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

RLX Technology Inc / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p></div><div><p>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</p></div><div><p>Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.</p></div><div><p>However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.</p></div><div><p>In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, we'll run the deal through our ECM framework and comment on updates in the new filing.</p></div><div><p><strong>Links to our previous notes:</strong></p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-peer-comparison-and-valuation" target="_blank" rel="noopener">RLX Technology Pre-IPO - Peer Comparison and Valuation</a></li>
</ul></div>

RLX Technology Inc (RLX US) aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, we'll run the deal through our ECM framework and comment on updates in the new filing.Links to our previous notes:

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
RLX Technology Pre-IPO - Peer Comparison and Valuation


RLX Technology IPO - Valuation Has More than Doubled in Two Months

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, <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>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>. Shorts increased on Real Estate, Consumer Discretionary, Consumer Staples and Materials, and decreased on Financials , Information Technology, Health Care and Communication Services.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a>, <a href="https://www.smartkarma.com/entities/seiko-epson-corp" target="_blank" data-smartkarma-citation="entities:16793:1" rel="noopener">Seiko Epson (6724 JP)</a> and <a href="https://www.smartkarma.com/entities/bank-of-kyoto-ltd" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank Of Kyoto (8369 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/ana-holdings-inc" target="_blank" data-smartkarma-citation="entities:5308:1" rel="noopener">Ana Holdings (9202 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> and <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>. Sectorally, shorts increased on Information Technology and Financials, while decreasing on Consumer Discretionary,  Industrials, Consumer Staples and Real Estate.</p></div><div><p>In Korea, there were short positions put on in <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/s-oil-corp" target="_blank" data-smartkarma-citation="entities:1667:1" rel="noopener">S Oil Corp (010950 KS)</a>, <a href="https://www.smartkarma.com/entities/mirae-asset-daewoo-co-ltd-b50c4d95-1687-46cb-9b58-f79ce0e72670" target="_blank" data-smartkarma-citation="entities:12061:1" rel="noopener">Mirae Asset Daewoo (006800 KS)</a>, <a href="https://www.smartkarma.com/entities/hanwha-life-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:2163:1" rel="noopener">Hanwha Life Insurance (088350 KS)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/foxconn-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:11950:1" rel="noopener">Foxconn Technology (2354 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a> and <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a> and <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Smoore International (6969 HK), Tencent Holdings (700 HK), JD.com (HK) (9618 HK) and Haidilao (6862 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), China Mobile (941 HK) and HSBC Holdings (5 HK). Shorts increased on Real Estate, Consumer Discretionary, Consumer Staples and Materials, and decreased on Financials , Information Technology, Health Care and Communication Services.In Japan, stocks that saw the most shorts were Itochu Corp (8001 JP), Trend Micro Inc (4704 JP), Seiko Epson (6724 JP) and Bank Of Kyoto (8369 JP) while shorts decreased on Honda Motor (7267 JP), Ana Holdings (9202 JP), Kao Corp (4452 JP) and Kubota Corp (6326 JP). Sectorally, shorts increased on Information Technology and Financials, while decreasing on Consumer Discretionary,  Industrials, Consumer Staples and Real Estate.In Korea, there were short positions put on in Samsung Electronics (005930 KS), Hyundai Motor Co (005380 KS), Kakao Corp (035720 KS) and LG Display (034220 KS) while shorts were covered in S Oil Corp (010950 KS), Mirae Asset Daewoo (006800 KS), Hanwha Life Insurance (088350 KS) and Doosan Infracore (042670 KS). Stocks in Taiwan that saw the highest increase in shorts were Pegatron Corp (4938 TT), Foxconn Technology (2354 TT), Yageo Corporation (2327 TT) and Unimicron Technology (3037 TT) while shorts were covered on United Microelectronics Corp (2303 TT), TSMC (2330 TT), Evergreen Marine Corp (2603 TT) and Delta Electronics (2308 TT).

