Alpha-Centric ESG Research

Kyle Rudden

Better late than never, as they say.Typically, I publish pre-IPO ESG assessments well before book building). This pre-IPO ESG report on <a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a>, aka Manbang, aka the "Uber for trucks," is admittedly a tad late in the IPO process – given that shares are expected to be trading in one day from now.Nevertheless, there are some important ESG issues to contemplate. Nothing that will alter the IPO, of course. And there really aren't all that many highly-material ESG issues for FTA. However, there are one or two big ones – the sort that could crush a technology stock just out of the IPO gate.For this Insight, I changed my modus operandi. Instead of addressing every conceivable ESG issue, I focus on the two most material issues for each ESG pillar. The ultra-condensed version is as follows (in decreasing order of materiality hence the Social, Governance, Environmental sequence):<ul>
<li>
Social: Nothing else matters in terms of acute investment risk. To be clear, FTA seems on top of things vis-à-vis cyber-risk management. There are no specific concerns. But one data breach, or one ransomware attack. That's all it takes to decimate any newly-listed technology company.</li>
<li>
Governance: They pale in comparison to Social-pillar cyber-risks, but two material Governance issues are: 1) disproportionate ownership and voting control (nothing new for tech, but an ESG hot-button), and 2) regulatory risk and uncertainty, mainly regarding China's antitrust stance.</li>
<li>
Environmental: Environmental issues just don't matter that much from a financial-materiality viewpoint. As a technology firm, FTA's direct climate footprint is negligible. Longer-term it must address its indirect footprint (emissions from third-party activities enabled by its platform).</li>
</ul>

Better late than never, as they say.Typically, I publish pre-IPO ESG assessments well before book building). This pre-IPO ESG report on Full Truck Alliance (YMM US), aka Manbang, aka the "Uber for trucks," is admittedly a tad late in the IPO process – given that shares are expected to be trading in one day from now.Nevertheless, there are some important ESG issues to contemplate. Nothing that will alter the IPO, of course. And there really aren't all that many highly-material ESG issues for FTA. However, there are one or two big ones – the sort that could crush a technology stock just out of the IPO gate.For this Insight, I changed my modus operandi. Instead of addressing every conceivable ESG issue, I focus on the two most material issues for each ESG pillar. The ultra-condensed version is as follows (in decreasing order of materiality hence the Social, Governance, Environmental sequence):

Social: Nothing else matters in terms of acute investment risk. To be clear, FTA seems on top of things vis-à-vis cyber-risk management. There are no specific concerns. But one data breach, or one ransomware attack. That's all it takes to decimate any newly-listed technology company.

Governance: They pale in comparison to Social-pillar cyber-risks, but two material Governance issues are: 1) disproportionate ownership and voting control (nothing new for tech, but an ESG hot-button), and 2) regulatory risk and uncertainty, mainly regarding China's antitrust stance.

Environmental: Environmental issues just don't matter that much from a financial-materiality viewpoint. As a technology firm, FTA's direct climate footprint is negligible. Longer-term it must address its indirect footprint (emissions from third-party activities enabled by its platform).


Pre-IPO ESG Analysis of Full Truck Alliance: Strong ESG Profile... But With One Potential Landmine

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

We plan to do a deep dive on Didi Chuxing now that the prospectus is out but there are a few points related to Softbank that are worth highlighting in advance. In general, the IPO needs to be wildly successful to provide a meaningful bump in sentiment and anything less is probably factored into Softbank’s share price already. At equity valuations of $70-100bn, the upside for SBG shareholders would be ¥93-291/share. That is positive of course but relatively less than what Uber shareholders could expect (6% Didi exposure v SBG 4%) and also a smaller gain that that offered by the headline listings from Beike, DoorDash and Coupang in the last three periods. The good news is a placement before quarter-end helps the public portfolio which is down $8bn+ QTD.

We plan to do a deep dive on Didi Chuxing now that the prospectus is out but there are a few points related to Softbank that are worth highlighting in advance. In general, the IPO needs to be wildly successful to provide a meaningful bump in sentiment and anything less is probably factored into Softbank’s share price already. At equity valuations of $70-100bn, the upside for SBG shareholders would be ¥93-291/share. That is positive of course but relatively less than what Uber shareholders could expect (6% Didi exposure v SBG 4%) and also a smaller gain that that offered by the headline listings from Beike, DoorDash and Coupang in the last three periods. The good news is a placement before quarter-end helps the public portfolio which is down $8bn+ QTD.

Softbank Group - Initial Thoughts on the Didi Chuxing IPO Filing

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.

