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.

Equity Bottom-Up

<ul>
<li>AI software company SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period as pre-investors of the company took some profits.  </li>
<li>The company was placed in an investment blacklist by the US government prior to the IPO which forced to launch the IPO without investors from the US.</li>
<li>The company also priced the IPO at the bottom of the price range and despite all of this, shares quickly went up to HK$8.20 from IPO price of US$3.85.</li>
</ul>


AI software company SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period as pre-investors of the company took some profits.  
The company was placed in an investment blacklist by the US government prior to the IPO which forced to launch the IPO without investors from the US.
The company also priced the IPO at the bottom of the price range and despite all of this, shares quickly went up to HK$8.20 from IPO price of US$3.85.


SenseTime: Shares Fall with Lock-Up Expiry; Further Downside with More Selling at the Next Expiry

Equity Capital Markets

SenseTime Group  / Equity Capital Markets

<ul>
<li>SenseTime raised HK$5,552m at HK$3.85 per share, at the lower end of the IPO price range of HK$3.85-3.99 at a market cap and post-money EV of HK$128.1bn and HK$112.4bn respectively.</li>
<li>SenseTime delayed its IPO after it was included in a US investment blacklist and relaunched the IPO last week without the US investors and some additional disclosures to risk factors.</li>
<li>The HK offering was oversubscribed by 5.18x and the international offering by only 1.5x. We think the exclusion of US investors from the IPO led to poor international subscription.</li>
</ul>


SenseTime raised HK$5,552m at HK$3.85 per share, at the lower end of the IPO price range of HK$3.85-3.99 at a market cap and post-money EV of HK$128.1bn and HK$112.4bn respectively.
SenseTime delayed its IPO after it was included in a US investment blacklist and relaunched the IPO last week without the US investors and some additional disclosures to risk factors.
The HK offering was oversubscribed by 5.18x and the international offering by only 1.5x. We think the exclusion of US investors from the IPO led to poor international subscription.


SenseTime IPO: Thoughts on First Day Trading

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (1475539D HK)</a> is the largest AI software company in Asia as measured by revenue in 2020. It has launched an HKEx IPO to raise up to US$767 million.  </li>
<li>In <a href="https://www.smartkarma.com/insights/sensetime-ipo-initiation-big-brother" target="_blank" data-smartkarma-citation="insights:62104" rel="noopener">SenseTime IPO Initiation: Big Brother</a>, we stated that the negatives outweigh the positives and we would give the IPO a pass. </li>
<li>Our valuation analysis suggests that the IPO price is unattractive. We would give the IPO a pass. Pricing is expected on 10 December with a listing on 17 December.</li>
</ul>



SenseTime Group (1475539D HK) is the largest AI software company in Asia as measured by revenue in 2020. It has launched an HKEx IPO to raise up to US$767 million.  
In SenseTime IPO Initiation: Big Brother, we stated that the negatives outweigh the positives and we would give the IPO a pass. 
Our valuation analysis suggests that the IPO price is unattractive. We would give the IPO a pass. Pricing is expected on 10 December with a listing on 17 December.


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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (1475539D HK)</a>  is looking to raise about US$2bn in its upcoming Hong Kong IPO. </li>
<li>STG was the market leading computer vision software provider in China for various industries in FY2020. But we estimate that the company has been losing market share.</li>
<li>We think that it is the price to pay for STG’s blanket approach to growth; trying its hands in everything and anything.</li>
</ul>



SenseTime Group (1475539D HK)  is looking to raise about US$2bn in its upcoming Hong Kong IPO. 
STG was the market leading computer vision software provider in China for various industries in FY2020. But we estimate that the company has been losing market share.
We think that it is the price to pay for STG’s blanket approach to growth; trying its hands in everything and anything.


