Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Full Truck Alliance   / Equity Capital Markets

<p><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> is getting ready to complete its IPO on the NYSE in the coming weeks. The company plans to raise up to $1.5 billion in this IPO. The company is seeking valuation ranging from <a href="https://www.reuters.com/world/china/chinas-full-truck-alliance-files-15-bln-us-ipo-2021-05-28/" target="_blank" rel="noopener">$20 billion </a>to $30 billion. Full Truck Alliance is also known as Manbang Group in China.</p><p>In 4Q 2020, <a href="https://techcrunch.com/2021/05/31/the-station-rivian-rolls-towards-an-ipo-and-quantumscape-makes-a-big-battery-hire/?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAADdx8mjy6_A1n9ynGk-dK54HhWG3dMFCBLiwA2nATHGBHOIHwnuUVqNAlFX0VyzIlh1C78BZEDtZg3WcdBi00wyLXYSOc54-Kcv4cuC9MdGcR4eUzOgLJ5sGb1zEdhjpanU-HVQEyRR9rJIH4vKDUuYoGm1Glp0CscoW6wo9HF51" target="_blank" rel="noopener">Full Truck Alliance</a> raised $3.6 billion in a private funding, at an $11.7 billion valuation. Key investors of Full Truck Alliance include SoftBank Vision Fund (22.2% pre-IPO stake), Sequoia Capital China (7.2%), Permira, Tencent, Hillhouse Capital, GGV Capital, Lightspeed China Partners and Baillie Gifford. </p><p>The company's sales increased by 4.4% YoY to reach 2,580.8 million RMB in 2020 and its sales surged by 97.7% YoY to reach 867.2 million RMB in 1Q 2021. Loss from operations as a percentage of revenues worsened from -41.3% in 2019 to -140.1% in 2020. However, the company enjoyed a surging growth in sales with a major improvement in profit margins in 1Q 2021. Loss from operations as a percentage of revenues improved from -28% in 1Q 2020 to -23.3% in 1Q 2021. This was driven by improving G&amp;A and R&amp;D expenses as a percentage of revenues in 1Q 2021. </p>

Full Truck Alliance (YMM US) is getting ready to complete its IPO on the NYSE in the coming weeks. The company plans to raise up to $1.5 billion in this IPO. The company is seeking valuation ranging from $20 billion to $30 billion. Full Truck Alliance is also known as Manbang Group in China.In 4Q 2020, Full Truck Alliance raised $3.6 billion in a private funding, at an $11.7 billion valuation. Key investors of Full Truck Alliance include SoftBank Vision Fund (22.2% pre-IPO stake), Sequoia Capital China (7.2%), Permira, Tencent, Hillhouse Capital, GGV Capital, Lightspeed China Partners and Baillie Gifford. The company's sales increased by 4.4% YoY to reach 2,580.8 million RMB in 2020 and its sales surged by 97.7% YoY to reach 867.2 million RMB in 1Q 2021. Loss from operations as a percentage of revenues worsened from -41.3% in 2019 to -140.1% in 2020. However, the company enjoyed a surging growth in sales with a major improvement in profit margins in 1Q 2021. Loss from operations as a percentage of revenues improved from -28% in 1Q 2020 to -23.3% in 1Q 2021. This was driven by improving G&amp;A and R&amp;D expenses as a percentage of revenues in 1Q 2021. 

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><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a>, an online recruitment platform in China, aims to raise up to US$912m in its US IPO. The company is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.</p></div><div><p>Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.</p></div><div>
<p>The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020. There is nothing much to complain about the financial performance of the company, however, its disclosures are patchy. </p>
<p>We have covered the deal background in our earlier notes, <a href="https://www.smartkarma.com/insights/kanzhun-pre-ipo-bumble-meets-linkedin" target="_blank" rel="noopener">Kanzhun Pre-IPO -Bumble meets Linkedin . </a></p>
</div>

Kanzhun (BZ US), an online recruitment platform in China, aims to raise up to US$912m in its US IPO. The company is backed by Tencent (700 HK). Kanzhun runs BOSS Zhipin APP, which allows enterprise users and jobseekers to directly chat, thus, providing more convenience to both.Kanzhun is the largest online recruitment platform in China, as measured by average MAU in 2020, according to the CIC Report. As of Mar 2021, it had 13.0m verified enterprise users, 6.3m verified enterprises, and 85.8m verified job seekers on its platform. For 12 months ended Mar 2021, it had 2.89m paid enterprise customers. Its average MAU (including job seekers and enterprise users) reached 24.0m in 1Q21.
The company nearly doubled its revenue in 2020 and its 1Q21 revenue was nearly triple that of 1Q20. Furthermore, while it remains loss making, it has been operating cash flow positive since 2020. There is nothing much to complain about the financial performance of the company, however, its disclosures are patchy. 
We have covered the deal background in our earlier notes, Kanzhun Pre-IPO -Bumble meets Linkedin . 


