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

<div>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> plans to raise around US$2.2bn in a primary follow-on offering. The stock is up 4x this year and has risen 10x since its IPO in 2017. 
We have covered the company since listing, links to our previous notes are below. In this note, I'll talk about the deal dynamics and run the deal through our ECM framework.
Links to our prior SEA coverage:
<ul>
<li><a href="https://www.smartkarma.com/insights/sea-ltd-trade-idea-time-to-shine-market-discounting-e-commerce-to-almost-zero" target="_blank" rel="noopener">Sea Ltd Trade Idea - Time to Shine - Market Discounting E-Commerce to Almost Zero</a></li>
<li>
<a href="https://www.smartkarma.com/insights/sea-ltd-placement-capitalizing-on-momentum" target="_blank" data-smartkarma-citation="insights:28366" rel="noopener">Sea Ltd Placement - Capitalizing on Momentum</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/sea-ltd-ipo-review-e-commerce-constitutes-64-of-sotp-valuation" target="_blank" data-smartkarma-citation="insights:14375" rel="noopener">Sea Ltd IPO Review - E-Commerce Constitutes 64% of SOTP Valuation</a> </li>
<li><a href="https://www.smartkarma.com/insights/sea-ltd-ipo-review-a-pure-exposure-to-se-asia-s-e-commerce-gaming-despite-stiff-competition" target="_blank" data-smartkarma-citation="insights:13958" rel="noopener">Sea Ltd IPO Review - A Pure Exposure to SE Asia's E-Commerce &amp; Gaming Despite Stiff Competition</a></li>
</ul>
</div>


Sea Ltd (SE US) plans to raise around US$2.2bn in a primary follow-on offering. The stock is up 4x this year and has risen 10x since its IPO in 2017. 
We have covered the company since listing, links to our previous notes are below. In this note, I'll talk about the deal dynamics and run the deal through our ECM framework.
Links to our prior SEA coverage:

Sea Ltd Trade Idea - Time to Shine - Market Discounting E-Commerce to Almost Zero

Sea Ltd Placement - Capitalizing on Momentum 

Sea Ltd IPO Review - E-Commerce Constitutes 64% of SOTP Valuation 
Sea Ltd IPO Review - A Pure Exposure to SE Asia's E-Commerce &amp; Gaming Despite Stiff Competition



SEA Ltd Placement - New Business Needs New Money

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Kerry Express Thailand / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends.

Kerry Express Thailand (KEX TB) recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company BEST Inc (BEST US) announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends. 

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

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.

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below.

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below. 

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> gives you deeply discounted exposure to one of the highest quality companies listed in the Emerging Markets, <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>. Should you back out the estimated fair values of all investments outside of Prosus’ 31% holding in Tencent from the current Naspers market cap, you are effectively buying exposure to Tencent for only 16.2x 2021F earnings.
Often overlooked, Naspers also gives exposure to a diverse range of online businesses, in differing stages of development, which are likely to structurally benefited from lasting changes to consumer behaviour in the wake of the COVID-19 pandemic.
Further, Management has signalled their focus on meaningfully reducing its discount to listed net asset value by implementing a $5bn share buyback program, during November 2020, which should also support the share price through volatility in the near term. 
The key risk to the investment thesis regards the newly proposed Anti-Monopoly Compliance Guidelines for the Platform Economy released by China’s State Administration for Market Regulation (SAMR), a clear signal of tougher antitrust regulations going forward. Tencent should, however, be able to manage through these better than the large eCommerce players.

Naspers (NPN SJ) gives you deeply discounted exposure to one of the highest quality companies listed in the Emerging Markets, Tencent Holdings (700 HK). Should you back out the estimated fair values of all investments outside of Prosus’ 31% holding in Tencent from the current Naspers market cap, you are effectively buying exposure to Tencent for only 16.2x 2021F earnings.
Often overlooked, Naspers also gives exposure to a diverse range of online businesses, in differing stages of development, which are likely to structurally benefited from lasting changes to consumer behaviour in the wake of the COVID-19 pandemic.
Further, Management has signalled their focus on meaningfully reducing its discount to listed net asset value by implementing a $5bn share buyback program, during November 2020, which should also support the share price through volatility in the near term. 
The key risk to the investment thesis regards the newly proposed Anti-Monopoly Compliance Guidelines for the Platform Economy released by China’s State Administration for Market Regulation (SAMR), a clear signal of tougher antitrust regulations going forward. Tencent should, however, be able to manage through these better than the large eCommerce players.

