APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

Dongguan Rural Commercial Bank / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/dongguan-rural-commercial-bank" target="_blank" data-smartkarma-citation="entities:34248:1" rel="noopener">Dongguan Rural Commercial Bank (DRCOBZ HK)</a> is looking to raise up to US$1.3bn in its Hong Kong IPO. </p><p>Dongguan Rural Commercial Bank (DRCB) is the fifth largest rural commercial bank in China by total assets as of Dec 2020, as per China Banking Association in 2021. As of the latest practicable date, the bank has 505 outlets, of which 501 are located in Dongguan city, covering all its administrative districts. The remaining four are located in Guangzhou, Zhuhai, Huizhou and Qingyuan, respectively. </p><p>Over FY18-20, the bank’s loans had expanded at a CAGR of 26.1%. During the period, net interest income and total income grew at 16.5% and 11% CAGR, respectively.</p><p>However, margin compression remains an overhang and the IPO valuation is at a premium versus peers, suggesting a huge downside risk potential.</p>

Dongguan Rural Commercial Bank (DRCOBZ HK) is looking to raise up to US$1.3bn in its Hong Kong IPO. Dongguan Rural Commercial Bank (DRCB) is the fifth largest rural commercial bank in China by total assets as of Dec 2020, as per China Banking Association in 2021. As of the latest practicable date, the bank has 505 outlets, of which 501 are located in Dongguan city, covering all its administrative districts. The remaining four are located in Guangzhou, Zhuhai, Huizhou and Qingyuan, respectively. Over FY18-20, the bank’s loans had expanded at a CAGR of 26.1%. During the period, net interest income and total income grew at 16.5% and 11% CAGR, respectively.However, margin compression remains an overhang and the IPO valuation is at a premium versus peers, suggesting a huge downside risk potential.

Dongguan Rural Commercial Bank IPO - Mind the Valuation Gap

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>Aukus makes a ruckus</li>
<li>Comprehensive and progressive? Sign us up.</li>
<li>Crackdowns leave China with no top ten firms </li>
<li>The red Shaanxi sun in our hearts</li>
<li>A nuclear revolution cranks up in the Gobi</li>
</ul><div class="content-remarks"><ul style="list-style-type: none;"><li><div>In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</div></li></ul></div>

China News That Matters
Aukus makes a ruckus
Comprehensive and progressive? Sign us up.
Crackdowns leave China with no top ten firms 
The red Shaanxi sun in our hearts
A nuclear revolution cranks up in the Gobi
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

<p>Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Sep 17.</p><p>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 741.4 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 520.1 million worth of buybacks), Xinyi Glass Holdings Limited (868 HK) (HKD 140.6 million worth of buybacks).</p>

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Sep 17.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 741.4 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 520.1 million worth of buybacks), Xinyi Glass Holdings Limited (868 HK) (HKD 140.6 million worth of buybacks).

Hong Kong Buybacks: Xiaomi and Tencent Led Weekly Buybacks

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<p>Following a period of exceptionally strong performance, driven by the stay-at-home culture during the onset of the COVID-19 pandemic in 2020, the Chinese online games market is again experiencing significant headwinds, not only from very tough comps but from a resurgence in regulatory pressure. Although this forms part of wider scrutiny on various facets of the Chinese tech industry (including online education, payment platforms, ridesharing, etc.) recent regulatory efforts have included a further tightening of regulation limiting youth gamers’ online access which has also now led to a delay in new games approvals. </p><p>This is very similar to what we saw in 2018 when, after an exceptionally strong 2017 revenue growth period, the Chinese government stepped up regulatory scrutiny specifically targeting youth gamers which ultimately led to a suspension of new games approvals from March 2018 until December 2018. </p><p>Given the material impact that recent regulatory approvals should have on revenue generation for <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, in this insight, I analyse the potential for negative revenue growth surprises, and further sell-side earnings downgrades, by comparing the current situation to that faced in 2018.</p>

Following a period of exceptionally strong performance, driven by the stay-at-home culture during the onset of the COVID-19 pandemic in 2020, the Chinese online games market is again experiencing significant headwinds, not only from very tough comps but from a resurgence in regulatory pressure. Although this forms part of wider scrutiny on various facets of the Chinese tech industry (including online education, payment platforms, ridesharing, etc.) recent regulatory efforts have included a further tightening of regulation limiting youth gamers’ online access which has also now led to a delay in new games approvals. This is very similar to what we saw in 2018 when, after an exceptionally strong 2017 revenue growth period, the Chinese government stepped up regulatory scrutiny specifically targeting youth gamers which ultimately led to a suspension of new games approvals from March 2018 until December 2018. Given the material impact that recent regulatory approvals should have on revenue generation for Tencent (700 HK) and NetEase (9999 HK), in this insight, I analyse the potential for negative revenue growth surprises, and further sell-side earnings downgrades, by comparing the current situation to that faced in 2018.

NetEase, Tencent: Risk of Negative Games Revenue Surprises Skewed to Tencent, Rather than NetEase

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<h2>Headline Developments</h2><p>The verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to third-party payment options, whilst ordering Epic to pay damages for violating Apple’s in-app purchasing system.</p>

Headline DevelopmentsThe verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to third-party payment options, whilst ordering Epic to pay damages for violating Apple’s in-app purchasing system.

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Dongguan Rural Commercial Bank IPO - Mind the Valuation Gap

Dongguan Rural Commercial Bank (DRCOBZ HK) is looking to raise up to US$1.3bn in its Hong Kong IPO. It is the fifth largest rural commercial bank...

Clarence Chu

AUKUS/ CPTPP/ Crackdowns/ CCP/ TMSR-LF1

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Hong Kong Buybacks: Xiaomi and Tencent Led Weekly Buybacks

We highlight that the top 3 companies that repurchased the most shares from the market were Xiaomi (1810 HK), Tencent (700 HK), and Xinyi Glass(868...

Ke Yan, CFA, FRM

NetEase, Tencent: Risk of Negative Games Revenue Surprises Skewed to Tencent, Rather than NetEase

In this insight, I analyse the potential for negative revenue growth surprises, and further earnings downgrades, for NetEase and Tencent, by...

Wium Malan, CFA

Weekly Innovation Review (WIRE) #49

The verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to...

Granite Bay Capital

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