Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

<p>Qiniu Cloud, a leading Platform as a service (PaaS) provider in China, is looking to raise up to USD 500 million via a US listing. </p><p>In this note, we look at the company's main value proposition of its media and data PaaS products. We think the company does have an interesting product offering that benefits the customers. Having said that we think the company's growth has been lacklustre as compared to the industry average. We are also concerned about its concentration in the live video streaming market. Its customer base for the data segment has not been expanding. </p><p>The company has a decent investor backing but we think given its small size and slow growth, it should trade at a discount to listed cloud peers.</p>

Qiniu Cloud, a leading Platform as a service (PaaS) provider in China, is looking to raise up to USD 500 million via a US listing. In this note, we look at the company's main value proposition of its media and data PaaS products. We think the company does have an interesting product offering that benefits the customers. Having said that we think the company's growth has been lacklustre as compared to the industry average. We are also concerned about its concentration in the live video streaming market. Its customer base for the data segment has not been expanding. The company has a decent investor backing but we think given its small size and slow growth, it should trade at a discount to listed cloud peers.

Qiniu Cloud (七牛云) Pre-IPO: PaaS Doesn't Warrant a Premium

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.

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a> is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by <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>, <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</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>.</p></div><div><p>At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/waterdrop-ipo-initiation-going-for-brokers" target="_blank" data-smartkarma-citation="insights:50610" rel="noopener">Waterdrop IPO Initiation: Going for Brokers</a>, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. </p></div></div></div>

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. 

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cloopen Group Holding Ltd / Equity Capital Markets

<p><strong>Our base case valuation of Cloopen Group Holdings is EV of $3.0 billion and implied market cap of $3.3 billion. This represents implied price per share of $22.2 per share, representing 48% higher than the high end of the IPO price range of $15 per share. Given the solid upside, we have a positive view of the Cloopen Group Holdings IPO. </strong></p><p>For the comparable companies analysis of Cloopen Group Holdings, we used five companies including <a href="https://www.smartkarma.com/entities/kingsoft-cloud" target="_blank" data-smartkarma-citation="entities:28835:1" rel="noopener">Kingsoft Cloud (KC US)</a>, <a href="https://www.smartkarma.com/entities/agora-inc" target="_blank" data-smartkarma-citation="entities:29037:1" rel="noopener">Agora Inc. (API US)</a>, <a href="https://www.smartkarma.com/entities/21-vianet-group-inc-adr" target="_blank" data-smartkarma-citation="entities:8489:1" rel="noopener">21Vianet Group (VNET US)</a>, <a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS Holdings (ADR) (GDS US)</a>, and <a href="https://www.smartkarma.com/entities/oneconnect-financial-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:28432:1" rel="noopener">OneConnect Financial Technology (OCFT US)</a>. </p>

Our base case valuation of Cloopen Group Holdings is EV of $3.0 billion and implied market cap of $3.3 billion. This represents implied price per share of $22.2 per share, representing 48% higher than the high end of the IPO price range of $15 per share. Given the solid upside, we have a positive view of the Cloopen Group Holdings IPO. For the comparable companies analysis of Cloopen Group Holdings, we used five companies including Kingsoft Cloud (KC US), Agora Inc. (API US), 21Vianet Group (VNET US), GDS Holdings (ADR) (GDS US), and OneConnect Financial Technology (OCFT US). 

Cloopen Group Holdings IPO Valuation Analysis

<p><a href="https://www.smartkarma.com/entities/cloopen-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:31315:1" rel="noopener">Cloopen Group Holding Ltd (RAAS US)</a> ("Cloopen") which provides cloud based communication services in China, plans to complete its IPO in the US in the coming days. Founded in 2012 and headquartered in Beijing, Cloopen Group operates the largest multi-capability cloud-based communications solution services in China in terms of 2019 revenue.</p><p><a href="https://www.renaissancecapital.com/IPO-Center/News/76061/Chinese-cloud-communication-provider-Cloopen-Group-Holding-sets-terms-for-%24" target="_blank" rel="noopener">Cloopen Group Holding</a> plans to raise <strong>$280 million </strong>(mid-point of IPO price range) by offering 20 million ADSs at a price range of $13 to $15. At the high point of IPO price range, the company could raise as much as $300 million. At the midpoint of the proposed range, Cloopen Group Holding would command a market value of $2.1 billion, which would represent a P/S multiple of 22x using 2019 sales. Cloopen Group Holdings will likely be compared to companies such as <a href="https://www.smartkarma.com/entities/kingsoft-cloud" target="_blank" data-smartkarma-citation="entities:28835:1" rel="noopener">Kingsoft Cloud (KC US)</a> which have experienced very strong share price appreciation in the past year. </p>

Cloopen Group Holding Ltd (RAAS US) ("Cloopen") which provides cloud based communication services in China, plans to complete its IPO in the US in the coming days. Founded in 2012 and headquartered in Beijing, Cloopen Group operates the largest multi-capability cloud-based communications solution services in China in terms of 2019 revenue.Cloopen Group Holding plans to raise $280 million (mid-point of IPO price range) by offering 20 million ADSs at a price range of $13 to $15. At the high point of IPO price range, the company could raise as much as $300 million. At the midpoint of the proposed range, Cloopen Group Holding would command a market value of $2.1 billion, which would represent a P/S multiple of 22x using 2019 sales. Cloopen Group Holdings will likely be compared to companies such as Kingsoft Cloud (KC US) which have experienced very strong share price appreciation in the past year. 

