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

Full Truck Alliance   / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a>, known as <em>Manbang</em> in China, is the world’s largest digital freight platform by gross transaction value (GTV) in 2020, according to CIC. FTA was formed in 2017 through the merger of <em>Yunmanman</em> and <em>Huochebang</em>, which were founded in 2013 and 2011, respectively. FTA is backed by SoftBank Vision Fund (22.2% of the outstanding shares), Sequoia Capital (7.2%), Hillhouse and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. </p>
<p>At the mid-point of the proposed IPO price range of $17.00-19.00 per ADS, FTA will have a market cap of $19.6 billion. FTA will also raise an additional $200 million in concurrent private placements to Ontario Teachers' Pension Plan Board and Mubadala Investment Company. At the mid-point of the IPO price range and including the concurrent private placement, the net proceeds are $1,620.7 million. FTA has received indications of interest from Fidelity ($100 million) and Invesco ($500 million). </p>
</div><div><p>In <a href="https://www.smartkarma.com/insights/full-truck-alliance-ipo-initiation-a-less-than-perfect-delivery" target="_blank" data-smartkarma-citation="insights:52399" rel="noopener">Full Truck Alliance IPO Initiation: A Less than Perfect Delivery</a>, we stated that at first sight, FTA recent results look stunning due to fast-paced growth, improving margin and cash generation. However, a closer look, suggests that FTA has less than ideal disclosure, a regulatory overhang and potential corporate governance issues. We concluded that we cannot recommend FTA wholeheartedly and inclined to watch this IPO unfold from the sidelines.   </p></div><div><div>
<div class="content-highlight"><p>Our valuation analysis suggests that FTA trades at frothy multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. On the other hand, the indications of interest and the concurrent placing with blue-chip investors suggest that the IPO price range is grounded in some logic. We think that the IPO pricing seems reasonable based on recent share repurchases and the PEG multiple. While the recent first-day pops suggest an awakening of IPO animal spirits, we remain uncomfortable in recommending FTA based on our previously highlighted concerns and a rich valuation. </p></div>
<p><em><strong>For readers interested in peer</strong></em>, <a href="https://www.smartkarma.com/entities/foru-worldwide-inc" target="_blank" data-smartkarma-citation="entities:33314:1" rel="noopener">ForU Worldwide (FOYO US)</a>, which also recently filed for a $500 million Nasdaq IPO, we highlight our note - <a href="https://www.smartkarma.com/insights/foru-worldwide-ipo-initiation-not-foru" target="_blank" data-smartkarma-citation="insights:51888" rel="noopener">ForU Worldwide IPO Initiation: Not ForU</a>  </p>
</div></div>


Full Truck Alliance (YMM US), known as Manbang in China, is the world’s largest digital freight platform by gross transaction value (GTV) in 2020, according to CIC. FTA was formed in 2017 through the merger of Yunmanman and Huochebang, which were founded in 2013 and 2011, respectively. FTA is backed by SoftBank Vision Fund (22.2% of the outstanding shares), Sequoia Capital (7.2%), Hillhouse and Tencent (700 HK). 
At the mid-point of the proposed IPO price range of $17.00-19.00 per ADS, FTA will have a market cap of $19.6 billion. FTA will also raise an additional $200 million in concurrent private placements to Ontario Teachers' Pension Plan Board and Mubadala Investment Company. At the mid-point of the IPO price range and including the concurrent private placement, the net proceeds are $1,620.7 million. FTA has received indications of interest from Fidelity ($100 million) and Invesco ($500 million). 
In Full Truck Alliance IPO Initiation: A Less than Perfect Delivery, we stated that at first sight, FTA recent results look stunning due to fast-paced growth, improving margin and cash generation. However, a closer look, suggests that FTA has less than ideal disclosure, a regulatory overhang and potential corporate governance issues. We concluded that we cannot recommend FTA wholeheartedly and inclined to watch this IPO unfold from the sidelines.   
Our valuation analysis suggests that FTA trades at frothy multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. On the other hand, the indications of interest and the concurrent placing with blue-chip investors suggest that the IPO price range is grounded in some logic. We think that the IPO pricing seems reasonable based on recent share repurchases and the PEG multiple. While the recent first-day pops suggest an awakening of IPO animal spirits, we remain uncomfortable in recommending FTA based on our previously highlighted concerns and a rich valuation. 
For readers interested in peer, ForU Worldwide (FOYO US), which also recently filed for a $500 million Nasdaq IPO, we highlight our note - ForU Worldwide IPO Initiation: Not ForU  


