APAC IPOs & Placements

Zhen Zhou, Toh

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

<a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" data-smartkarma-citation="entities:28812:1" rel="noopener">Li Auto Inc. (LI US)</a>  is looking to raise up to US$1.5bn via a dual primary listing in Hong Kong. News of Chinese EVs exploring their Hong Kong listing option was reported in March 2021.We covered Li Auto’s US listing in 2020:<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/li-auto-pre-ipo-taking-the-long-way-around" target="_blank" data-smartkarma-citation="insights:41253" rel="noopener">Li Auto (理想汽车) Pre-IPO - Taking the Long Way Around</a> </li>
<li><a href="https://www.smartkarma.com/insights/li-auto-visit-li-auto-store-and-find-out-license-game" target="_blank" data-smartkarma-citation="insights:41299" rel="noopener">Li Auto (理想汽车): A to Visit Li Auto's Store and Find Out about the License Game</a></li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-pre-ipo-peer-comparison-margins-may-look-like-byd-but-sells-like-nio" target="_blank" data-smartkarma-citation="insights:41515" rel="noopener">Li Auto (理想汽车) Pre-IPO - Peer Comparison - Margins May Look like BYD, but Sells like NIO</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-ipo-worth-a-ride-at-the-low-end" target="_blank" data-smartkarma-citation="insights:41596" rel="noopener">Li Auto (理想汽车) IPO - Worth a Ride, at the Low -End</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-trading-update-no-mention-of-hillhouse-s-investment" target="_blank" data-smartkarma-citation="insights:41746" rel="noopener">Li Auto (理想汽车) Trading Update - No Mention of Hillhouse's Investment</a> </li>
</ul>We also covered its December 2020 follow-on offering:<ul><li>
<a href="https://www.smartkarma.com/insights/li-auto-placement-opportunistic-but-still-a-worth-a-bet-among-ev-peers" target="_blank" data-smartkarma-citation="insights:45988" rel="noopener">Li Auto (理想汽车) Placement - Opportunistic but Still a Worth a Bet Among EV Peers</a> </li></ul>In this note, we will share our thoughts on fundamentals and discuss deal dynamics.

Li Auto Inc. (LI US)  is looking to raise up to US$1.5bn via a dual primary listing in Hong Kong. News of Chinese EVs exploring their Hong Kong listing option was reported in March 2021.We covered Li Auto’s US listing in 2020:

Li Auto (理想汽车) Pre-IPO - Taking the Long Way Around 
Li Auto (理想汽车): A to Visit Li Auto's Store and Find Out about the License Game

Li Auto (理想汽车) Pre-IPO - Peer Comparison - Margins May Look like BYD, but Sells like NIO 

Li Auto (理想汽车) IPO - Worth a Ride, at the Low -End 

Li Auto (理想汽车) Trading Update - No Mention of Hillhouse's Investment 
We also covered its December 2020 follow-on offering:
Li Auto (理想汽车) Placement - Opportunistic but Still a Worth a Bet Among EV Peers In this note, we will share our thoughts on fundamentals and discuss deal dynamics.

Li Auto HK Listing - Needs to Be Done at Discount Given XPeng’s Poor Debut

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Equity Bottom-Up

China managers are losing faith in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK).</a> From peak ownership of 32.5% of funds back in December 2020, active China managers have closed positions in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> en masse.  Average holding weights have dropped from 0.77% to 0.37% over the same period, with the net underweight rising to -1.17%.This leaves sentiment in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>  among the worst in the China universe at present.Analysis taken from our China research, which covers 116 active China managers with combined AUM of $68bn

China managers are losing faith in Xiaomi Corp (1810 HK). From peak ownership of 32.5% of funds back in December 2020, active China managers have closed positions in Xiaomi Corp (1810 HK) en masse.  Average holding weights have dropped from 0.77% to 0.37% over the same period, with the net underweight rising to -1.17%.This leaves sentiment in Xiaomi Corp (1810 HK)  among the worst in the China universe at present.Analysis taken from our China research, which covers 116 active China managers with combined AUM of $68bn

Xiaomi Exodus:  Confidence Fading Among Active China Investors

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

In recent months, <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> announced record vehicle deliveries and ambitious domestic and international expansion plans.  These developments highlight the significant progress it made compared to early 2020 when it appeared to be on the verge of bankruptcy.  This article discusses the Hefei Investors' emergency funding which facilitated Nio Inc's subsequent business and share price turnaround but subjected ADR holders to certain risks including, amongst others, structural subordination in terms of their claim on the key operating assets in China.

