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

<div><p><a href="https://www.smartkarma.com/entities/dingdong-maicai" target="_blank" data-smartkarma-citation="entities:33461:1" rel="noopener">Dingdong Maicai (DDL US)</a> is an online grocery platform in China. The <em>Dingdong Fresh</em> mobile app and mini-programs enable Chinese consumer to shop online for groceries and other products. Dingdong notes that its market share in the on-demand e-commerce industry as measured by GMV (gross merchandise value) was 10.1% in 2020, according to CIC. Dingdong is backed by Shunwei China Internet Fund V (5.7% of outstanding shares), General Atlantic (5.6%), SoftBank Vision Fund (5.6%), CMC Capital (5.3%) and DST Asia (5.1%). </p></div><div><p>At the mid-point of the proposed IPO price range of $23.50-25.50 per ADS, Dingdong will have a market cap of $6.0 billion. At the mid-point of the IPO price range, the net proceeds are $314.9 million, below the rumoured $500 million raise target. Dingdong has received $200 million indications of interest from existing shareholders Aspex Master Fund ($50 million), Coatue ($50 million), SoftBank Vision Fund ($50 million) and Tiger Global ($500 million). </p></div><div><p>In <a href="https://www.smartkarma.com/insights/dingdong-ipo-initiation-an-arms-race-is-brewing" target="_blank" data-smartkarma-citation="insights:53334" rel="noopener">Dingdong IPO Initiation: An Arms Race Is Brewing</a>,  we stated that t<span>he current frenzy around the online grocery delivery market in China is reminiscent of the bike-sharing frenzy a few years.</span><span> The resulting arms race has led to specialists (such as Dingdong and <a href="https://www.smartkarma.com/entities/missfresh-limited" target="_blank" data-smartkarma-citation="entities:33468:1" rel="noopener">Missfresh (MF US)</a>), tech goliaths (<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>) and traditional offline stores (such as <a href="https://www.smartkarma.com/entities/wm-tech-corporation" target="_blank" data-smartkarma-citation="entities:32976:1" rel="noopener">WM Tech Corporation (WMT HK)</a>) reporting heavy losses for their online grocery segments in the quest to grab market share. </span><span>The online grocery delivery market is set for a shakeout which means that like bike-sharing, it will result in significant shareholder value destruction. We concluded that we would pass on the IPO and wait on the sidelines to see how this plays out.</span></p></div><div><div class="content-highlight"><p>Our valuation analysis suggests that Dingdong trades at attractive multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. The strong indications of interest suggest ongoing support from shareholders. While the fundamentals are less than ideal, the undemanding rating implied by the IPO price range offers a reasonable risk-reward profile. We think that Dingdong is worth a punt for investors seeking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform. </p></div></div><div><p><strong><em>For readers interested in peer</em></strong>, Missfresh, which also launched its Nasdaq IPO, we highlight our note - <a href="https://www.smartkarma.com/insights/missfresh-ipo-initiation-no-so-fresh" target="_blank" data-smartkarma-citation="insights:53139" rel="noopener">Missfresh IPO Initiation: No so Fresh</a>. WM Tech has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in <a href="https://www.smartkarma.com/insights/wm-tech-ipo-initiation-food-for-thought" target="_blank" data-smartkarma-citation="insights:49914" rel="noopener">WM Tech IPO Initiation: Food for Thought</a>. </p></div>

Dingdong Maicai (DDL US) is an online grocery platform in China. The Dingdong Fresh mobile app and mini-programs enable Chinese consumer to shop online for groceries and other products. Dingdong notes that its market share in the on-demand e-commerce industry as measured by GMV (gross merchandise value) was 10.1% in 2020, according to CIC. Dingdong is backed by Shunwei China Internet Fund V (5.7% of outstanding shares), General Atlantic (5.6%), SoftBank Vision Fund (5.6%), CMC Capital (5.3%) and DST Asia (5.1%). At the mid-point of the proposed IPO price range of $23.50-25.50 per ADS, Dingdong will have a market cap of $6.0 billion. At the mid-point of the IPO price range, the net proceeds are $314.9 million, below the rumoured $500 million raise target. Dingdong has received $200 million indications of interest from existing shareholders Aspex Master Fund ($50 million), Coatue ($50 million), SoftBank Vision Fund ($50 million) and Tiger Global ($500 million). In Dingdong IPO Initiation: An Arms Race Is Brewing,  we stated that the current frenzy around the online grocery delivery market in China is reminiscent of the bike-sharing frenzy a few years. The resulting arms race has led to specialists (such as Dingdong and Missfresh (MF US)), tech goliaths (Pinduoduo (PDD US) and Meituan (3690 HK)) and traditional offline stores (such as WM Tech Corporation (WMT HK)) reporting heavy losses for their online grocery segments in the quest to grab market share. The online grocery delivery market is set for a shakeout which means that like bike-sharing, it will result in significant shareholder value destruction. We concluded that we would pass on the IPO and wait on the sidelines to see how this plays out.Our valuation analysis suggests that Dingdong trades at attractive multiples (EV/Sales and growth adjusted EV/Sales) compared to its peers. The strong indications of interest suggest ongoing support from shareholders. While the fundamentals are less than ideal, the undemanding rating implied by the IPO price range offers a reasonable risk-reward profile. We think that Dingdong is worth a punt for investors seeking to play the first-day IPO pops or gain exposure to a pure-play online grocery delivery platform. For readers interested in peer, Missfresh, which also launched its Nasdaq IPO, we highlight our note - Missfresh IPO Initiation: No so Fresh. WM Tech has also filed for an HKEx IPO to raise potentially $1 billion, according to press reports. We discussed this in WM Tech IPO Initiation: Food for Thought. 

Full Truck Alliance   / Equity Capital Markets

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<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>
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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

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<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>
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<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>
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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.

Netherlands

Just Eat Takeaway.com N.V. is a Dutch multinational online food ordering and delivery company that operates as a global marketplace. It connects consumers with restaurant, grocery, and retail partners through its platforms, offering a wide variety of food choices and convenience products. The company is headquartered in Amsterdam, Netherlands, and was founded in 2000.

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Just Eat Takeaway (TKWY NA)

Dingdong IPO: Valuation Insights

The undemanding rating offers a reasonable risk-reward profile. Dingdong is worth a punt for investors seeking to play the first-day pops or gain...

Arun George

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

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