Asia Short Interest: Smoore, JD, SMIC, China Mobile, Itochu, Honda, Ana, Samsung, Pegatron, TSMC

<p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p><p>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</p><p>Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.</p><p>However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.</p><p>In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, I’ll undertake a peer comparison and talk about valuation.</p><div><p>Links to our previous notes:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
</ul></div>

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings, leaving one to wonder where these operations are housed and who exactly owns them.In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, I’ll undertake a peer comparison and talk about valuation.Links to our previous notes:

RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors


RLX Technology Pre-IPO - Peer Comparison and Valuation

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<p>Relx Technology aims to raise around US$1bn in its US IPO.</p>
<ul>
<li>We visited electronic cigarette (e-cig) stores of Relx, Vazo, Yooz, and Moti.</li>
<li>We conclude that the price of Relx-Classic, RMB299, is the benchmark of the e-cig market.</li>
<li>Relx has the largest market share because of its store number.</li>
<li>Vazo discounts its prices to be closer to Relx-Classic.</li>
<li>Yooz and Moti keep about RMB50~60 below Relx-Classic.</li>
</ul>
<p>We have covered the basic background of the company in our earlier insights:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/smoore-pre-ipo-on-the-ground-visit-revealed-five-risks-in-china-market" target="_blank" data-smartkarma-citation="insights:34166" rel="noopener">Smoore (麦克韦尔) Pre-IPO: On-The-Ground Visit Revealed Five Risks in China Market</a></li>
</ul>

Relx Technology aims to raise around US$1bn in its US IPO.

We visited electronic cigarette (e-cig) stores of Relx, Vazo, Yooz, and Moti.
We conclude that the price of Relx-Classic, RMB299, is the benchmark of the e-cig market.
Relx has the largest market share because of its store number.
Vazo discounts its prices to be closer to Relx-Classic.
Yooz and Moti keep about RMB50~60 below Relx-Classic.

We have covered the basic background of the company in our earlier insights:


RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
Smoore (麦克韦尔) Pre-IPO: On-The-Ground Visit Revealed Five Risks in China Market


RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors

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.

<p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> is the leading branded e-vapour company in China with a 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. It is seeking is raise as much as $1 billion through an NYSE IPO, according to press reports.</p><p>In <a href="https://www.smartkarma.com/insights/rlx-technology-ipo-initiation-smoke-signals" target="_blank" data-smartkarma-citation="insights:46758" rel="noopener">RLX Technology IPO Initiation: Smoke Signals</a>, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. Investors can also gain exposure to this secular growth trend through <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, which has stormed ahead around 5x from its IPO price.</p><div class="content-highlight"><p>In this note, we compare RLX and Smoore’s business model and fundamentals. Subject to the proposed IPO price range, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability, in our view. </p></div>

RLX Technology Inc (RLX US) is the leading branded e-vapour company in China with a 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. It is seeking is raise as much as $1 billion through an NYSE IPO, according to press reports.In RLX Technology IPO Initiation: Smoke Signals, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. Investors can also gain exposure to this secular growth trend through Smoore International (6969 HK), which has stormed ahead around 5x from its IPO price.In this note, we compare RLX and Smoore’s business model and fundamentals. Subject to the proposed IPO price range, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability, in our view. 

RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?

China

Smoore International is a global leader in atomization technology solutions, specializing in the research, design, and manufacturing of vaping devices, components, and heat-not-burn products for corporate clients and under its own brands like Vaporesso and FEELM. The company also develops beauty atomization products. Headquartered in Shenzhen, China, Smoore International was founded in 2009.

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Smoore International (6969 HK)

RLX Technology IPO - Valuation Has More than Doubled in Two Months

RLX Technology (RLX US) aims to raise around US$1.1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

Asia Short Interest: Smoore, JD, SMIC, China Mobile, Itochu, Honda, Ana, Samsung, Pegatron, TSMC

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

RLX Technology Pre-IPO - Peer Comparison and Valuation

RLX Technology (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors

We visited electronic cigarette stores of Relx, Vazo, Yooz, and Moti in Shanghai. We conclude that the price of Relx-Classic, RMB299, is the...

Ming Lu

RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?

We compare RLX and Smoore’s business model and fundamentals. Investors largely face a trade-off between RLX’s high growth and lower reg risk vs...

Arun George

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