In recent months, NIO Inc (NIO US) announced record vehicle deliveries and ambitious domestic and international expansion plans.  These developments highlight the significant progress it made compared to early 2020 when it appeared to be on the verge of bankruptcy.  This article discusses the Hefei Investors' emergency funding which facilitated Nio Inc's subsequent business and share price turnaround but subjected ADR holders to certain risks including, amongst others, structural subordination in terms of their claim on the key operating assets in China.

Nio Inc – Structural Subordination to Hefei Investors and Associated Risks

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

The bloodbath in Hong Kong and H-shares in the first week of July 2021 was mainly caused by the perceived worsening corporate governance to invest in Chinese companies as the Chinese regulator has gone more draconian on the new listing of the Chinese companies, especially for tech companies.  This will inevitably put downward pressure on the share prices of the tech companies but it will increase trading volume in the HK exchange, on the short term basis at least. In the long term, <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> may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy.

The bloodbath in Hong Kong and H-shares in the first week of July 2021 was mainly caused by the perceived worsening corporate governance to invest in Chinese companies as the Chinese regulator has gone more draconian on the new listing of the Chinese companies, especially for tech companies.  This will inevitably put downward pressure on the share prices of the tech companies but it will increase trading volume in the HK exchange, on the short term basis at least. In the long term, HKEX (388 HK) may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy. 

HK Exchange (388): Beneficiary of HK Tech Crack Down

Consumer Discretionary / Industrials

Henry Kwon

TSP has underperformed NASDAQ by 24.15% since June 30, while other Autonomous Driving Truck themed SPACs HCIC (merger announced with Plus AI) and NGAB (merger announced with Embark Trucks) have underperformed the Index by 1.86 and 1.87%, respectively in the same period. While we would not expect SPACs to begin reflecting the market's sentiment until official shareholder approval is obtained for SPAC mergers, both TSLA and NKLA have not shown similar degrees of underperformance with TSP since the DIDI oversight announcement took place last week, so the degree of TSP's underperformance aligns much more closely with those of NIO and XPEV.To be sure, TSP does have a VIE structure for its China business and that is what we think the market has just noticed in the past week as it ponders the long term implications of the current government oversight issues faced by overseas-listed Chinese stocks (U.S. companies conducting business in China tend to do so via either VIEs or JVs due to regulatory bars). This clearly is not good for TSP's current narrative in the market, but actually TSP is an American company, incorporated and headquartered in the U.S. (Not Cayman Islands) with the U.S. trucking market being its core center of value creation, which should be an overwhelming note of thematic positive at this point in time.In our view, TSP's narrative in the market has failed to maximize its positioning potential in the minds of U.S. investors since its April IPO. By highlighting its owned freight capacity and partnership with Navistar TSP merely highlighted structurally lower potential margins when compared to a pure SaaS provider with universal interface such as Embark Trucks. In the face of mounting concerns over rising Sino-American tensions, the stock was positioned as a China expansion play, while 71% of its owned fleet capacity is in the U.S. with a far bigger proportion of expected revenue growth coming from the U.S. in the foreseeable future, which is in fact what the Navistar partnership should signal to the market. While the trade-off is that TSP is (at least for now, anyways) a captive supplier to Navistar with the attendant margin implications, this implication is not as glaring on a casual glance through TSP's presentation materials and the issue normally should not come into play until at least scaling up is well under way.The short term trading implications for TSP's shares that we see are:<ul>
<li>
Bullish Short Term Scenario: TSP closed below its 50% Fibonacci Retracement level of $55.99 on Friday, at $55.01. If the shares can close above its 10-day EMA of $58.43, then $61.61 at the 38.2% Fibonacci Retracement level can come into play.</li>
<li>
Bearish Short Term Scenario: MACD is showing a bearish posture with RSI at 51.07, suggesting there could be further downside risk from current levels. 50-DMA sits at $45.84, below the 61.8% Fibonacci Retracement level of $50.36. These are likely to be the first support zones.</li>
</ul>Given TSP's short trading history, there are currently no set historical trading ranges, so we would use the Fibonacci retracement for loosely gauging where potential resistance/support zones could be at this point in time.

