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.

Equity Bottom-Up

<ul>
<li>China Audio-Video and Digital Publishing Association announced <em>the Age Rating of Online Game</em>.</li>
<li>Many online platforms stopped selling cash deposit products.</li>
<li>Online payment amount grew by 28% YoY on the shopping season “December 12”.</li>
</ul>


China Audio-Video and Digital Publishing Association announced the Age Rating of Online Game.
Many online platforms stopped selling cash deposit products.
Online payment amount grew by 28% YoY on the shopping season “December 12”.


China Internet Weekly (21Dec2020): Online Games Rated by Age, Online Platforms Banned from Deposit

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

Kerry Express Thailand / Equity Capital Markets

<p><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. </p><p>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. </p><p>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. </p>

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

<p>In this new monthly research product we introduce three Long / Short pair trade ideas in Chinese travel, Chinese express and logistics, and global container shipping. </p>
<p>These pair trade ideas are based mainly on expected fundamental change in each segment over the next 6-12 months. We'll focus on Asia, but occasionally we may place non-Asian names on either side of our pair ideas. Besides examining key secular and cyclical trends in each segment, we will consider relative valuations, and we'll strive to identify key catalysts and risks for each stock. </p>
<p>Broadly, the idea behind this new product is to identify and <em>own</em> companies we expect to profitably gain share or to reap outsized benefits from important secular and cyclical trends, then <em>short</em> names in the same segment that stand to lose the most to the 'winners' we select. </p>
<p>We'll be back in about a month with our first updates on these three proposed pairs!</p>

In this new monthly research product we introduce three Long / Short pair trade ideas in Chinese travel, Chinese express and logistics, and global container shipping. 
These pair trade ideas are based mainly on expected fundamental change in each segment over the next 6-12 months. We'll focus on Asia, but occasionally we may place non-Asian names on either side of our pair ideas. Besides examining key secular and cyclical trends in each segment, we will consider relative valuations, and we'll strive to identify key catalysts and risks for each stock. 
Broadly, the idea behind this new product is to identify and own companies we expect to profitably gain share or to reap outsized benefits from important secular and cyclical trends, then short names in the same segment that stand to lose the most to the 'winners' we select. 
We'll be back in about a month with our first updates on these three proposed pairs!

TRACKING TRAFFIC/Three Suggested Pair Trades in Travel, Express & Shipping

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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.

<div><p><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> is the leading express delivery company in Thailand. It is backed by <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (63.0% shareholder) and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> (23.0% shareholder).</p></div><div><p>Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Subscription will take place between 8-9 and 14 December for retail investors, and 16-18 December for institutional investors. The final price is expected to be announced on 15 December. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kerry-express-ipo-initiation-a-recovery-play" target="_blank" data-smartkarma-citation="insights:45446" rel="noopener">Kerry Express IPO Initiation: A Recovery Play?</a>, we stated that while the 3Q20 results are not ideal, we think that revenue decline is a short-term market-specific issue, and Kerry Express remains well-placed to ride an eventual recovery in Thai consumer confidence. Overall, we think that a reasonable P/E valuation, a market-leading business and solid cornerstone support makes Kerry Express tempting at the proposed pricing range. </p></div></div></div>

Kerry Express Thailand (KEX TB) is the leading express delivery company in Thailand. It is backed by Kerry Logistics Network (636 HK) (63.0% shareholder) and VGI PCL (VGI TB) (23.0% shareholder).Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Subscription will take place between 8-9 and 14 December for retail investors, and 16-18 December for institutional investors. The final price is expected to be announced on 15 December. In Kerry Express IPO Initiation: A Recovery Play?, we stated that while the 3Q20 results are not ideal, we think that revenue decline is a short-term market-specific issue, and Kerry Express remains well-placed to ride an eventual recovery in Thai consumer confidence. Overall, we think that a reasonable P/E valuation, a market-leading business and solid cornerstone support makes Kerry Express tempting at the proposed pricing range. 

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/980/original/BANNER-LOGISTICS.png?1605971640" class="editor-image img-responsive" data-smartkarma-image-id="172980"></figure></section><p>In October, Chinese express parcel volume growth remained strong. However, pricing was weak, and we see no signs of price improvement in the near-term. Margins remain under pressure. </p><p>A slew of Q3 earnings results show some companies losing money, with margins at almost all of the companies under intense pressure. <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>'s recent decision to exit non-core businesses supports our thesis that pressure to consolidate is increasing. </p><p>We retain our view that SF Holding is the sector's leading company, but in the medium-term, we believe Best is an attractive way to play expected sector M&amp;A in 2021. </p>

In October, Chinese express parcel volume growth remained strong. However, pricing was weak, and we see no signs of price improvement in the near-term. Margins remain under pressure. A slew of Q3 earnings results show some companies losing money, with margins at almost all of the companies under intense pressure. BEST Inc (BEST US)'s recent decision to exit non-core businesses supports our thesis that pressure to consolidate is increasing. We retain our view that SF Holding is the sector's leading company, but in the medium-term, we believe Best is an attractive way to play expected sector M&amp;A in 2021. 

TRACKING TRAFFIC/Chinese Express: Weak Q3 Results from ZTO & Best | Consolidation Pressures Gaining

Hong Kong

S. F. Holding Co., Ltd. offers express courier services. The Company provides logistics, order tracking, supply chain management, warehousing, and other services. S. F. Holding offers services worldwide.

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S.F. Holding (6936 HK)

China Internet Weekly (21Dec2020): Online Games Rated by Age, Online Platforms Banned from Deposit

Authorities announced the Age Rating of Online Game. Many online platforms stopped selling cash deposit products. Online payment amount grew by 28%...

Ming Lu

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

TRACKING TRAFFIC/Three Suggested Pair Trades in Travel, Express & Shipping

We're introducing a monthly pair trade idea product to go along with our monthly products covering Chinese travel and tourism, Chinese express, and...

Tracking Traffic

Kerry Express IPO: Valuation Insights

Kerry Express has launched its IPO at a price range of THB25.00-28.00 per share to raise as much as THB8.4 billion ($278 million). Overall, we...

Arun George

TRACKING TRAFFIC/Chinese Express: Weak Q3 Results from ZTO & Best | Consolidation Pressures Gaining

October express data show -- once again -- strong parcel volume growth but very weak pricing. Margin pressure seen in Q3 results is adding to...

Tracking Traffic

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