SenseTime Group (商汤集团) Pre-IPO - Peer Comparison & Industry - Paying the Price of Diversification

Alpha-Centric ESG Research

Kyle Rudden

Well, that sure escalated quickly.Early last week, in the Insight <a href="https://www.smartkarma.com/insights/pre-ipo-esg-analysis-didi-s-exemplary-esg-achievements-eclipsed-by-regulatory-risks-and-uncertainty" target="_blank" data-smartkarma-citation="insights:53687" rel="noopener">Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty</a>, I juxtaposed <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi's (DIDI US)</a> relatively strong ESG results in areas under its control with serious concerns about regulatory risk outside of its direct control.Late last week, days after DiDi's successful US$4.4 billion initial public offering, Chinese regulators ordered the removal of DiDi's business-critical ride-hailing apps from online app markets, until the company rectifies "serious violations" pertaining to collection and use of customer data.DiDi is down 5.3% so far (delayed open today).Regulatory risk was central to my thesis in the first Insight. I hardly anticipated this, but I referred to regulatory risk as real, near-term, tangible investment risk; not just some fuzzy ESG risk. Given that, I felt obliged to follow up. At the same time, however, this news is covered ad nauseam.No sense in beating a dead horse with a broken record.So, I decided to do something different. That statement about regulatory risk being a real tangible investment risk is primarily based on anecdotal evidence – i.e., when regulators flex their muscle, stocks go down, not up. But "anecdotal" isn't good enough.Which is why I took this opportunity to quantify the impacts of adverse regulatory events in China. Specifically, with event studies measuring abnormal returns around major regulatory events across four broad categories. That's what most of this Insight is about. But back to DiDi for a moment.Regulatory risk and uncertainty for DiDi is much worse today than it was last week. Typically, the opposite would be true; a negative event out in the open is better than a possible event lurking in the shadows. But not this time. Barring an immediate change of heart by the PRC, this is bad.Therefore, downgrading to bearish.

Well, that sure escalated quickly.Early last week, in the Insight Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty, I juxtaposed DiDi's (DIDI US) relatively strong ESG results in areas under its control with serious concerns about regulatory risk outside of its direct control.Late last week, days after DiDi's successful US$4.4 billion initial public offering, Chinese regulators ordered the removal of DiDi's business-critical ride-hailing apps from online app markets, until the company rectifies "serious violations" pertaining to collection and use of customer data.DiDi is down 5.3% so far (delayed open today).Regulatory risk was central to my thesis in the first Insight. I hardly anticipated this, but I referred to regulatory risk as real, near-term, tangible investment risk; not just some fuzzy ESG risk. Given that, I felt obliged to follow up. At the same time, however, this news is covered ad nauseam.No sense in beating a dead horse with a broken record.So, I decided to do something different. That statement about regulatory risk being a real tangible investment risk is primarily based on anecdotal evidence – i.e., when regulators flex their muscle, stocks go down, not up. But "anecdotal" isn't good enough.Which is why I took this opportunity to quantify the impacts of adverse regulatory events in China. Specifically, with event studies measuring abnormal returns around major regulatory events across four broad categories. That's what most of this Insight is about. But back to DiDi for a moment.Regulatory risk and uncertainty for DiDi is much worse today than it was last week. Typically, the opposite would be true; a negative event out in the open is better than a possible event lurking in the shadows. But not this time. Barring an immediate change of heart by the PRC, this is bad.Therefore, downgrading to bearish.

PRC Shows DiDi Who's Boss: An Analysis of Adverse Regulatory Events on Stock Prices

China

IFLYTEK Co., Ltd. specializes in speech intelligence and artificial intelligence technology.  The company also develops chip product, voice messaging software and e-government system integration software.

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IFlytek Co Ltd A (002230 CH)

SenseTime: Shares Fall with Lock-Up Expiry; Further Downside with More Selling at the Next Expiry

SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period. Some shareholders have agreed to extend...

Shifara Samsudeen, FCMA, CGMA

SenseTime IPO: Thoughts on First Day Trading

SenseTime priced its IPO at HK$3.85 per share, at the lower end of the IPO price range. Shares are still expensive even after priced at the bottom,...

Shifara Samsudeen, FCMA, CGMA

SenseTime IPO: Valuation Insights

Our valuation analysis suggests that the IPO price is unattractive. We would give the IPO a pass. Pricing is expected on 10 December with a listing...

Arun George

SenseTime Group (商汤集团) Pre-IPO - Peer Comparison & Industry - Paying the Price of Diversification

SenseTime Group (1475539D HK) is looking to raise about US$2bn in its upcoming Hong Kong IPO. We estimate that the company has been losing market...

Sumeet Singh

PRC Shows DiDi Who's Boss: An Analysis of Adverse Regulatory Events on Stock Prices

Last week, I wrote about DiDi's regulatory risk. This week, it's worse. Hence the downgrade. But this is mostly an analysis of how regulatory...

Kyle Rudden

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