalapak’s strategy of focusing on consumers in the non-Tier 1 area and the mass market in the Tier 1 area results in a relatively small overlap (less than 20%) between its customers and customers of other online marketplaces such as <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>'s Shopee, <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <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>'s Lazada. Competitors generally target the affluent segment of the market. We concluded that Bukalapak's fundamentals tick all the right boxes of rising monetisation, lower losses and declining cash burn, in our view. </p></div><div class="content-highlight"><p>Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO.</p></div>


Bukalapak (BUKA IJ), which means 'opening a kiosk' in Indonesian, is a leading e-commerce player in non-Tier 1 cities in Indonesia, with a market share of 35% in 2020 based on GMV (gross merchandise value), according to Frost &amp; Sullivan. 
Bukalapak will price its IPO at the top-end of its indicative price range of Rp750-850 per share, according to press reports. Bukalapak will raise Rp22 trillion ($1.5 billion) which will be Indonesia's largest-ever IPO. The shares are set to list on 6 August. 
In Bukalapak IPO Initiation: Island Shopping, we noted that like its peers, Bukalapak is benefiting from the accelerating adoption of e-commerce in Indonesia. Bukalapak’s strategy of focusing on consumers in the non-Tier 1 area and the mass market in the Tier 1 area results in a relatively small overlap (less than 20%) between its customers and customers of other online marketplaces such as Sea Ltd (SE US)'s Shopee, Tokopedia PT (1087142D IJ) and Alibaba Group (BABA US)'s Lazada. Competitors generally target the affluent segment of the market. We concluded that Bukalapak's fundamentals tick all the right boxes of rising monetisation, lower losses and declining cash burn, in our view. Our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO.

United States

eBay Inc. operates an online trading community.  The Company's service is used by buyers and sellers for the exchange of products and services such as coins, collectibles, computers, memorabilia, stamps and toys, as well as concert and sporting tickets.  eBay also offers, through a subsidiary, secure online payment services.

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Ebay Inc (EBAY US)

Huitongda Network IPO: Valuation Insights

Huitongda will launch an HKEx IPO on Monday to raise up to US$318m. Our valuation analysis suggests that the IPO price range is attractive at the...

Arun George

Qoo10 Japan to Launch ¥10 Billion Fashion Mall Rival to Zozo

Qoo10 is largely unknown outside Japan but has grown fast and is becoming more of a competitor to Zozo and Rakuten, particularly in the key market...

Michael Causton

Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers

Kakao Bank, South Korea’s largest digital bank, raised up to US$2.2bn in its South Korean IPO. Kakao will hold a 27.26% stake post listing. The...

Sumeet Singh

Amazon 2Q21: Pay Attention to AWS and Advertising

Retail decelerated ALOT. In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. We value these two businesses at...

Aaron Gabin

Bukalapak IPO: Valuation Insights

Bukalapak will price its IPO at the top-end of its indicative price range of Rp750-850 per share, according to press reports. Our valuation...

Arun George

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