2021 High Conviction: Naspers, Deeply Discounted Exposure to Accelerating Online Sales

APAC IPOs & Placements

Zhen Zhou, Toh

Evergrande Property Services / Equity Capital Markets


Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.




We are close to the home stretch for IPOs this year but there are still a handful of deals that are coming to market. In Hong Kong, we are hearing that Evergrande Services (EGS HK) and China Resources Mixc Lifestyle Services (CRML HK) will be opening their books on Monday and Tuesday, respectively. Blue Moon Group Holdings (BMG HK) will likely launch its bookbuild soon as well since it just won its approval to list last week whereas JD Health (JDH HK) should also hit the market soon since it has been doing its premarketing rounds this week.


Evergrande Services (恒大物业) Pre-IPO - Bad Parenting 

CR Mixc Lifestyle Services (华润万象生活) Pre-IPO - SOE-Linked Parentage Didn’t Help 

CR Mixc Lifestyle Services (华润万象生活) Pre-IPO - A Balance of Residential and Commercial Properties 

Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag 

Blue Moon Group Pre-IPO - Valuation Updates 

JD Health (京东健康) Pre-IPO - Updates from PHIP - Fine-Tuning Forecasts 

Other upcoming (relatively smaller deal size) IPOs which had gotten approvals this week are  POP MART (POP HK), and Harbour Biomed (HMD HK) and they will be looking to premarket this coming week. Dalrymple Bay Infrastructure (DBI AT) in Australia also completed its bookbuild on the 19th of November. We have covered them in:


Pop Mart Pre-IPO - The Positives - Expanding Portfolio+Wider Distribution= Explosive Earnings Growth, and
Pop Mart Pre-IPO - The Negatives - Is It a Brand Owner or Just a Retailer?

Pop Mart Pre-IPO - Peer Set and Valuation 

HBM (和珀医药) Pre-IPO: Innovative Heavy Chain Platform to Be Tested 

HBM (和珀医药) Pre-IPO: Thoughts on Valuation 

Dalrymple Bay Infrastructure - Highly Curious Timing 

IPO debuts this week traded well, indicating that short-term momentum is still strong for now. Yatsen Holding (YSG US) traded the strongest amongst listings. It closed its first day trading (Thursday) with about 70+% gain and on Friday,  posted another 8% gain. It is now 90% above IPO price. Valuation is very stretched at this point and it would probably be a wise move to take some profits off the table.


Yatsen IPO - Pricey but It Comes with Strong Investor Backing 

Yatsen IPO Trading - A Little More Pricey Now 

Hong Kong property management services listings rush were looking weak initially due to Jinke Smart Services (9666 HK)'s weak debut (broke deal price) but managed to turn for the better after Sunac Services (1516 HK) trade better on the first day (closing about 20% higher). Obviously this bodes well for CR Mixc and Evergrande Svcs but we think these listings have their own problems too which one needs to be cognizant about (Links above). 


Sunac Services (融创服务) IPO Trading - Subscription Rate Similar to Jinke Svcs 

Jinke Smart Services (金科智慧服务) IPO Trading - Demand and Valuation = Muted Near-Term Performance 

Other than these, Gland Pharma (7172753Z IN) in India, traded well on debut too closing about 20% higher than IPO price on Friday but Antengene (6996 HK) in Hong Kong opened high but closed just 1% above.


Antengene (德琪医药) IPO Trading: Ample Potential for the Management 

Gland Pharma IPO Trading - Squeezed Through, Now for the Real Test 

Placement activity was not as busy as last week but there were two notable ADR/ADS placements by Pinduoduo (PDD US) and KE Holdings Inc (BEKE US). Both have traded well above their respective deal prices post-pricing but PDD's performance was the most outstanding as it has already returned 14% from deal price as of Friday's close. In India, Embassy Office Parks REIT (EOP IN) is looking to partially fund the acquisition of assets via an institutional placement.


