Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>The IPO for <a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services Holdings (1516 HK)</a> ("SSH"), the latest property management service company to seek listing, is open for applications. The Offer Price is expected to be announced on the 18 November, with the commencement of trading in the shares on the 19 November.</p>
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<p>SSH is the spin-off of <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a>, who will own 72% in SSH after the IPO, down from 100% prior to a recent capitalisation.</p>
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<p>As with <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>, and <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a>, SSH's punchy implied PER is, to some degree, supported by its strong growth (and absolute size), although on a FY20E (LTM) metric, SSH's valuation is only surpassed by <a href="https://www.smartkarma.com/entities/ever-sunshine-lifestyle-services-group-limited" target="_blank" data-smartkarma-citation="entities:28932:1" rel="noopener">Ever Sunshine Lifestyle Services (1995 HK)</a>.</p>
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<p>Sunac China, on the other hand, is expensive when de-consolidating out the implied market cap of SSH.</p>
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<p>More below the fold. </p>
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The IPO for Sunac Services Holdings (1516 HK) ("SSH"), the latest property management service company to seek listing, is open for applications. The Offer Price is expected to be announced on the 18 November, with the commencement of trading in the shares on the 19 November.


SSH is the spin-off of Sunac China Holdings (1918 HK), who will own 72% in SSH after the IPO, down from 100% prior to a recent capitalisation.


As with KWG Living Group (3913 HK), and Shimao Services Holdings (873 HK), SSH's punchy implied PER is, to some degree, supported by its strong growth (and absolute size), although on a FY20E (LTM) metric, SSH's valuation is only surpassed by Ever Sunshine Lifestyle Services (1995 HK).


Sunac China, on the other hand, is expensive when de-consolidating out the implied market cap of SSH.


More below the fold. 


Sunac Services (1516 HK): Lofty Metrics In A Congested Space

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

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<li>We believe the new law will slow down the expansion of the lending business related to e-commerce companies.</li>
<li>iQiyi (IQ) announced it would raise the membership fees.</li>
<li>Tencent Music (TME) signed a contract for exclusively using Peer Music’s copyrights in China.</li>
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We believe the new law will slow down the expansion of the lending business related to e-commerce companies.
iQiyi (IQ) announced it would raise the membership fees.
Tencent Music (TME) signed a contract for exclusively using Peer Music’s copyrights in China.


China Internet Weekly (9Nov2020): New Law on Online Small Amount Lending

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

New Oriental Education & Techn / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/new-oriental-education-tech-grp-adr" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education (EDU US)</a> raised around US$1.5bn in its secondary listing in Hong Kong.</p></div><div><p>I have covered the background of the deal in my earlier insight, <a href="https://www.smartkarma.com/insights/new-oriental-hong-kong-secondary-might-be-relatively-small" target="_blank" rel="noopener">New Oriental Hong Kong Secondary - Might Be Relatively Small.</a></p></div><div><p>In this note, I'll talk about the deal dynamics and updates over the past week.</p></div>

New Oriental Education (EDU US) raised around US$1.5bn in its secondary listing in Hong Kong.I have covered the background of the deal in my earlier insight, New Oriental Hong Kong Secondary - Might Be Relatively Small.In this note, I'll talk about the deal dynamics and updates over the past week.

New Oriental Hong Kong Secondary Trading - Largest ADR/HK Listing Premium Yet

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.

Kuaishou Technology / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Beijing Kuaishou Technology Co Ltd (1496219D CH)</a> is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising <em>Kuaishou Flagship</em>, <em>Kuaishou Express</em> and <em>Kuaishou Concept</em>, which is collectively referred to as the Kuaishou App. Kuaishou is backed by <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> (21.57% shareholder), Morningside Venture Capital, DCM Capital (9.23%), <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> (3.78%), Sequoia Capital (3.20%), Boyu Capital (2.29%) and Temasek (0.86%). In January 2020, Kuaishou raised $3 billion through a Series F round at a valuation of $28 billion, according to press reports. Kuaishou has filed for a Hong Kong IPO to raise up to $5 billion as early as January 2021, according to Reuters. </p><div class="content-highlight"><p>As a key competitor to <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a>’s Douyin, Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive.</p></div>

