Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul>
<li>The government warned that Meituan should raise delivery workers’ benefits and reduce their workload.</li>
<li>The CEO quoted a poem on a social media and we believe all media reports misunderstand it.</li>
<li>We reduced the target price to HK$230.</li>
</ul>
Our previous coverage on Meituan:
<ul>
<li><a href="https://www.smartkarma.com/insights/meituan-3690-hk-forthcoming-punishment-will-benefit-alibaba" target="_blank" data-smartkarma-citation="insights:50794" rel="noopener">Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba</a></li>
<li>
<a href="https://www.smartkarma.com/insights/meituan-3690-hk-meituan-spending-money-but-agents-accumulating-customers-for-themselves" target="_blank" data-smartkarma-citation="insights:50118" rel="noopener">Meituan (3690 HK): Meituan Spending Money, But Agents Accumulating Customers for Themselves</a> </li>
</ul>


The government warned that Meituan should raise delivery workers’ benefits and reduce their workload.
The CEO quoted a poem on a social media and we believe all media reports misunderstand it.
We reduced the target price to HK$230.

Our previous coverage on Meituan:

Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba

Meituan (3690 HK): Meituan Spending Money, But Agents Accumulating Customers for Themselves 


Meituan (3690 HK): CEO's Poem, as Response to Authorities' Sweat Shop Warning, Could Be Disaster

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

International Games System / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/international-games-system-co-ltd" target="_blank" data-smartkarma-citation="entities:3486:1" rel="noopener">International Games System (3293 TT)</a> (IGS) is one of the leading social online gaming companies in Taiwan. IGS's core products include social casino games, casual games, and arcade games.Despite risks including declining sales of Arcade Games and potential regulatory risks associated with social casino online games, we believe many investors will focus on the positives and continue to add to their positions of this undervalued stock. Key catalysts of the company are as follows:<ul>
<li>Tremendous growth in online/mobile social casino &amp; casual games</li>
<li>Strong sales growth in Jan-Apr 2021 </li>
<li>Improving profit margins</li>
<li>High dividend payout</li>
</ul>

International Games System (3293 TT) (IGS) is one of the leading social online gaming companies in Taiwan. IGS's core products include social casino games, casual games, and arcade games.Despite risks including declining sales of Arcade Games and potential regulatory risks associated with social casino online games, we believe many investors will focus on the positives and continue to add to their positions of this undervalued stock. Key catalysts of the company are as follows:
Tremendous growth in online/mobile social casino &amp; casual games
Strong sales growth in Jan-Apr 2021 
Improving profit margins
High dividend payout


International Games System: An Undervalued Online Social Gaming Stock in Taiwan

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
On the 28 February, e-commerce and payment solutions provider <a href="https://www.smartkarma.com/entities/china-youzan-limited" target="_blank" data-smartkarma-citation="entities:11467:1" rel="noopener">China Youzan Limited (8083 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0228/2021022800069.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.
All in, the indicative Offer price was HK$2.3088/share, a 30.2% discount to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. 
In <a href="https://skr.ma/qgiJ9" target="_blank" rel="noopener">China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech</a>, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. 
On the 6  May, Disinterested Scheme Shareholders <a href="https://www1.hkexnews.hk/listedco/listconews/gem/2021/0506/2021050602278.pdf" target="_blank" rel="noopener">approved</a> at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. 
Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. 
This is starting to look more attractive.
</div>


On the 28 February, e-commerce and payment solutions provider China Youzan Limited (8083 HK) announced a pre-conditional Offer by way of a Scheme to take its GEM-listed shares private, then list 51.7%-held Youzan Technology on Hong Kong's mainboard. Shareholders are offered HK$0.1352/share in cash plus an in-specie distribution of 0.05077265 Youzan Technology shares for every China Youzan share held.
All in, the indicative Offer price was HK$2.3088/share, a 30.2% discount to last close. China Youzan was up 283% in the past year, and 44% YTD prior to the offer. 
In China Youzan (8083 HK): Proposal Towards Relisting Youzan Tech, I recommended avoiding the stock, with a view to re-entering if it closed in on the implied fair value using peer multiples, or ~HK$2.20/share. 
On the 6  May, Disinterested Scheme Shareholders approved at the First SGM a rollover arrangement and other side-agreements - not the take-private proposal as has been incorrectly reported by some media sources. The Scheme Document is expected to be posted on or before the 15 June. 
Shares closed today at $2.09/share, down 5.4%, and down 37% since the delisting proposal. 
This is starting to look more attractive.