KE Holdings/​​​​​Beike Placement - Too Much, Too Soon. Front Running the Lock-Up Expiry 

Pinduoduo Placement - Should Do Well If, It Corrects Beforehand 

Embassy Office Parks REIT Placement - Early Look - Big Deal but Will Come with Ample Warning 

Last, but not least, Hong Kong Exchange came up with plans to shorten the settlement period for IPO shares to as short as one day, hoping to bring HKEX in line with other major markets and stay competitive.




Accuracy Rate:



Our overall accuracy rate is 73.5% for IPOs and 66.2% for Placements 


(Performance measurement criteria is explained at the end of the note)







No new IPO filings this week  




Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.







News on Upcoming IPOs  





Hong Kong stock exchange aims to modernise IPO process
Sebi’s public float plan to aid LIC IPO
JD Health Passes Hong Kong Stock Exchange Hearing En Route to IPO




Analysis on Upcoming IPOs







Name
Insight


Hong Kong


Blue Moon

Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales 



Blue Moon

Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising 



Blue Moon

Blue Moon: No. 1 But No Exclusive Advantage, Observation on the Ground 



Blue Moon

Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison 



ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)



ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 



ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)



ByteDance

ByteDance (字节跳动) Pre-IPO: How Has It Done in 1H? 



ByteDance

ByteDance: The Unlisted Company’s Video Apps Leading the Market and Threatening Internet Giants 



ByteDance

ByteDance (字节跳动) Pre-IPO: Why Facebook Should Worry About TikTok 



ByteDance

ByteDance (字节跳动) Pre-IPO - Globally the Most Downloaded App for Jan 2020 Driven by India 



ByteDance

ByteDance (字节跳动) Pre-IPO: Global Ambition Meets Regulatory Challenges 



Dida

Dida Pre-IPO - Making Hay While Big Brother Retreats 



E-Star Comm

E-Star Commercial Management Pre-IPO - Better Disclosure in New Prospectus 



E-Star Comm

E-Star Commercial Management Pre-IPO - Still Largely Reliant on Galaxy, Poor Disclosure Doesn’t Help 



Jiayuan Svcs

Jiayuan Services (佳源服务) Pre-IPO - Another Small Property Management Company 



JD Health

JD Health (京东健康) Pre-IPO - Well-Positioned to Ride China’s Healthcare Digitalization 



JD Health

JD Health (京东健康) Pre-IPO - Peer Comparison - It's a Close Fight and Competition Is Intensifying 



JD Health

JD Health (京东健康) Pre-IPO - Assumptions and Valuations 



Kilcoy

Kilcoy Global Foods Pre-IPO - Rapid Earnings Growth on the Back of Margin Improvement 



Kilcoy

Kilcoy Global Foods Pre-IPO - A Lot of Things Still Remain Unexplained 



Kuaishou

Kuaishou Technology Pre-IPO - The Positives - Hot Segment, Fast Growth 



Kuaishou

Kuaishou Technology Pre-IPO - The Negatives - Ample Doubts Remain 



Megvii

Megvii (旷视) Pre-IPO - Remarkable Growth (Part 1) 


Megvii

Megvii (旷视) Pre-IPO - A Bet on the Future - Segments, Revenue Drivers and Growth Potential 


Megvii

Megvii (旷视) Pre-IPO - The Real Race Is in Research - Founders' Profile and Talent 


Megvii

Megvii (旷视) Pre-IPO - Competitive Landscape and Peer Analysis 


Megvii

Megvii (旷视) Pre-IPO -  Initial Thoughts on Valuation 


Ocumension

Ocumension (欧康维视) Pre-IPO: All Ready for a Great Listing Except a Block Buster 


Pop Mart

Pop Mart Pre-IPO - The Negatives - Is It a Brand Owner or Just a Retailer? 