<p>Kingsoft Cloud is one of the best cloud computing stocks in China. Since completing its IPO in May 2020 at an IPO price of $17 per share, Kingsoft Cloud's share price has risen 90% to $32.29. Kingsoft Cloud is the largest independent cloud service provider and the third-largest internet cloud service provider in China.  On 21 September, Kingsoft Cloud announced another equity offering and many investors did not like this move and they pushed down the stock price by 12.5% on Tuesday, 22 September. <strong>Now, Kingsoft Cloud's share price is now down 25% from the 52 weeks high and we believe this is a good opportunity to pick up shares of this company. </strong></p><div class="content-highlight">
<p><strong>Kingsoft Cloud's Enterprise Cloud business has been experiencing a surging growth in the past three years. The company's Enterprise Cloud Services revenues increased by 415% YoY in 2019 and by 183% YoY in 1H 2020. The Enterprise Cloud Services accounted for 1.2% of total revenues in 2017, and this ratio increased to 14.6% in 1H 2020. </strong></p>
<p>In this insight, we provide a comparison of Kingsoft Cloud to Amazon AWS. This is a good framework to compare Kingsoft Cloud since it gives a greater amount of confidence that once the company's annual sales reach about $2 billion to $3 billion, then the probability increases that Kingsoft Cloud may also start to generate positive operating profits. In terms of time frame,<strong> 2022 to 2023</strong> could be a<strong> "sweet spot"</strong> for the company in reaching an annual revenue of $2 billion to $3 billion and achieve positive operating profit. </p>
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Kingsoft Cloud is one of the best cloud computing stocks in China. Since completing its IPO in May 2020 at an IPO price of $17 per share, Kingsoft Cloud's share price has risen 90% to $32.29. Kingsoft Cloud is the largest independent cloud service provider and the third-largest internet cloud service provider in China.  On 21 September, Kingsoft Cloud announced another equity offering and many investors did not like this move and they pushed down the stock price by 12.5% on Tuesday, 22 September. Now, Kingsoft Cloud's share price is now down 25% from the 52 weeks high and we believe this is a good opportunity to pick up shares of this company. 
Kingsoft Cloud's Enterprise Cloud business has been experiencing a surging growth in the past three years. The company's Enterprise Cloud Services revenues increased by 415% YoY in 2019 and by 183% YoY in 1H 2020. The Enterprise Cloud Services accounted for 1.2% of total revenues in 2017, and this ratio increased to 14.6% in 1H 2020. 
In this insight, we provide a comparison of Kingsoft Cloud to Amazon AWS. This is a good framework to compare Kingsoft Cloud since it gives a greater amount of confidence that once the company's annual sales reach about $2 billion to $3 billion, then the probability increases that Kingsoft Cloud may also start to generate positive operating profits. In terms of time frame, 2022 to 2023 could be a "sweet spot" for the company in reaching an annual revenue of $2 billion to $3 billion and achieve positive operating profit. 


Kingsoft Cloud - Oversold on Equity Offering; Annual Revenues in 2020 Similar to AWS 9 Years Ago

China

Kingsoft Cloud manufactures software. The Company mainly produces office software, king dictionary, game software, anti-virus software, and other application software.

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Kingsoft Cloud (KC US)

Qiniu Cloud (七牛云) Pre-IPO: PaaS Doesn't Warrant a Premium

Qiniu Cloud, a leading Platform as a service (PaaS) provider in China, is looking to raise up to USD 500m. We are concerned with its sub-par...

Ke Yan, CFA, FRM

Waterdrop IPO: Valuation Insights

Waterdrop has launched its IPO to raise net proceeds of $301.6 million at the mid-point of the price range of $10-12. The price range is full at...

Arun George

Cloopen Group Holdings IPO Valuation Analysis

Our base case valuation of Cloopen Group Holdings is an implied price per share of $22.2 per share, representing 48% higher than the high end of...

Douglas Kim

Cloopen Group Holdings IPO Preview

Cloopen Group Holding plans to raise $280 million (mid-point of IPO price range) by offering 20 million ADSs at a price range of $13 to $15.

Douglas Kim

Kingsoft Cloud - Oversold on Equity Offering; Annual Revenues in 2020 Similar to AWS 9 Years Ago

Kingsoft Cloud is the largest independent cloud service provider and the third-largest internet cloud service provider in China.

Douglas Kim

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