<ul>
<li>We do not believe that the death of the founder will negatively impact BEKE.</li>
<li>The 1Q21 result is much better than the market consensus.</li>
<li>The booming existing home is exactly the market BEKE is good at.</li>
<li>We believe the stock will have an upside of 36% for the end of 2022.</li>
</ul>


We do not believe that the death of the founder will negatively impact BEKE.
The 1Q21 result is much better than the market consensus.
The booming existing home is exactly the market BEKE is good at.
We believe the stock will have an upside of 36% for the end of 2022.


BK (BEKE): Buy for Strong Quarter When Others Fear for Founder’s Death

When you go to a live music show in Japan there is almost always an encore. In fact, that is the standard. If an artist has truly done well, there may be a second encore. And if the performance has been legendary, there might even be a third. That is how the last year with Vision Fund has felt...

When you go to a live music show in Japan there is almost always an encore. In fact, that is the standard. If an artist has truly done well, there may be a second encore. And if the performance has been legendary, there might even be a third. That is how the last year with Vision Fund has felt...

Softbank Group: Q4 20 Results – Will There Be an Encore?

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a division of 58.com which was privatised in 2020 and is now being spun out as its real estate division.It provides online marketing services for new and existing properties under Anjuke and 50 Real Estate brands.  It also operates Aifang, a new property transaction services platform that facilitates developers’ new property sales through brokerage brands and agents. Anjuke also provides property brokerage brands and agents with its cloud-native, purpose-built SaaS solutions through Qiaofang,Based on iResearch’s report, the company was the market leader by average mobile monthly active users (MAU) in 4Q20 at 67m. As of Dec 20, it had over 726,000 paying agents on its platform. Anjuke was also the leader in online marketing service revenue in 2020 with 66.8% market share.Its financial performance has been sort of a mixed bag with Anjuke reporting 21.9% YoY growth in revenue in FY19, 17.6% growth in gross profit, 23% growth in EBITDA and 21% increase in PATMI. However, in FY20, revenue growth slowed down to 6.24% YoY and even though the company managed to grow its gross profit by 7.8%, EBITDA was down 9% YoY, while PATMI was down 15% YoY.In addition, there are also related parties and other issues that one needs to be aware of.

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a division of 58.com which was privatised in 2020 and is now being spun out as its real estate division.It provides online marketing services for new and existing properties under Anjuke and 50 Real Estate brands.  It also operates Aifang, a new property transaction services platform that facilitates developers’ new property sales through brokerage brands and agents. Anjuke also provides property brokerage brands and agents with its cloud-native, purpose-built SaaS solutions through Qiaofang,Based on iResearch’s report, the company was the market leader by average mobile monthly active users (MAU) in 4Q20 at 67m. As of Dec 20, it had over 726,000 paying agents on its platform. Anjuke was also the leader in online marketing service revenue in 2020 with 66.8% market share.Its financial performance has been sort of a mixed bag with Anjuke reporting 21.9% YoY growth in revenue in FY19, 17.6% growth in gross profit, 23% growth in EBITDA and 21% increase in PATMI. However, in FY20, revenue growth slowed down to 6.24% YoY and even though the company managed to grow its gross profit by 7.8%, EBITDA was down 9% YoY, while PATMI was down 15% YoY.In addition, there are also related parties and other issues that one needs to be aware of.

Anjuke Pre-IPO - Mixed (Positive and Negative) Developments

China

KE Holdings Inc. operates as an integrated online and offline platform for housing transactions and services. The Company offers existing and new home sales, home rentals, home renovation, real estate financial solutions, and other services. KE Holdings conducts businesses in China.

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KE Holdings (BEKE US)

Pre-IPO ESG Analysis of Full Truck Alliance: Strong ESG Profile... But With One Potential Landmine

There aren't many highly material ESG issues for FTA. But quantity is irrelevant when there is one big ESG issue with the potential to crush any...

Kyle Rudden

Softbank Group - Initial Thoughts on the Didi Chuxing IPO Filing

Softbank's reaction to Didi's IPO filing has been muted as expectations are set and only a wildly sucecssful debut would boost sentiment. Also,...

Kirk Boodry

BK (BEKE): Buy for Strong Quarter When Others Fear for Founder’s Death

We do not believe that the death of the founder will negatively impact BEKE. The 1Q21 result is much better than the market consensus. The booming...

Ming Lu

Softbank Group: Q4 20 Results – Will There Be an Encore?

Softbank reported record earnings but this was anticipated and what happens moving forward is more relevant. It has high exposure to a tech sell...

Kirk Boodry

Anjuke Pre-IPO - Mixed (Positive and Negative) Developments

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a...

Sumeet Singh

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