Full Truck Alliance IPO: Valuation Insights

<div>
<div><p><a href="https://www.smartkarma.com/entities/hello-inc" target="_blank" data-smartkarma-citation="entities:33031:1" rel="noopener">Hello Inc (1883864D US)</a>, which is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a>, is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as <em>Hello Bike</em> and <em>Hello e-Bike</em>. It also has a carpooling marketplace known as <em>Hello Carpooling</em>. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports.   </p></div>
<div>
<p>In <a href="https://www.smartkarma.com/insights/hello-ipo-initiation-goodbye" target="_blank" data-smartkarma-citation="insights:50795" rel="noopener">Hello IPO Initiation: Goodbye</a> we stated that Hello’s investor pitch is that its various businesses create a flywheel that drives user spending growth with limited user acquisition costs. However, Hello remains saddled with a core business (shared two-wheeler services) that has challenging prospects due to declining growth, low profitability and high cash burn.</p>
<div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hello-ipo-1q21-update-does-not-change-the-avoid-tag" target="_blank" data-smartkarma-citation="insights:51119" rel="noopener">Hello IPO: 1Q21 Update Does Not Change the Avoid Tag</a>, we noted that at first glance, the 1Q21 update looks stunning due to accelerating growth and margin progression. However, a closer look, suggests that business continues to face daunting challenges. In this note, we present our forecasts and take the first look at Hello's potential valuation range. </p></div>
</div>
</div>


Hello Inc (1883864D US), which is backed by Ant Financial Services Group (6688 HK), is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as Hello Bike and Hello e-Bike. It also has a carpooling marketplace known as Hello Carpooling. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports.   

In Hello IPO Initiation: Goodbye we stated that Hello’s investor pitch is that its various businesses create a flywheel that drives user spending growth with limited user acquisition costs. However, Hello remains saddled with a core business (shared two-wheeler services) that has challenging prospects due to declining growth, low profitability and high cash burn.
In Hello IPO: 1Q21 Update Does Not Change the Avoid Tag, we noted that at first glance, the 1Q21 update looks stunning due to accelerating growth and margin progression. However, a closer look, suggests that business continues to face daunting challenges. In this note, we present our forecasts and take the first look at Hello's potential valuation range. 



Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>One of London’s most anticipated tech IPOs in recent history, <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (ROO LN)</a>, tumbled 26.3% on first day after pricing its shares at £3.90 per share, at bottom end of the lowered IPO price range. The share price went down to £2.71 per share in early trading before eventually ending the day at £2.87 per share.</p><p>Deliveroo managed to narrow losses last year, however if Deliveroo is requested to treat its riders as employees, all that could be easily undone. Therefore, we expect shares to remain under pressure medium term with additional pressure from retail selling towards mid next week as shares bought via the Deliveroo app becomes tradable from 7<sup>th</sup> April.</p>

One of London’s most anticipated tech IPOs in recent history, Deliveroo (ROO LN), tumbled 26.3% on first day after pricing its shares at £3.90 per share, at bottom end of the lowered IPO price range. The share price went down to £2.71 per share in early trading before eventually ending the day at £2.87 per share.Deliveroo managed to narrow losses last year, however if Deliveroo is requested to treat its riders as employees, all that could be easily undone. Therefore, we expect shares to remain under pressure medium term with additional pressure from retail selling towards mid next week as shares bought via the Deliveroo app becomes tradable from 7th April.

Deliveroo IPO First Day Trading: Too Risky to Hold Long Term

Independent Research, Food Delivery Space, Newmoon Capital

Newmoon Capital

Independent Research, Food Delivery Space

We look for owner-operators in what we believe are either highly defensible assets or soon to be highly defensible assets, trading at a fraction of their future potential.

