Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul>
<li>Tencent invested more in Ubisoft Entertainment, a French game developer.</li>
<li>The monthly active users of local life recovered in China in June and July.</li>
<li>NetEase will close Music Street, the social networking-oriented karaoke app.</li>
</ul>


Tencent invested more in Ubisoft Entertainment, a French game developer.
The monthly active users of local life recovered in China in June and July.
NetEase will close Music Street, the social networking-oriented karaoke app.


China Internet Weekly (12Aug2022): Tencent, JD.com, Meituan, NetEase, Inkeverse

<ul class="">
<li>Xiaomi plans to produce electric vehicle.</li>
<li>The court forces Douyu to compensate Huya for broadcaster poaching.</li>
<li>Tencent Music and Vipshop launch share repurchase programs.</li>
</ul>
Our coverage on Chinese equities:
E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).
Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).
Others: Xiaomi (1810 HK).


Xiaomi plans to produce electric vehicle.
The court forces Douyu to compensate Huya for broadcaster poaching.
Tencent Music and Vipshop launch share repurchase programs.

Our coverage on Chinese equities:
E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).
Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).
Others: Xiaomi (1810 HK).

China Internet Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu

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.

Event-Driven

Douyu International Holdings / Event-Driven

<a href="https://www.smartkarma.com/entities/huya-inc" target="_blank" data-smartkarma-citation="entities:26983:1" rel="noopener">HUYA Inc (HUYA US)</a> and <a href="https://www.smartkarma.com/entities/douyu-international-hold-adr" target="_blank" data-smartkarma-citation="entities:28045:1" rel="noopener">Douyu International Holdings (DOYU US)</a> have entered into a merger agreement to create a Chinese game live streaming giant. The proposed share exchange ratio is 0.73 Huya ADS for each DouYu ADS. Based on Friday’s close prices, the share exchange ratio values DouYu at $18.83 per ADS, a 35% premium to the Friday close price. On completion, the shareholders of Huya and DouYu will each hold 50% shares of the combined company on a fully diluted basis, respectively. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>'s voting power in the combined company will be 67.5% on a fully-diluted basis.<div class="content-highlight">With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. As DouYu is incorporated in the Cayman Islands, for the merger to succeed, DouYu shareholders representing two-thirds of shares present and voting need to approve the deal. Tencent collectively has the support of 54.6% of DouYu’s voting rights. In <a href="https://www.smartkarma.com/insights/tencent-sets-in-motion-a-sensible-huya-douyu-merger" target="_blank" rel="noopener">our previous note</a>, we outlined that the merger makes a lot of sense due to potential revenue and cost synergies. In combination with an attractive share exchange ratio, we expect DouYu’s shareholders to support the merger. The merger is expected to close during the first half of 2021.</div>

HUYA Inc (HUYA US) and Douyu International Holdings (DOYU US) have entered into a merger agreement to create a Chinese game live streaming giant. The proposed share exchange ratio is 0.73 Huya ADS for each DouYu ADS. Based on Friday’s close prices, the share exchange ratio values DouYu at $18.83 per ADS, a 35% premium to the Friday close price. On completion, the shareholders of Huya and DouYu will each hold 50% shares of the combined company on a fully diluted basis, respectively. Tencent Holdings (700 HK)'s voting power in the combined company will be 67.5% on a fully-diluted basis.With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. As DouYu is incorporated in the Cayman Islands, for the merger to succeed, DouYu shareholders representing two-thirds of shares present and voting need to approve the deal. Tencent collectively has the support of 54.6% of DouYu’s voting rights. In our previous note, we outlined that the merger makes a lot of sense due to potential revenue and cost synergies. In combination with an attractive share exchange ratio, we expect DouYu’s shareholders to support the merger. The merger is expected to close during the first half of 2021.

After much media speculation, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> finally showed its hand by proposing that <a href="https://www.smartkarma.com/entities/huya-inc" target="_blank" data-smartkarma-citation="entities:26983:1" rel="noopener">HUYA Inc (HUYA US)</a> and <a href="https://www.smartkarma.com/entities/douyu-international-hold-adr" target="_blank" data-smartkarma-citation="entities:28045:1" rel="noopener">Douyu International Holdings (DOYU US)</a> enter a stock-for-stock merger. Under the plan, Huya would acquire DouYu in exchange for newly issued Class A ordinary shares of Huya. The exchange ratio will be mutually agreed among Tencent, the independent members of the Huya and DouYu Board.  Tencent also announced that it has entered into a share transfer agreement with <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> and Mr Rongjie Dong (Huya’s CEO) to purchase 30 million and 1 million Class B ordinary shares of Huya, respectively.  The transfers will be completed on or before 9 September, resulting in Tencent's owning 51.0% of Huya's outstanding shares and 70.4% of the voting power. <div class="content-highlight">Tencent is also the DouYu’s largest shareholder and owns 38.0% of the outstanding shares and voting power. With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. Overall, we think that the merger makes a lot of sense and would get the backing from DouYu’s shareholders, subject to a suitable exchange ratio. </div>

