Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<div class="content-highlight">
<p>The Asian OTT sector is one of the most attractive industries to be in the next five years. In this report, we highlight numerous major potential winners and discuss some of the most important factors impacting the OTT sector in Asia. There are three crucial trends that will impact the Asian OTT sector:</p>
<ul>
<li>A surging growth of 5G services</li>
<li>Increased consolidations and partnerships especially among the global OTTs and local content providers/OTTs</li>
<li>Greater spending on higher quality contents in efforts to improve consumer retention</li>
</ul>
<p><strong>The main purpose of this report is as follows:</strong></p>
<ul>
<li>Identify the major players (both public &amp; private) in the OTT sector in Asia</li>
<li>Specify the key trends driving the Asian OTT industry</li>
<li>Provide an initial overview of the key companies in the Asian OTT industry</li>
</ul>
</div>


The Asian OTT sector is one of the most attractive industries to be in the next five years. In this report, we highlight numerous major potential winners and discuss some of the most important factors impacting the OTT sector in Asia. There are three crucial trends that will impact the Asian OTT sector:

A surging growth of 5G services
Increased consolidations and partnerships especially among the global OTTs and local content providers/OTTs
Greater spending on higher quality contents in efforts to improve consumer retention

The main purpose of this report is as follows:

Identify the major players (both public &amp; private) in the OTT sector in Asia
Specify the key trends driving the Asian OTT industry
Provide an initial overview of the key companies in the Asian OTT industry



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/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 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/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> while there was short covering 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/gcl-poly-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:3708:1" rel="noopener">Gcl Poly Energy Holdings Limited (3800 HK)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>. Shorts increased on Consumer Discretionary, Communication Services, Financials, Consumer Staples and Industrials, while decreasing on Information Technology, Real Estate and Health Care.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/olympus-corp" target="_blank" data-smartkarma-citation="entities:356:1" rel="noopener">Olympus Corp (7733 JP)</a>, <a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a>, <a href="https://www.smartkarma.com/entities/nomura-holdings-inc" target="_blank" data-smartkarma-citation="entities:742:1" rel="noopener">Nomura Holdings (8604 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a> and <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix Holdings (9684 JP)</a>. Sectorally, shorts increased on Financials, Industrials and Health Care, while decreasing on Information Technology and Consumer Discretionary.</p></div><div><p>In Korea, there were short positions put on in <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>, <a href="https://www.smartkarma.com/entities/gs-engineering-construct" target="_blank" data-smartkarma-citation="entities:15916:1" rel="noopener">GS Engineering &amp; Construction (006360 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/hyundai-mobis-co-ltd" target="_blank" data-smartkarma-citation="entities:6089:1" rel="noopener">Hyundai Mobis (012330 KS)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" data-smartkarma-citation="entities:22932:1" rel="noopener">Samsung Biologics Co., (207940 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>. </p></div><div>
<p>Stocks in Taiwan that saw the highest increase in shorts were <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/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/e-sun-financial-holding-co" target="_blank" data-smartkarma-citation="entities:719:1" rel="noopener">E.Sun Financial Holding Co (2884 TT)</a> and <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> while shorts were covered on <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>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a> and <a href="https://www.smartkarma.com/entities/ase-technology-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:27270:1" rel="noopener">ASE Technology Holding Co Ltd (3711 TT)</a>.</p>
<p>Following the <a href="https://www.smartkarma.com/entities/gamestop-corp-class-a" target="_blank" data-smartkarma-citation="entities:13790:1" rel="noopener">GameStop Corp Class A (GME US)</a> saga, we have added tables in each market with the largest stocks in terms of days of ADV to cover.</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 BYD (1211 HK), Meituan (3690 HK), Tencent Holdings (700 HK), Alibaba Group (9988 HK) and HKEX (388 HK) while there was short covering on Smoore International (6969 HK), Gcl Poly Energy Holdings Limited (3800 HK), Innovent Biologics Inc (1801 HK), Sunny Optical (2382 HK) and Xiaomi Corp (1810 HK). Shorts increased on Consumer Discretionary, Communication Services, Financials, Consumer Staples and Industrials, while decreasing on Information Technology, Real Estate and Health Care.In Japan, stocks that saw the most shorts were Olympus Corp (7733 JP), Dai Ichi Life Insurance (8750 JP), Nomura Holdings (8604 JP) and Mitsubishi UFJ Financial (MUFG) (8306 JP) while shorts decreased on Anritsu Corp (6754 JP), Lasertec Corp (6920 JP), Sharp Corp (6753 JP) and Square Enix Holdings (9684 JP). Sectorally, shorts increased on Financials, Industrials and Health Care, while decreasing on Information Technology and Consumer Discretionary.In Korea, there were short positions put on in LG Display (034220 KS), GS Engineering &amp; Construction (006360 KS), LG Chem Ltd (051910 KS) and Hyundai Mobis (012330 KS) while shorts were covered in Netmarble Corporation (251270 KS), Samsung Biologics Co., (207940 KS), Celltrion Inc (068270 KS) and Kakao Corp (035720 KS). 
Stocks in Taiwan that saw the highest increase in shorts were United Microelectronics Corp (2303 TT), Innolux Corp (3481 TT), E.Sun Financial Holding Co (2884 TT) and TSMC (2330 TT) while shorts were covered on Evergreen Marine Corp (2603 TT), Acer Inc (2353 TT), Pegatron Corp (4938 TT) and ASE Technology Holding Co Ltd (3711 TT).
Following the GameStop Corp Class A (GME US) saga, we have added tables in each market with the largest stocks in terms of days of ADV to cover.