Kanzhun IPO - Fast Growth, Strong Investor Support, Cash Flow Positive...

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> and <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>. Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/pharma-foods-international" target="_blank" data-smartkarma-citation="entities:10530:1" rel="noopener">Pharma Foods International (2929 JP)</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-yusen-kk" target="_blank" data-smartkarma-citation="entities:12285:1" rel="noopener">Nippon Yusen Kk (9101 JP)</a>, <a href="https://www.smartkarma.com/entities/ebara-corp" target="_blank" data-smartkarma-citation="entities:4728:1" rel="noopener">Ebara Corp (6361 JP)</a> and <a href="https://www.smartkarma.com/entities/skylark-co-ltd" target="_blank" data-smartkarma-citation="entities:474:1" rel="noopener">Skylark Co Ltd (3197 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/kyushu-railway-company" target="_blank" data-smartkarma-citation="entities:23609:1" rel="noopener">Kyushu Railway Company (9142 JP)</a>, <a href="https://www.smartkarma.com/entities/marui-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13604:1" rel="noopener">Marui Group (8252 JP)</a>, <a href="https://www.smartkarma.com/entities/chugoku-electric-power-co" target="_blank" data-smartkarma-citation="entities:16243:1" rel="noopener">Chugoku Electric Power Co (9504 JP)</a>, <a href="https://www.smartkarma.com/entities/keihan-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:6120:1" rel="noopener">Keihan Holdings Co., Ltd. (9045 JP)</a> and <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>. Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/posco-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12421:1" rel="noopener">Posco Chemical Co Ltd (003670 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/chicony-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:13085:1" rel="noopener">Chicony Electronics (2385 TT)</a>, <a href="https://www.smartkarma.com/entities/chunghwa-telecom-co-ltd" target="_blank" data-smartkarma-citation="entities:9181:1" rel="noopener">Chunghwa Telecom (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/highwealth-construction-corp" target="_blank" data-smartkarma-citation="entities:6739:1" rel="noopener">Highwealth Construction (2542 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/quanta-computer-inc" target="_blank" data-smartkarma-citation="entities:2754:1" rel="noopener">Quanta Computer (2382 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Alibaba Group (9988 HK), Ping An Insurance (H) (2318 HK)Kuaishou Technology (1024 HK), Country Garden Services Holdings (6098 HK) and Chow Tai Fook Jewellery (1929 HK) while there was short covering on ICBC (H) (1398 HK), ASM Pacific Technology (522 HK), Tencent (700 HK), PCCW Ltd (8 HK) and Sunny Optical (2382 HK). Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.In Japan, stocks increased on Pharma Foods International (2929 JP), CyberAgent Inc (4751 JP), Nippon Yusen Kk (9101 JP), Ebara Corp (6361 JP) and Skylark Co Ltd (3197 JP) while there was short covering on Kyushu Railway Company (9142 JP), Marui Group (8252 JP), Chugoku Electric Power Co (9504 JP), Keihan Holdings Co., Ltd. (9045 JP) and Canon Inc (7751 JP). Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), Doosan Heavy Industries &amp; Construction (034020 KS), LG Chem Ltd (051910 KS) and Posco Chemical Co Ltd (003670 KS) while shorts were covered on Hyundai Motor Co (005380 KS), Samsung Electronics (005930 KS), SK Hynix (000660 KS) and Naver Corp (035420 KS).In Taiwan, shorts increased on AU Optronics (2409 TT), Yageo Corporation (2327 TT), Innolux Corp (3481 TT), Yang Ming Marine Transport (2609 TT) and Hannstar Display (6116 TT) while shorts covered on Chicony Electronics (2385 TT), Chunghwa Telecom (2412 TT), Highwealth Construction (2542 TT), Mediatek Inc (2454 TT) and Quanta Computer (2382 TT).

