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.

Equity Capital Markets

FWD Group Holdings / Equity Capital Markets

<div>FWD, a pan-Asian life insurer founded by Richard Li, aims to raise up to US$3bn in its US IPO. </div><div>FWD is a pan-Asia life insurer operating in ten markets including Hong Kong (and Macau), Thailand (and Cambodia), Japan, the Philippines, Indonesia, Singapore, Vietnam and Malaysia. Southeast Asia markets contributed over 40% of its Value of New Business (VNB) in 2020. It had served over 9.9m customers as of Jun 21.</div><div><div>In our previous note, we spoke about the positive  and negatives aspects of the deal in our earleir notes, <a href="https://www.smartkarma.com/insights/fwd-pre-ipo-the-positives-growing-fast" target="_blank" rel="noopener">FWD Pre-IPO - The Positives - Growing Fast</a> and <a href="https://www.smartkarma.com/insights/fwd-pre-ipo-the-negatives-strategy-remains-unclear" target="_blank" rel="noopener">FWD Pre-IPO - The Negatives - Strategy Remains Unclear</a>.</div></div>In this note we will undertake a peer comparison.

FWD, a pan-Asian life insurer founded by Richard Li, aims to raise up to US$3bn in its US IPO. FWD is a pan-Asia life insurer operating in ten markets including Hong Kong (and Macau), Thailand (and Cambodia), Japan, the Philippines, Indonesia, Singapore, Vietnam and Malaysia. Southeast Asia markets contributed over 40% of its Value of New Business (VNB) in 2020. It had served over 9.9m customers as of Jun 21.In our previous note, we spoke about the positive  and negatives aspects of the deal in our earleir notes, FWD Pre-IPO - The Positives - Growing Fast and FWD Pre-IPO - The Negatives - Strategy Remains Unclear.In this note we will undertake a peer comparison.

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Another Weak Number: Waterdrop, Inc. (WDH.US) [Waterdrop] reported its second set of earnings results since its IPO, coming in at a negative CNY 656 mn  - declining CNY 286 mn or 77.3% linked quarter bringing cumulative losses since the IPO to over CNY 1.0 bn or about 38% of IPO funds raised. Challenges came from overall cost growth of CNY 411 mn (30.6%) due primarily to sales and marketing spend; and    *”Notice” To Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders”, aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections. This will be a direct challenge for Waterdrop and other mainland Chinese insurers.

*Another Weak Number: Waterdrop, Inc. (WDH.US) [Waterdrop] reported its second set of earnings results since its IPO, coming in at a negative CNY 656 mn  - declining CNY 286 mn or 77.3% linked quarter bringing cumulative losses since the IPO to over CNY 1.0 bn or about 38% of IPO funds raised. Challenges came from overall cost growth of CNY 411 mn (30.6%) due primarily to sales and marketing spend; and    *”Notice” To Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders”, aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections. This will be a direct challenge for Waterdrop and other mainland Chinese insurers. 

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

*Weak Results Mask Improving Overall Fundamentals: Ping An Insurance (2318.HK) [Ping An] reported 1H21 results of CNY 58.0 bn, declining CNY 16.4 bn (22.0%) HOH.  Much of the struggle this half appears to be centered in Ping An’s investment portfolio which caused its net investment yield to plummet 80 bp to 4.1%. This resulted in substantial HOH net profit declines of CNY 20.4 bn (40.6%) and CNY 3.0 bn (48.4%) at Ping An Life (PAL) and Ping An Technology, respectively.  Excluding both write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0%; and*Concerns Increase At Bank And With Expansion Plans: Ping An Bank (000001.CH) [PAB] reported 2Q21 reported results of CNY 7.5 bn – decreasing CNY 2.7 bn (26.4%) linked quarter driven by credit concerns and weaker net interest income. In addition, Ping An is investing between CNY 37-51 bn in order to restructure the messy Founder Group, which will no doubt be a distraction for the Group just as fundamentals have begun to turn.

*Weak Results Mask Improving Overall Fundamentals: Ping An Insurance (2318.HK) [Ping An] reported 1H21 results of CNY 58.0 bn, declining CNY 16.4 bn (22.0%) HOH.  Much of the struggle this half appears to be centered in Ping An’s investment portfolio which caused its net investment yield to plummet 80 bp to 4.1%. This resulted in substantial HOH net profit declines of CNY 20.4 bn (40.6%) and CNY 3.0 bn (48.4%) at Ping An Life (PAL) and Ping An Technology, respectively.  Excluding both write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0%; and*Concerns Increase At Bank And With Expansion Plans: Ping An Bank (000001.CH) [PAB] reported 2Q21 reported results of CNY 7.5 bn – decreasing CNY 2.7 bn (26.4%) linked quarter driven by credit concerns and weaker net interest income. In addition, Ping An is investing between CNY 37-51 bn in order to restructure the messy Founder Group, which will no doubt be a distraction for the Group just as fundamentals have begun to turn.