Private Capital Markets

<p>£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective. Also, existing investors which include Will Shu will be selling OVER £600mn shares.</p>

£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective. Also, existing investors which include Will Shu will be selling OVER £600mn shares.

<p>Roofoods Ltd, the company behind the on-demand food delivery service <a href="https://www.smartkarma.com/entities/roofoods-ltd" target="_blank" data-smartkarma-citation="entities:27468:1" rel="noopener">Deliveroo (1022770D LN)</a>, plans to raise around £1.0bn ($1.4bn) via an IPO on the London Stock Exchange over the next few weeks. The company had a private market valuation of $7.0bn in July last year, and various media reports suggests that the valuation could increase by about $3.0bn to $10.0bn following the IPO.</p><p>The food delivery industry’s medium to long term growth potential may not concern investors for now, but the competition and the lack of profitability might become a big concern, especially if the current tech bubble bursts anytime soon.</p><p>Deliveroo made a net loss of £226.4m in 2020, which is about 19.0% of revenue compared to <a href="https://www.smartkarma.com/entities/just-eat-takeaway-908587b0-d4c9-488a-801b-2910cf29e24b" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Just Eat Takeaway (TKWY NA)</a>’s 2020 net loss of €151.0m (£129.9m) and net margin of -7.4%.</p><p>We see Deliveroo’s path to profitability being blocked by excessive competition. Therefore, we are not 100% confident on Deliveroo’s business model to consider it as a as a long-term investment. That said, all these recent high profile tech IPOs had excellent stock market debuts. If priced decently, it is difficult to think that a famous IPO like Deliveroo will not provide similar upside on trading debut.</p>

Roofoods Ltd, the company behind the on-demand food delivery service Deliveroo (1022770D LN), plans to raise around £1.0bn ($1.4bn) via an IPO on the London Stock Exchange over the next few weeks. The company had a private market valuation of $7.0bn in July last year, and various media reports suggests that the valuation could increase by about $3.0bn to $10.0bn following the IPO.The food delivery industry’s medium to long term growth potential may not concern investors for now, but the competition and the lack of profitability might become a big concern, especially if the current tech bubble bursts anytime soon.Deliveroo made a net loss of £226.4m in 2020, which is about 19.0% of revenue compared to Just Eat Takeaway (TKWY NA)’s 2020 net loss of €151.0m (£129.9m) and net margin of -7.4%.We see Deliveroo’s path to profitability being blocked by excessive competition. Therefore, we are not 100% confident on Deliveroo’s business model to consider it as a as a long-term investment. That said, all these recent high profile tech IPOs had excellent stock market debuts. If priced decently, it is difficult to think that a famous IPO like Deliveroo will not provide similar upside on trading debut.

Deliveroo IPO: Plagued With Intense Competition

United Kingdom

Just Eat Takeaway.com N.V. is an online food ordering company. The Company offers mobile application for ordering and delivering of food and beverages. Just Eat Takeaway.com serves customers worldwide.

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

Just Eat Takeaway.com NV (TKWY NA)

Full Truck Alliance IPO: Valuation Insights

While the recent first-day pops suggest an awakening of IPO animal spirits, we remain uncomfortable in recommending FTA based on our previously...

Arun George

Hello IPO: Valuation First Look

Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports. In this note, we present our forecasts and take the...

Arun George

Deliveroo IPO First Day Trading: Too Risky to Hold Long Term

If Deliveroo is requested to treat its riders as employees, the company's path to profitability is going to get impaired significantly. Therefore,...

Oshadhi Kumarasiri

Deliveroo part 7 - Valuation

£8bn at the mid-point… that’s pretty high. That prices the company on a much higher valuation than $DASH on a comparable accounting perspective

Newmoon Capital

Deliveroo IPO: Plagued With Intense Competition

Deliveroo’s track record regarding its financial discipline is not that great. The company has raised around £0.9bn over seven funding rounds...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)