China Youzan (8083 HK): Reality Check As Shares Rollover

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.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  Companies mentioned this week:<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/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</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>, <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  Companies mentioned this week:TSMC (2330 TT), Tencent (700 HK), Posco (005490 KS), China Mobile (941 HK), China Unicom Hong Kong (762 HK), China Telecom Corp Ltd (H) (728 HK)

Global Emerging Markets Weekly: 7 May 2021

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/ximalaya-inc" target="_blank" data-smartkarma-citation="entities:33232:1" rel="noopener">Ximalaya (XIMA US), which</a> is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, is getting ready to complete its IPO in the United States in the next several weeks. Ximalaya is the largest online audio platform in China in terms of MAU. <a href="https://www.reuters.com/technology/chinese-podcast-startup-ximalaya-files-us-ipo-2021-04-30/" target="_blank" rel="noopener">Ximalaya</a> was last valued at $3.7 billion in July 2018. The main underwriters of the IPO include Goldman Sachs, Morgan Stanley, BofA Securities, and CICC. The company generated sales of 4.1 billion RMB (up 51.3% YoY) and gross profit of 2.0 billion RMB (up 70.3% YoY). From 2018 to 2020, the company's sales increased by 65.7% CAGR. The company's sales continued to accelerate by 65.2% YoY in 1Q 2021. The increasing sales growth has been accompanied by improving profit margins.

Ximalaya (XIMA US), which is backed by Tencent (700 HK), is getting ready to complete its IPO in the United States in the next several weeks. Ximalaya is the largest online audio platform in China in terms of MAU. Ximalaya was last valued at $3.7 billion in July 2018. The main underwriters of the IPO include Goldman Sachs, Morgan Stanley, BofA Securities, and CICC. The company generated sales of 4.1 billion RMB (up 51.3% YoY) and gross profit of 2.0 billion RMB (up 70.3% YoY). From 2018 to 2020, the company's sales increased by 65.7% CAGR. The company's sales continued to accelerate by 65.2% YoY in 1Q 2021. The increasing sales growth has been accompanied by improving profit margins.

Ximalaya IPO Preview - Creating the Joe Rogans of China

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)

Meituan (3690 HK): CEO's Poem, as Response to Authorities' Sweat Shop Warning, Could Be Disaster

The government warned that Meituan should raise delivery workers’ benefits and reduce their workload. The CEO quoted a poem on a social media and...

Ming Lu

China Youzan (8083 HK): Reality Check As Shares Rollover

Buying China Youzan means you are buying the Youzan Tech IPO at an Implied EV/sales multiple. That's around a 10% premium to peers currently. The...

David Blennerhassett

Global Emerging Markets Weekly: 7 May 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Ximalaya IPO Preview - Creating the Joe Rogans of China

Ximalaya is the largest online audio platform in China which is getting ready to complete its IPO in the next several weeks.

Douglas Kim

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Meituan (3690 HK): CEO's Poem, as Response to Authorities' Sweat Shop Warning, Could Be Disaster

The government warned that Meituan should raise delivery workers’ benefits and reduce their workload. The CEO quoted a poem on a social media and...

Ming Lu

International Games System: An Undervalued Online Social Gaming Stock in Taiwan

International Games System (3293 TT) is high growth, social games provider in Taiwan that we believe is undervalued versus leading global social...

Douglas Kim

China Youzan (8083 HK): Reality Check As Shares Rollover

Buying China Youzan means you are buying the Youzan Tech IPO at an Implied EV/sales multiple. That's around a 10% premium to peers currently. The...

David Blennerhassett

Global Emerging Markets Weekly: 7 May 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Ximalaya IPO Preview - Creating the Joe Rogans of China

Ximalaya is the largest online audio platform in China which is getting ready to complete its IPO in the next several weeks.

Douglas Kim