Asia Short Interest: BYD, Smoore, GCL Poly, Olympus, Nomura, Anritsu, Netmarble, UMC, Innolux, Acer

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

Topsports International Holdings / Equity Capital Markets

<div>
<p>CDH aims to raise around US$236m via selling a 2.3% stake in <a href="https://www.smartkarma.com/entities/topsports-international" target="_blank" data-smartkarma-citation="entities:28153:1" rel="noopener">Topsports International (6110 HK)</a>. This will be the second selldown in the company in a span of 7 months. </p>
<p>We had covered the previous placement in Jun 2020 as well, <a href="https://www.smartkarma.com/insights/topsports-placement-parent-selling-but-discount-is-enticing-at-the-low-end" target="_blank" rel="noopener">Topsports Placement - Parent Selling but Discount Is Enticing at the Low-End.</a></p>
</div><div>
<p>I've covered various aspects of the company in my earlier insights, links to which are below. In this insight, I'll talk about the deal dynamics.</p>
<p></p>
</div><div><p>Links to my earlier insights:</p></div><div><ul style="list-style-type: disc;">
<li>The company's fundamentals and some of the related party issues: <a href="https://www.smartkarma.com/insights/topsports-international-holdings-pre-ipo-performing-well-but-all-proceeds-will-likely-go-to-belle" target="_blank" rel="noopener">Topsports International Holdings Pre-IPO - Performing Well but All Proceeds Will Likely Go to Belle</a>
</li>
<li>Historic growth and its implication for current operations: <a href="https://www.smartkarma.com/insights/topsports-international-pre-ipo-history-has-a-lot-to-tell-about-growth-and-margins" target="_blank" rel="noopener">Topsports International Pre-IPO - History Has a Lot to Tell About Growth and Margins</a>
</li>
<li>Compared the company's reported growth numbers with those of its two principal brands: <a href="https://www.smartkarma.com/entities/nike-inc-cl-b" target="_blank" data-smartkarma-citation="entities:6658:1" rel="noopener">Nike Inc Cl B (NKE US)</a> and <a href="https://www.smartkarma.com/entities/adidas-ag" target="_blank" data-smartkarma-citation="entities:21578:1" rel="noopener">adidas AG (ADS GR)</a>: <a href="https://www.smartkarma.com/insights/topsports-pre-ipo-quick-take-nike-adidas-data-throws-up-some-interesting-nuggets" target="_blank" rel="noopener">Topsports Pre-IPO - Quick Take - Nike &amp; Adidas Data Throws up Some Interesting Nuggets</a>
</li>
<li>Compared the company's performance with that of its main listed peer:  <a href="https://www.smartkarma.com/insights/topsports-pre-ipo-way-ahead-of-its-peer-on-most-counts" target="_blank" rel="noopener">Topsports Pre-IPO - Way Ahead of Its Peer on Most Counts</a>
</li>
<li>Commented on earnings outlook and valuation: <a href="https://www.smartkarma.com/insights/topsports-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">Topsports Pre-IPO - Thoughts on Valuation</a>