Ping An Insurance – Looking Beyond The Investment Book

*Better, But Off A Low Base: AIA Group (1299.HK) [AIA] released its 1H21 results. Operating profit amounted to USD 3.2 bn, increasing 5% YOY, while VONB improved 22% YOY to USD 1.8 bn due to a combination of higher new sales volume (ANP up across all markets ex-Hong Kong which declined 11% YOY) and VONB margin expansion from (up 4.6% to 59.0%). Net profit improved to USD 3.2 bn, increasing 47% YOY due to the large negative investment variance in 1H20; and* China And Hong Kong Risks Still Need To Be Addressed: Concerned about weakening organic growth, AIA has gone on a deal-making spree: Bank of East Asia’s (23.HK) [BEA] wholly-owned life insurance unit, BEA Life; an exclusive 15-year bancassurance relationship with BEA; acquisition of Blue Cross (Asia-Pacific) Insurance’s underwritten closed life insurance; a strategic digital partnership with ZhongAn Online P&amp;C Insurance’ (6060.HK) [ZhongAn]; and received CBIRC approval to restructure its Shanghai-based life insurance branch into a wholly-owned subsidiary. In addition to the massive managerial distractions with so many deals at one time, there are challenges of bogusly rated AAA mainland Chinese bonds; no end in sight with its flailing Hong Kong flagship; and getting the BEA Life team on the same with AIA Hong Kong.

*Better, But Off A Low Base: AIA Group (1299.HK) [AIA] released its 1H21 results. Operating profit amounted to USD 3.2 bn, increasing 5% YOY, while VONB improved 22% YOY to USD 1.8 bn due to a combination of higher new sales volume (ANP up across all markets ex-Hong Kong which declined 11% YOY) and VONB margin expansion from (up 4.6% to 59.0%). Net profit improved to USD 3.2 bn, increasing 47% YOY due to the large negative investment variance in 1H20; and* China And Hong Kong Risks Still Need To Be Addressed: Concerned about weakening organic growth, AIA has gone on a deal-making spree: Bank of East Asia’s (23.HK) [BEA] wholly-owned life insurance unit, BEA Life; an exclusive 15-year bancassurance relationship with BEA; acquisition of Blue Cross (Asia-Pacific) Insurance’s underwritten closed life insurance; a strategic digital partnership with ZhongAn Online P&amp;C Insurance’ (6060.HK) [ZhongAn]; and received CBIRC approval to restructure its Shanghai-based life insurance branch into a wholly-owned subsidiary. In addition to the massive managerial distractions with so many deals at one time, there are challenges of bogusly rated AAA mainland Chinese bonds; no end in sight with its flailing Hong Kong flagship; and getting the BEA Life team on the same with AIA Hong Kong. 

China

New China Life Insurance Company Ltd. provides life insurance services. The Company provides life insurance, accident insurance, health insurance products, and other related insurance products. New China Life Insurance offers services in China.

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New China Life Insurance (1336 HK)

FWD Pre-IPO - Peer Comparison

FWD, a pan-Asian life insurer founded by Richard Li, aims to raise up to US$3bn in its US IPO. In this note, we will undertake a peer comparison.

Sumeet Singh

Waterdrop – Someone Plug The Dike

WATERDROP: WDH reported its second set of earnings since the IPO, coming in at a negative CNY 656 mn - declining 77.3% QOQ bringing cumulative...

Thomas J. Monaco

Ping An Insurance - Ugggh

PING AN INSURANCE: The CBIRC is investigating Ping An's property investments against the backdrop of the country’s skyrocketing real estate market...

Thomas J. Monaco

Ping An Insurance – Looking Beyond The Investment Book

PING AN INSURANCE: Weak results mask PAI's improving overall fundamentals, as 1H21 HOH declined 22.0% mainly due to investment risk. Excluding the...

Thomas J. Monaco

AIA Group – Its Own Worst Enemy

AIA GROUP: AIA's 1H21 operating profit improved 5% YOY off of a low base, while VONB improved 22%. With all of its aggressive moves in mainland...

Thomas J. Monaco

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