Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Capital Markets

<ul>
<li>Klook Technology Limited, travel and leisure booking platform company with leadership position in APAC intra-regional travel, aims to raise up to $500M in US IPO.</li>
<li>The company is expected to IPO in December. Goldman Sachs, J.P. Morgan and Morgan Stanley are leading the offering and Klook will list its ADSs on the NYSE.</li>
<li>My IPO valuation analysis coalesces around initial valuation range between $2.5B and $3.5B for Klook Technology Limited upcoming offering.</li>
</ul>


Klook Technology Limited, travel and leisure booking platform company with leadership position in APAC intra-regional travel, aims to raise up to $500M in US IPO.
The company is expected to IPO in December. Goldman Sachs, J.P. Morgan and Morgan Stanley are leading the offering and Klook will list its ADSs on the NYSE.
My IPO valuation analysis coalesces around initial valuation range between $2.5B and $3.5B for Klook Technology Limited upcoming offering.


Klook IPO (NYSE: KLK): Fair Valuation Would Be Significantly Above Last Reported Valuation

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a>'s 1Q25 adjusted net profit surged 41.1%, suggesting an accelerating momentum. It should continue to outperform <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a>. </li>
<li>Good cost management, even as revenue rose 13.2%, has enhanced adjusted EBITDA margin by 5.3pp YoY - this trend will sustain. </li>
<li>More visa convenience will boost inbound and outbound travel. At end-1Q25, net cash equals 14% of market capitalisation, and it can still generate ROE of 12-15%. </li>
</ul>



Tongcheng Travel Holdings (780 HK)'s 1Q25 adjusted net profit surged 41.1%, suggesting an accelerating momentum. It should continue to outperform Trip.com Group (9961 HK). 
Good cost management, even as revenue rose 13.2%, has enhanced adjusted EBITDA margin by 5.3pp YoY - this trend will sustain. 
More visa convenience will boost inbound and outbound travel. At end-1Q25, net cash equals 14% of market capitalisation, and it can still generate ROE of 12-15%. 


Tongcheng Travel (780 HK): Regaining Momentum, Better Choice than Trip.com

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Wanda Hotel Development Company / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wanda-hotel-development-co-ltd" target="_blank" data-smartkarma-citation="entities:15233:1" rel="noopener">Wanda Hotel Development (169 HK)</a>, <a href="https://di.hkex.com.hk/di/NSForm2.aspx?fn=CS20241018E00444&amp;sa2=as&amp;sid=290&amp;corpn=Wanda+Hotel+Development+Co.+Ltd.&amp;sd=24%2f04%2f2024&amp;ed=24%2f04%2f2025&amp;cid=0&amp;sa1=cl&amp;scsd=24%2f04%2f2024&amp;sced=24%2f04%2f2025&amp;sc=169&amp;src=MAIN&amp;lang=EN&amp;g_lang=en&amp;" target="_blank" rel="noopener">65.05%</a> held by Wang Jianlin, is selling its hotel property arm to <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/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com (9961 HK)</a>-backed <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a>.</li>
<li>Wang Jianlin's cash-strapped Dalian Wanda Group has been offloading assets such as the $8.3bn sale of its mall management business to a PAG-led consortium in March last year.</li>
<li>Wanda Hotel proposes distributing all or part of the proceeds from the sale. Given Wang's controlling shareholding, I'd tilt towards the former.</li>
</ul>



Wanda Hotel Development (169 HK), 65.05% held by Wang Jianlin, is selling its hotel property arm to Tencent (700 HK) and Trip.com (9961 HK)-backed Tongcheng Travel Holdings (780 HK).
Wang Jianlin's cash-strapped Dalian Wanda Group has been offloading assets such as the $8.3bn sale of its mall management business to a PAG-led consortium in March last year.
Wanda Hotel proposes distributing all or part of the proceeds from the sale. Given Wang's controlling shareholding, I'd tilt towards the former.


Wanda Hotel (169 HK) To Offload Hotel Management Arm

<ul>
<li>The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> is a key beneficiary.</li>
<li>In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. </li>
<li>Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> can be reversed.</li>
</ul>


The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. Tongcheng Travel Holdings (780 HK) is a key beneficiary.
In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. 
Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against Trip.com (TCOM US) can be reversed.


Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>China's outbound tourism recovery started much later than others in the region</li>
<li>In particular, Taiwan &amp; Korea began ramping outbound travel earlier (in Q222)</li>
<li>As destinations, Thailand &amp; Vietnam recovered early, but now lag HK's growth</li>
</ul>


China's outbound tourism recovery started much later than others in the region
In particular, Taiwan &amp; Korea began ramping outbound travel earlier (in Q222)
As destinations, Thailand &amp; Vietnam recovered early, but now lag HK's growth


China's Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower

Hong Kong

Tongcheng Travel Holdings Limited is an investment holding company providing travel-related services in the People's Republic of China. It offers accommodation reservation, transportation ticketing, online advertising, hotel management, tourist attraction tickets, and packaged tours through its online platforms, mobile apps, and websites. The company was founded in 1999 and is headquartered in Suzhou, the People's Republic of China.

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Tongcheng Travel (780 HK)

Klook IPO (NYSE: KLK): Fair Valuation Would Be Significantly Above Last Reported Valuation

Travel booking platform Klook Technology Limited plans to raise up to $500M in upcoming US IPO. In my insight, I discuss IPO valuation scenarios,...

Andrei Zakharov