After much media speculation, Tencent Holdings (700 HK) finally showed its hand by proposing that HUYA Inc (HUYA US) and Douyu International Holdings (DOYU US) enter a stock-for-stock merger. Under the plan, Huya would acquire DouYu in exchange for newly issued Class A ordinary shares of Huya. The exchange ratio will be mutually agreed among Tencent, the independent members of the Huya and DouYu Board.  Tencent also announced that it has entered into a share transfer agreement with JOYY (YY US) and Mr Rongjie Dong (Huya’s CEO) to purchase 30 million and 1 million Class B ordinary shares of Huya, respectively.  The transfers will be completed on or before 9 September, resulting in Tencent's owning 51.0% of Huya's outstanding shares and 70.4% of the voting power. Tencent is also the DouYu’s largest shareholder and owns 38.0% of the outstanding shares and voting power. With Tencent owning more than two-thirds of the votes in Huya, the approval of the merger largely comes down to securing the backing of DouYu shareholders. Overall, we think that the merger makes a lot of sense and would get the backing from DouYu’s shareholders, subject to a suitable exchange ratio. 

Tencent Sets in Motion a Sensible Huya DouYu Merger

APAC IPOs & Placements

Zhen Zhou, Toh

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/china-mobile-games-adr" target="_blank" data-smartkarma-citation="entities:451:1" rel="noopener">China Mobile Games Adr (CMGE HK)</a> is looking to raise US$166m in its Hong Kong IPO. We have covered the company in December 2018, <a href="https://www.smartkarma.com/insights/cmge-tech-pre-ipo-review-unfortunate-timing" target="_blank" data-smartkarma-citation="insights:26547" rel="noopener">CMGE Tech (中手游) Pre-IPO Review - Unfortunate Timing</a>. Since then, the company's application to list on the Hong Kong Exchange has lapsed twice.In this insight, we will look at the updates from the PHIP, share our thoughts on growth assumptions, and compare its valuation with other Hong Kong-listed peers.

China Mobile Games Adr (CMGE HK) is looking to raise US$166m in its Hong Kong IPO. We have covered the company in December 2018, CMGE Tech (中手游) Pre-IPO Review - Unfortunate Timing. Since then, the company's application to list on the Hong Kong Exchange has lapsed twice.In this insight, we will look at the updates from the PHIP, share our thoughts on growth assumptions, and compare its valuation with other Hong Kong-listed peers.

CMGE Tech (中手游) IPO Review - Back in Homeland After a Long Wait

China

Inke Limited designs and develops software solutions. The Company operates a mobile live streaming platform that enable users to communicate, interact, and share their knowledge and skills. Inke serves customers in China and Hong Kong.

Inke Inc (3700 HK)

China Internet Weekly (12Aug2022): Tencent, JD.com, Meituan, NetEase, Inkeverse

Tencent invested more in Ubisoft Entertainment. The monthly active users of local life recovered in China in June and July. NetEase will close...

Ming Lu

China Internet Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu

Xiaomi plans to produce electric vehicle.The court forces Douyu to compensate Huya for broadcaster poaching.Tencent Music and Vipshop launches...

Ming Lu

Huya and DouYu’s Merger Is Game On

The merger makes a lot of sense due to potential revenue and cost synergies. In combination with an attractive share exchange ratio, we expect...

Arun George

Tencent Sets in Motion a Sensible Huya DouYu Merger

After much media speculation, Tencent Holdings (700 HK) finally showed its hand by proposing that HUYA Inc (HUYA US) and Douyu International...

Arun George

CMGE Tech (中手游) IPO Review - Back in Homeland After a Long Wait

China Mobile Games Adr (CMGE HK) is looking to raise US$166m in its Hong Kong IPO. We have covered the company in December 2018, CMGE Tech (中手游)...

Zhen Zhou, Toh