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.

Equity Capital Markets

J&T Global Express  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express-co-ltd" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>, a leading express delivery business in Southeast Asia and China, is pre-marketing a HKEx IPO to raise US$500 million, according to press reports.   </li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/j-t-global-express-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:104964" rel="noopener">J&amp;T Global Express IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/j-t-global-express-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:105041" rel="noopener">J&amp;T Global Express IPO: The Bear Case</a>. </li>
<li>The PHIP filing favours the bull case due to a return to organic growth across the main geographies, maiden profitability, stabilization in contract liabilities and declining FCF burn.</li>
</ul>



J&amp;T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China, is pre-marketing a HKEx IPO to raise US$500 million, according to press reports.   
We previously discussed the IPO in J&amp;T Global Express IPO: The Bull Case and J&amp;T Global Express IPO: The Bear Case. 
The PHIP filing favours the bull case due to a return to organic growth across the main geographies, maiden profitability, stabilization in contract liabilities and declining FCF burn.


J&T Global Express IPO: Updates Tilts the Balance Positively

<ul>
<li>
<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a> aims to complete the IPO of <a href="https://www.smartkarma.com/entities/cainiao-smart-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:36859:1" rel="noopener">Cainiao Smart Logistics (1437124D HK)</a> in the next 12 to 18 months. Alibaba holds a 67% stake in Cainiao. </li>
<li>Cainiao's revenue growth, while on a declining trend, remains in double digits. Encouragingly. narrowing losses set a path to profitability.</li>
<li>On 30 March, Bloomberg reported that Cainiao is currently valued at more than US$20 billion. Our valuation analysis suggests that such a valuation is justifiable.</li>
</ul>



Alibaba (ADR) (BABA US) aims to complete the IPO of Cainiao Smart Logistics (1437124D HK) in the next 12 to 18 months. Alibaba holds a 67% stake in Cainiao. 
Cainiao's revenue growth, while on a declining trend, remains in double digits. Encouragingly. narrowing losses set a path to profitability.
On 30 March, Bloomberg reported that Cainiao is currently valued at more than US$20 billion. Our valuation analysis suggests that such a valuation is justifiable.


HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The 1H23 result of <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> is unexciting as recurring profit contracted 9.8%. The decline has also accelerated to 13.5% in 2Q23, from just 4.6% in 1Q23. </li>
<li>Weak export (-14.5% YoY in Jul) and poor airfreight price (-45% YoY in Jul) did not bode well for profitability. The flattening of DHL-Sinotrans' contribution also limits earnings upside.</li>
<li>Valuations are inexpensive at 5.3x PER and 9% yield for FY23, but growth outlook is not encouraging. We think it is a good time to take money off the table.</li>
</ul>


The 1H23 result of Sinotrans (598 HK) is unexciting as recurring profit contracted 9.8%. The decline has also accelerated to 13.5% in 2Q23, from just 4.6% in 1Q23. 
Weak export (-14.5% YoY in Jul) and poor airfreight price (-45% YoY in Jul) did not bode well for profitability. The flattening of DHL-Sinotrans' contribution also limits earnings upside.
Valuations are inexpensive at 5.3x PER and 9% yield for FY23, but growth outlook is not encouraging. We think it is a good time to take money off the table.


Sinotrans (598 HK): Challenges Have Not Abated Yet

<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>, a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   </li>
<li>In <a href="https://www.smartkarma.com/insights/j-t-global-express-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:104964" rel="noopener">J&amp;T Global Express IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash burn and weak balance sheet.</li>
</ul>



J&amp;T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   
In J&amp;T Global Express IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash burn and weak balance sheet.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>, a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   </li>
<li>J&amp;T is the number one express delivery operator in Southeast Asia by parcel volume from 2020 to 2022, according to Frost &amp; Sullivan. </li>
<li>The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which set a path to profitability.</li>
</ul>



J&amp;T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   
J&amp;T is the number one express delivery operator in Southeast Asia by parcel volume from 2020 to 2022, according to Frost &amp; Sullivan. 
The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which set a path to profitability.


China

Sinotrans Limited provides integrated logistics services with core service of sea, air, rail and road freight forwarding, express services and shipping agency services.  The Company also provides support services of storage and terminal services, trucking and marine transportation services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Sinotrans (598 HK)

J&T Global Express IPO: Updates Tilts the Balance Positively

The PHIP filing favours the bull case due to a return to organic growth across the main geographies, maiden profitability, stabilization in...

Arun George

Alibaba’s Cainiao IPO: The First Look

Alibaba has submitted a listing plan to HKEx to spin-off Cainiao. After the spin-off, Alibaba will hold over 50% of outstanding shares. The share...

Arun George

Sinotrans (598 HK): Challenges Have Not Abated Yet

Weak export and poor airfreight price did not bode well for profitability. The flattening of DHL-Sinotrans' contribution limits earnings upside. It...

Osbert Tang, CFA

J&T Global Express IPO: The Bear Case

The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash...

Arun George

J&T Global Express IPO: The Bull Case

The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)