Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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 Capital Markets

As the US-listed Chinese tech firms such as <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>, <a href="https://www.smartkarma.com/entities/tencent-music-entertainment" target="_blank" data-smartkarma-citation="entities:27255:1" rel="noopener">Tencent Music (TME US)</a>, <a href="https://www.smartkarma.com/entities/vipshop-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:1088:1" rel="noopener">Vipshop Holdings (VIPS US)</a>, and <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> rush for secondary listings on the Hong Kong Stock Exchange amidst the uncertainty surrounding the US policy framework, in this insight, we analyse the ADR/HKEX discount/premium behaviour of the 10 most recent secondary listings on the Hong Kong Stock Exchange.

As the US-listed Chinese tech firms such as Bilibili Inc (BILI US), Tencent Music (TME US), Vipshop Holdings (VIPS US), and JOYY (YY US) rush for secondary listings on the Hong Kong Stock Exchange amidst the uncertainty surrounding the US policy framework, in this insight, we analyse the ADR/HKEX discount/premium behaviour of the 10 most recent secondary listings on the Hong Kong Stock Exchange.

An Analysis of ADR/HKEX Discount Behavior As The US Listed Chinese Tech Rush To Hong Kong

China and US Equity Analyst

Roger Xie

Equity Bottom-Up

<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> December ADT (Average Daily Turnover) re-accelerated strongly, delivering amazing 86% year-over-year growth in the month. The outperformance is helped by the rising global equity markets and strong IPO listings in Hong Kong. For the year 2020, HKEx ADT has accelerated the year-over-year growth rate to 49%, which is one the best trading volume years recently. In 2020, HKEx stock price rose 68%, outperforming Hang Seng Index down 3%. We believe HKEx momentum will continue in 2021.</li>
<li>We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021. <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> will benefit from this secular trend in several ways: 1) Hong Kong market becomes de facto choice for China new economy companies for IPO and fund raising; 2) HKEx Northbound trading has become an increasing important factor as the gateway to invest in China A-share; 3) MSCI index products will continue to gain market share. We forecast Securities ADT of HK$240bn in FY 21 (Hong Kong and Stock Connect Northbound) and raise HKEx TP HKD 500. </li>
<li>HKEx announced that Calvin Tai Chi Kin has replaced Charles Li Xiaojia as its new interim Chief Executive, effective from 1st January 2021. Calvin Tai Chi Kin, a financial industry veteran, has been named HKEx' Interim CEO since last September. He will take over Charles Li Xiaojia’s responsibilities and continue his role as Co-President and Chief Operating Officer of HKEx. Calvin brings a wealth of experience of more than thirty-five years to his new position. According to the media, several candidates have been considered by HKEx, but the final decision on HKEx CEO has not been reached. 
</li>
</ul>



HKEX (388 HK) December ADT (Average Daily Turnover) re-accelerated strongly, delivering amazing 86% year-over-year growth in the month. The outperformance is helped by the rising global equity markets and strong IPO listings in Hong Kong. For the year 2020, HKEx ADT has accelerated the year-over-year growth rate to 49%, which is one the best trading volume years recently. In 2020, HKEx stock price rose 68%, outperforming Hang Seng Index down 3%. We believe HKEx momentum will continue in 2021.
We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021. HKEX (388 HK) will benefit from this secular trend in several ways: 1) Hong Kong market becomes de facto choice for China new economy companies for IPO and fund raising; 2) HKEx Northbound trading has become an increasing important factor as the gateway to invest in China A-share; 3) MSCI index products will continue to gain market share. We forecast Securities ADT of HK$240bn in FY 21 (Hong Kong and Stock Connect Northbound) and raise HKEx TP HKD 500. 
HKEx announced that Calvin Tai Chi Kin has replaced Charles Li Xiaojia as its new interim Chief Executive, effective from 1st January 2021. Calvin Tai Chi Kin, a financial industry veteran, has been named HKEx' Interim CEO since last September. He will take over Charles Li Xiaojia’s responsibilities and continue his role as Co-President and Chief Operating Officer of HKEx. Calvin brings a wealth of experience of more than thirty-five years to his new position. According to the media, several candidates have been considered by HKEx, but the final decision on HKEx CEO has not been reached. 



HKEx (388.HK): A Blockbuster Year 2020; Becoming Regional Leader in Years Ahead; Raise TP to HK$500

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>Pinduoduo (PDD)’s employee died a sudden death on the way home at a frozen deep night.</li>
<li>Donald Trump banned transactions with 8 Chinese apps.</li>
<li>Chinese developers’ global income increased by 45% yoy, higher than 28% yoy of the global market size.</li>
</ul>


Pinduoduo (PDD)’s employee died a sudden death on the way home at a frozen deep night.
Donald Trump banned transactions with 8 Chinese apps.
Chinese developers’ global income increased by 45% yoy, higher than 28% yoy of the global market size.


China Internet Weekly (11Jan2021): PDD Employee Died at Frozen Deep Night, US Banned 8 Chinese Apps.

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

The news that <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but also for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a>
One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>.
<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> in Indonesia.

The news that Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but also for Grab (0967655D SP), which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
Gojek (1379371D IJ) has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).
One key area of overlap between Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for Tokopedia PT (1087142D IJ).
The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for Sea Ltd (SE US) in Indonesia.

Gojek and Tokopedia - Digital Game of Thrones

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January?

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January? 

Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

An Analysis of ADR/HKEX Discount Behavior As The US Listed Chinese Tech Rush To Hong Kong

As the US-listed Chinese tech firms rush for secondary listings on the Hong Kong Stock Exchange, we analyse the ADR/HKEX discount behaviour of the...

Oshadhi Kumarasiri

HKEx (388.HK): A Blockbuster Year 2020; Becoming Regional Leader in Years Ahead; Raise TP to HK$500

We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021and raise HKEx TP HKD 500.

Roger Xie

China Internet Weekly (11Jan2021): PDD Employee Died at Frozen Deep Night, US Banned 8 Chinese Apps.

Pinduoduo (PDD)’s employee died a sudden death on the way home at a frozen deep night. Donald Trump banned 8 Chinese apps. Chinese developers’...

Ming Lu

Gojek and Tokopedia - Digital Game of Thrones

The potential merger of Gojek and Tokopedia with a listing of the combined entity planned at a future date will provide investors with an exciting...

Angus Mackintosh

Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK...

Douglas Kim

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