TSP has underperformed NASDAQ by 24.15% since June 30, while other Autonomous Driving Truck themed SPACs HCIC (merger announced with Plus AI) and NGAB (merger announced with Embark Trucks) have underperformed the Index by 1.86 and 1.87%, respectively in the same period. While we would not expect SPACs to begin reflecting the market's sentiment until official shareholder approval is obtained for SPAC mergers, both TSLA and NKLA have not shown similar degrees of underperformance with TSP since the DIDI oversight announcement took place last week, so the degree of TSP's underperformance aligns much more closely with those of NIO and XPEV.To be sure, TSP does have a VIE structure for its China business and that is what we think the market has just noticed in the past week as it ponders the long term implications of the current government oversight issues faced by overseas-listed Chinese stocks (U.S. companies conducting business in China tend to do so via either VIEs or JVs due to regulatory bars). This clearly is not good for TSP's current narrative in the market, but actually TSP is an American company, incorporated and headquartered in the U.S. (Not Cayman Islands) with the U.S. trucking market being its core center of value creation, which should be an overwhelming note of thematic positive at this point in time.In our view, TSP's narrative in the market has failed to maximize its positioning potential in the minds of U.S. investors since its April IPO. By highlighting its owned freight capacity and partnership with Navistar TSP merely highlighted structurally lower potential margins when compared to a pure SaaS provider with universal interface such as Embark Trucks. In the face of mounting concerns over rising Sino-American tensions, the stock was positioned as a China expansion play, while 71% of its owned fleet capacity is in the U.S. with a far bigger proportion of expected revenue growth coming from the U.S. in the foreseeable future, which is in fact what the Navistar partnership should signal to the market. While the trade-off is that TSP is (at least for now, anyways) a captive supplier to Navistar with the attendant margin implications, this implication is not as glaring on a casual glance through TSP's presentation materials and the issue normally should not come into play until at least scaling up is well under way.The short term trading implications for TSP's shares that we see are:

Bullish Short Term Scenario: TSP closed below its 50% Fibonacci Retracement level of $55.99 on Friday, at $55.01. If the shares can close above its 10-day EMA of $58.43, then $61.61 at the 38.2% Fibonacci Retracement level can come into play.

Bearish Short Term Scenario: MACD is showing a bearish posture with RSI at 51.07, suggesting there could be further downside risk from current levels. 50-DMA sits at $45.84, below the 61.8% Fibonacci Retracement level of $50.36. These are likely to be the first support zones.
Given TSP's short trading history, there are currently no set historical trading ranges, so we would use the Fibonacci retracement for loosely gauging where potential resistance/support zones could be at this point in time.

TSP: SaaS Provider or Trucker, American or Chinese? Identity Crises in the Making

China

NIO Inc. manufactures and sells automobiles. The Company offers electric vehicles and parts, as well as provides battery charging services. NIO serves customers worldwide.

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NIO (NIO US)

Li Auto HK Listing - Needs to Be Done at Discount Given XPeng’s Poor Debut

Li Auto Inc. (LI US) is looking to raise up to US$1.5bn via a dual primary listing in Hong Kong. News of Chinese EVs exploring their Hong Kong...

Zhen Zhou, Toh

Xiaomi Exodus: Confidence Fading Among Active China Investors

China managers are losing faith in Xiaomi Corp (1810 HK). From peak ownership of 32.5% of funds back in December 2020, active China managers have...

Steven Holden

Nio Inc – Structural Subordination to Hefei Investors and Associated Risks

Nio Inc has experienced a remarkable turnaround. This article discusses the Hefei Investors' funding which enabled the turnaround and the resultant...

Jason Yap, CFA

HK Exchange (388): Beneficiary of HK Tech Crack Down

HKEX (388 HK) may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy

Henry Soediarko

TSP: SaaS Provider or Trucker, American or Chinese? Identity Crises in the Making

TSP is a U.S. domiciled American company, with the U.S. as its core value creation center. However, its China-centric narrative did not help as the...

Henry Kwon

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