</li>
<li>Updates from PHIP: <a href="https://www.smartkarma.com/insights/topsports-pre-ipo-phip-not-very-encouraging-updates-shifting-more-towards-adidas" target="_blank" rel="noopener">Topsports Pre-IPO - PHIP (Not Very Encouraging) Updates - Shifting More Towards Adidas</a>
</li>
<li>Comments on IPO price range: <a href="https://www.smartkarma.com/insights/topsports-international-ipo-looks-reasonable-towards-the-lower-end" target="_blank" rel="noopener">Topsports International IPO - Looks Reasonable Towards the Lower End</a>
</li>
<li>IPO trading update: <a href="https://www.smartkarma.com/insights/topsports-international-ipo-trading-cheap-at-the-ipo-price" target="_blank" rel="noopener">Topsports International IPO Trading - Cheap at the IPO Price</a>
</li>
<li>1H Results: <a href="https://www.smartkarma.com/insights/topsports-international-ipo-trading-1h-results-inline-but-not-very-encouraging-results" target="_blank" rel="noopener">Topsports International IPO Trading - 1H Results - Inline but Not Very Encouraging Results</a>
</li>
<li>Lock-up expiry: <a href="https://www.smartkarma.com/insights/topsports-lock-up-hasn-t-corrected-as-much-watch-out-for-the-debt-at-parent-level" target="_blank" rel="noopener">Topsports Lock-Up - Hasn’t Corrected as Much, Watch Out for the Debt at Parent Level</a>
</li>
<li>Update on Implication from Nike Results: <a href="https://www.smartkarma.com/insights/topsports-nike-results-are-encouraging-for-the-short-term-but-not-so-for-the-long-term" target="_blank" rel="noopener">Topsports - Nike Results Are Encouraging for the Short-Term but Not so for the Long Term</a>
</li>
<li>Placement in Jun 2020: <a href="https://www.smartkarma.com/insights/topsports-placement-parent-selling-but-discount-is-enticing-at-the-low-end" target="_blank" rel="noopener">Topsports Placement - Parent Selling but Discount Is Enticing at the Low-End</a>
</li>
</ul></div>


CDH aims to raise around US$236m via selling a 2.3% stake in Topsports International (6110 HK). This will be the second selldown in the company in a span of 7 months. 
We had covered the previous placement in Jun 2020 as well, Topsports Placement - Parent Selling but Discount Is Enticing at the Low-End.

I've covered various aspects of the company in my earlier insights, links to which are below. In this insight, I'll talk about the deal dynamics.

Links to my earlier insights:
The company's fundamentals and some of the related party issues: Topsports International Holdings Pre-IPO - Performing Well but All Proceeds Will Likely Go to Belle

Historic growth and its implication for current operations: Topsports International Pre-IPO - History Has a Lot to Tell About Growth and Margins

Compared the company's reported growth numbers with those of its two principal brands: Nike Inc Cl B (NKE US) and adidas AG (ADS GR): Topsports Pre-IPO - Quick Take - Nike &amp; Adidas Data Throws up Some Interesting Nuggets