Beijing Kuaishou Technology Co Ltd (1496219D CH) is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising Kuaishou Flagship, Kuaishou Express and Kuaishou Concept, which is collectively referred to as the Kuaishou App. Kuaishou is backed by Tencent Holdings (700 HK) (21.57% shareholder), Morningside Venture Capital, DCM Capital (9.23%), Baidu (BIDU US) (3.78%), Sequoia Capital (3.20%), Boyu Capital (2.29%) and Temasek (0.86%). In January 2020, Kuaishou raised $3 billion through a Series F round at a valuation of $28 billion, according to press reports. Kuaishou has filed for a Hong Kong IPO to raise up to $5 billion as early as January 2021, according to Reuters. As a key competitor to ByteDance (1460967D CH)’s Douyin, Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive.

Kuaishou IPO Initiation: Dancing to Its Own Tune

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<p>Back on the 13 September 2019, <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> and Hammer Capital tabled a preliminary non-binding <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-announces-receipt-preliminary-non-binding-going-private" target="_blank" rel="noopener">proposal</a> for <a href="https://www.smartkarma.com/entities/bitauto-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:12004:1" rel="noopener">Bitauto Holdings Ltd Adr (BITA US)</a> at US$16/ADS, a ~20.6% premium to last close.</p>
<p>On the 12 June of this year, Bitauto <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-enters-definitive-agreement-going-private-transaction" target="_blank" rel="noopener">announced</a> it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in <a href="https://skr.ma/BkDTp" target="_blank" rel="noopener">T<em>encent's Potential Downstream Offer For Yixin</em></a> and <em><a href="https://skr.ma/dCrB8" target="_blank" rel="noopener">Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO</a></em>, the deal was done.</p>
<p>Bitauto shareholders <a href="https://ir.bitauto.com/static-files/e04db9da-f521-4630-9b28-4db300df73a7" target="_blank" rel="noopener">approved</a> the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.</p>
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<p>Bitauto owns ~43.72% of shares out in <a href="https://www.smartkarma.com/entities/yixin-group-ltd" target="_blank" data-smartkarma-citation="entities:26008:1" rel="noopener">Yixin Group Ltd (2858 HK)</a>. Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0615/2020061501449.pdf" target="_blank" rel="noopener">unconditional mandatory general</a> offer (MGO). The downstream Offer will be HK$1.9088/share.</p>
<p><strong>The New News</strong></p>
<p>All conditions to the Bitauto merger were fulfilled on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1106/2020110600073.pdf" target="_blank" rel="noopener">4 November</a>. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.</p>
<p>More below the fold.</p>
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Back on the 13 September 2019, Tencent Holdings (700 HK) and Hammer Capital tabled a preliminary non-binding proposal for Bitauto Holdings Ltd Adr (BITA US) at US$16/ADS, a ~20.6% premium to last close.
On the 12 June of this year, Bitauto announced it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in Tencent's Potential Downstream Offer For Yixin and Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO, the deal was done.
Bitauto shareholders approved the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.


Bitauto owns ~43.72% of shares out in Yixin Group Ltd (2858 HK). Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an unconditional mandatory general offer (MGO). The downstream Offer will be HK$1.9088/share.
The New News
All conditions to the Bitauto merger were fulfilled on the 4 November. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.
More below the fold.









Yixin (2858 HK)’s Downstream Unconditional MGO

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)

Sunac Services (1516 HK): Lofty Metrics In A Congested Space

SSH is not cheap, regardless of its top four market cap status. The recent share price performance of recent listings - and the sector as a whole -...

David Blennerhassett

China Internet Weekly (9Nov2020): New Law on Online Small Amount Lending

We believe the new law will slow down the expansion of online lending. iQiyi raised the membership fees. Tencent Music signed an exclusive contract...

Ming Lu

New Oriental Hong Kong Secondary Trading - Largest ADR/HK Listing Premium Yet

New Oriental Education (EDU US) raised US$1.5bn in its secondary listing. I have covered the background of the deal in my earlier note. In this...

Sumeet Singh

Kuaishou IPO Initiation: Dancing to Its Own Tune

Kuaishou is a key competitor to ByteDance’s Douyin. While Kuaishou’s performance is distorted due to various factors, we believe that the...

Arun George

Yixin (2858 HK)’s Downstream Unconditional MGO

With Tencent at the helm, investors are playing the back-end. You effectively have a hard floor (or put) on the stock through to early December....

David Blennerhassett

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