Pop Mart

Pop Mart Pre-IPO - The Positives - Expanding Portfolio+Wider Distribution= Explosive Earnings Growth 


Pop Mart

Pop Mart Pre-IPO - Peer Set and Valuation 


Pop Mart

Pop Mart Pre-IPO Quick Note - On the Ground - Pop-Up Stores Are Effective 


RemeGen

RemeGen (荣昌生物) Pre-IPO: Thoughts on Valuation of RC18 and RC48 


Toplist

Toplist China Pre-IPO - Overwhelmingly More Negatives than Positives 


Tasly

Tasly Biopharm (天士力生物) IPO: Visible Growth from Approved Drug but Lacks Blockbusters 


WeDoctor

WeDoctor (微医) Pre-IPO -App Walk Through - The Online Medical Directory and More 


WeDoctor

WeDoctor (微医) Pre-IPO - A More Focused Online Medical Svc Provider than Ping An Good Doctor 


India


ASK

ASK Investment Managers Pre-IPO - Riding on a Wave of Wealth 


Anmol Ind
Anmol Industries Pre-IPO Quick Take - No Growth, Generous Payments to Founders


Bharat Hotel

Bharat Hotels Pre-IPO - Catching up with Peers 



Burger King

Burger King India Pre-IPO - Has Been Growing Fast and Plans to Grow Even Faster 



Burger King

Burger King India Pre-IPO - Peer Comparison Yields Interesting Nuggets on Profitability and Capex 



Bajaj En

Bajaj Energy Pre-IPO - Supposed to Deliver Steady Performance if Only Its Sole Client Would Let It 



CMS Info
CMS Info Systems Pre-IPO - When a PE Sells to Another PE... Only One Gets the Timing Right


Crystal Crop
Crystal Crop Protection Pre-IPO - DRHP Raises More Questions than in Answers


ESAF SFB

ESAF Small Finance Bank Pre-IPO - Growing Fast but Remains Highly Dependant on a Related Party 


Flemingo 
Flemingo Travel Retail Pre-IPO - Its a Different Business in Every Country


Emami Cem

Emami Cement Pre-IPO - Still in Ramp Up Phase but Shares Pledge Might Lead to an Early IPO 


IRFC

Indian Railway Finance Pre-IPO - Low Risk, Low Margin Business 


NSE
NSE IPO Preview- Not Only Fast..its Risky and Expensive


NSE
National Stock Exchange Pre-IPO Review - Bigger, Better, Stronger but a Little Too Fast for Some


Mrs. Bector
Mrs. Bectors Food Specialities Pre-IPO Quick Take - Sales for Its Main Segment Have Been Sta



LIC


Life Insurance Corporation of India Pre-IPO - Early Take on India's Largest IPO 



Lodha

Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable


Lodha
Lodha Developers IPO: Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt


Penna Cem

Penna Cement - Aggressive Expansion Plans Even Though Past Performance Has Been Tepid 


PNB Met
PNB Metlife Pre-IPO Quick Take - Doesn't Stack up Well Versus Its Larger Peers


Samhi Hotels

Samhi Hotels Pre-IPO - Assets and Borrowings Are Growing, but Earnings Haven’t Kept Pace 


Malaysia


QSR
QSR Brands Pre-IPO - As Healthy as Fast Food


Thailand


PTTOR

PTT Oil and Retail IPO - F&amp;B Business Is the Profit Driver 


The U.S


CDP

CDP Holdings Pre-IPO Review - Highly Reliant on Best Inc. 


CloudMinds
CloudMinds Inc Early Thoughts - Still Nascent






ECM Weekly (22 November 2020) - Evergrande Svcs, CR Mixc Svcs, Blue Moon, HBM, Yatsen

China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

Price Gauge
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PDD Holdings (PDD US)

SEA Ltd Placement - New Business Needs New Money

Sea Ltd (SE US) plans to raise around US$2.2bn in a primary follow-on offering. The stock is up 4x this year and has risen 10x since its IPO in 2017.

Sumeet Singh

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

We update our views of KEX's IPO valuation ahead of its late December listing. We also highlight the potential sale of a domestic competitor. We...

Tracking Traffic

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese...

Rickin Thakrar

2021 High Conviction: Naspers, Deeply Discounted Exposure to Accelerating Online Sales

Naspers: Deeply discounted exposure to Tencent, a diverse range of online businesses set to benefit from accelerated online activity post-COVID-19...

Wium Malan, CFA

ECM Weekly (22 November 2020) - Evergrande Svcs, CR Mixc Svcs, Blue Moon, HBM, Yatsen

We are close to the home stretch for IPOs this year but there are still handful of deals that are coming to market such as Evergrande Svcs, CR Mixc...

Zhen Zhou, Toh

Price Gauge

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