Compared the company's performance with that of its main listed peer:  Topsports Pre-IPO - Way Ahead of Its Peer on Most Counts

Commented on earnings outlook and valuation: Topsports Pre-IPO - Thoughts on Valuation

Updates from PHIP: Topsports Pre-IPO - PHIP (Not Very Encouraging) Updates - Shifting More Towards Adidas

Comments on IPO price range: Topsports International IPO - Looks Reasonable Towards the Lower End

IPO trading update: Topsports International IPO Trading - Cheap at the IPO Price

1H Results: Topsports International IPO Trading - 1H Results - Inline but Not Very Encouraging Results

Lock-up expiry: Topsports Lock-Up - Hasn’t Corrected as Much, Watch Out for the Debt at Parent Level

Update on Implication from Nike Results: Topsports - Nike Results Are Encouraging for the Short-Term but Not so for the Long Term

Placement in Jun 2020: Topsports Placement - Parent Selling but Discount Is Enticing at the Low-End



Topsports Placement - Previous Deal Didn't Do Well, More to Come

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Equity Bottom-Up

<p>Since their last reported fair value (3Q20) <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>’s listed investees have continued their meteoric share price rise which, along with the <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> IPO, have helped propel Tencent to be one of the top-performing Global Emerging Market shares in the short period we have had year-to-date. </p>
<p>Given the meteoric rise in Tencent’s share price, the continued extremely bullish market sentiment around the sector, the continued sharp share price appreciation of their main listed investees, as well as the likely impact of the Kuaishou listing on their aggregate fair value, in this insight, I have updated my analysis on the impact of Tencent’s listed associates on the implied valuation of Tencent’s consolidated operations.</p>

Since their last reported fair value (3Q20) Tencent Holdings (700 HK)’s listed investees have continued their meteoric share price rise which, along with the Kuaishou Technology (1024 HK) IPO, have helped propel Tencent to be one of the top-performing Global Emerging Market shares in the short period we have had year-to-date. 
Given the meteoric rise in Tencent’s share price, the continued extremely bullish market sentiment around the sector, the continued sharp share price appreciation of their main listed investees, as well as the likely impact of the Kuaishou listing on their aggregate fair value, in this insight, I have updated my analysis on the impact of Tencent’s listed associates on the implied valuation of Tencent’s consolidated operations.

Tencent: An Update on Investees and the Implied Valuation of Consolidated Operations

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<p>Alot of handwringing on the Facebook conference call about tough 2H20 comps and the big "Apple IDFA Overhang"...we think the lady doth protest too much. Facebook will be just fine, and at 14x forward EBITDA for ~20% EBITDA growth, its one of the most compelling values in TMT.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Alot of handwringing on the Facebook conference call about tough 2H20 comps and the big "Apple IDFA Overhang"...we think the lady doth protest too much. Facebook will be just fine, and at 14x forward EBITDA for ~20% EBITDA growth, its one of the most compelling values in TMT.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Facebook 4Q20: Trying to Take a Bite Out of the Apple

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)

Asian OTT Wars

The Asian OTT sector is one of the most attractive industries to be in the next five years. In this Smartkarma Original, we discuss some of the...

Douglas Kim

Asia Short Interest: BYD, Smoore, GCL Poly, Olympus, Nomura, Anritsu, Netmarble, UMC, Innolux, Acer

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

Topsports Placement - Previous Deal Didn't Do Well, More to Come

CDH aims to raise around US$236m via selling a 2.3% stake in Topsports International (6110 HK). This will be the second selldown in the company in...

Sumeet Singh

Tencent: An Update on Investees and the Implied Valuation of Consolidated Operations

In this insight, I account for the increase in fair value of Tencent’s investees, including the Kuaishou IPO, which indicates that consolidated...

Wium Malan, CFA

Facebook 4Q20: Trying to Take a Bite Out of the Apple

Facebook printed a extremely strong quarter and commentary regarding potential overhangs from Apple and tough comps is just Facebook talking down...

Aaron Gabin

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