Asia Shorts: CGS, CTF, ASM Pac, PCCW, KyushuRail, Marui, HMM, Doosan, LG Chem, HMC, Yang Ming

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Equity Bottom-Up

<p>We believe that <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> is a special situation that warrants a close look from the long side.  Our recent checks in the live broadcasting broadcasters and agencies suggest that broadcasters see a surge in traffic/new viewers from BIDU in recent weeks.  BIDU traffic is of lower quality than YY as BIDU’s existing business model for live streaming is ecommerce.  YY, on the other hand, discusses tips for broadcasters.  <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  has opened multiple entries to YY.  For example, all viewers of Haokan Video (short video sub of <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> ) now have access to YY subsidiaries.  Haokan is said to have 30MM DAU through independent Haokan App, and 110 MM DAU through all apps in Baidu ecosystem in 2019.  Assuming YY can convert 1% DAU to paying users, that is 26% boost to YY existing paying users.</p>

We believe that JOYY (YY US) is a special situation that warrants a close look from the long side.  Our recent checks in the live broadcasting broadcasters and agencies suggest that broadcasters see a surge in traffic/new viewers from BIDU in recent weeks.  BIDU traffic is of lower quality than YY as BIDU’s existing business model for live streaming is ecommerce.  YY, on the other hand, discusses tips for broadcasters.  Baidu (BIDU US)  has opened multiple entries to YY.  For example, all viewers of Haokan Video (short video sub of Baidu (BIDU US) ) now have access to YY subsidiaries.  Haokan is said to have 30MM DAU through independent Haokan App, and 110 MM DAU through all apps in Baidu ecosystem in 2019.  Assuming YY can convert 1% DAU to paying users, that is 26% boost to YY existing paying users.

BIDU-YY Live Streaming Integration Update: Unlocking Deep Value in YY

<p><a href="https://www.smartkarma.com/entities/aihuishou" target="_blank" data-smartkarma-citation="entities:33426:1" rel="noopener">Aihuishou (RERE US)</a> (AHS), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise up to US$1bn via a US listing. It is backed by <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>, Morningside and Tiger Global.</p><p>A total of 26.1m consumer products, worth RMB22.8bn, were transacted by AHS over twelve months ending Mar 2021. It had over 755 offline stores across 172 cities. According to CIC, it had a 6.6% market share in terms of GMV for pre-owned electronics and 8.7% market share in terms of number of pre-owned devices transacted in 2020. As per CIC, its GMV for electronics and number of devices transacted in 2020 were both greater than the next five largest platforms combined, as per CIC. </p>

Aihuishou (RERE US) (AHS), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise up to US$1bn via a US listing. It is backed by JD.com Inc (ADR) (JD US), Morningside and Tiger Global.A total of 26.1m consumer products, worth RMB22.8bn, were transacted by AHS over twelve months ending Mar 2021. It had over 755 offline stores across 172 cities. According to CIC, it had a 6.6% market share in terms of GMV for pre-owned electronics and 8.7% market share in terms of number of pre-owned devices transacted in 2020. As per CIC, its GMV for electronics and number of devices transacted in 2020 were both greater than the next five largest platforms combined, as per CIC. 

AiHuiShou Pre-IPO - Mostly Positive - Pre-Owned but Well Loved

China

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

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Kuaishou Technology (1024 HK)

Full Truck Alliance IPO Preview

Full Truck Alliance is getting ready for an IPO in the next few weeks. FTA had about 20% of all China's heavy-duty and medium-duty truckers...

Douglas Kim

Kanzhun IPO - Fast Growth, Strong Investor Support, Cash Flow Positive...

Kanzhun (BZ US), an online recruitment platform in China, aims to raise up to US$912m in its US IPO. The company is backed by Tencent (700 HK).

Sumeet Singh

Asia Shorts: CGS, CTF, ASM Pac, PCCW, KyushuRail, Marui, HMM, Doosan, LG Chem, HMC, Yang Ming

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

BIDU-YY Live Streaming Integration Update: Unlocking Deep Value in YY

YY to broadcaster on May 21: “YY and Baidu live streaming channels will start sharing data. We asked our live broadcasters to welcome the new...

JL Warren Capital

AiHuiShou Pre-IPO - Mostly Positive - Pre-Owned but Well Loved

Aihuishou(RERE US), China’s largest pre-owned consumer electronics transactions and services platform, aims to raise upto US$1bn via a US listing....

Sumeet Singh

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