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.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/dida-inc" target="_blank" data-smartkarma-citation="entities:29701:1" rel="noopener">Dida (DIDA HK)</a> operates the largest carpooling marketplace in China with a market share of 66.5% as measured by the number of carpooling rides in 2019, according to Frost &amp; Sullivan. Dida is seeking listing approval to raise $500 million through a Hong Kong listing, according to press reports. Dida is backed by <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a>’s founder (Mr Bin Li), <a href="https://www.smartkarma.com/entities/bitauto-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:12004:1" rel="noopener">Bitauto Holdings (BITA US)</a>, Hillhouse Capital, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> and <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>. <div class="content-highlight">Dida is a play on China’s carpooling market which is an increasingly accepted mobility option in China. In recent years, Chinese regulators have released various policies and guidelines to tackle traffic congestion and carbon emissions, including a commitment to promote carpooling under a regulatory framework. Dida is an attractive new economy company that combines high growth with profitability and cash generation. Consequently, Dida warrants a closer look.   </div>

Dida (DIDA HK) operates the largest carpooling marketplace in China with a market share of 66.5% as measured by the number of carpooling rides in 2019, according to Frost &amp; Sullivan. Dida is seeking listing approval to raise $500 million through a Hong Kong listing, according to press reports. Dida is backed by NIO Inc (NIO US)’s founder (Mr Bin Li), Bitauto Holdings (BITA US), Hillhouse Capital, JD.com Inc (ADR) (JD US) and Trip.com (TCOM US). Dida is a play on China’s carpooling market which is an increasingly accepted mobility option in China. In recent years, Chinese regulators have released various policies and guidelines to tackle traffic congestion and carbon emissions, including a commitment to promote carpooling under a regulatory framework. Dida is an attractive new economy company that combines high growth with profitability and cash generation. Consequently, Dida warrants a closer look.   

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/934/original/BANNER-TourDec20.png?1611266148" class="editor-image img-responsive" data-smartkarma-image-id="183934"></figure>
</section>
Data and anecdotes from a range of sources in December and January show the recovery in Chinese domestic travel demand has stalled. Looking forward, government estimates suggest travel activity over the Lunar New Year holiday in February will also remain muted. 
In the run up to the long holiday period, Chinese officials have responded aggressively to Covid19 outbreaks in several Chinese cities, most of them in Northern China. Until vaccines reach most of the population and prove effective against new variants of the virus, travel demand -- outbound and domestic -- will likely remain depressed. Even a Summer rebound now appears optimistic. 
A combination of hesitant consumers and necessarily aggressive government responses to new outbreaks leaves current travel demand far below normal (2019) levels. The stalled recovery in Chinese travel activity thus lags substantially the return of the Chinese consumer. With few signs of "pent-up" travel demand, it appears Chinese tourists may have altered spending priorities. 
The Chinese travel sector will enjoy easy YoY "comps" in early 2021 as we lap the worst of the Covid19 crisis in H120. However, in the medium-term, we see a "new normal" developing: non-essential travel has become riskier and less attractive, and thus a lower priority for consumers, and this will likely remain the case until Covid19 is put decisively in the rear-view mirror.




Data and anecdotes from a range of sources in December and January show the recovery in Chinese domestic travel demand has stalled. Looking forward, government estimates suggest travel activity over the Lunar New Year holiday in February will also remain muted. 
In the run up to the long holiday period, Chinese officials have responded aggressively to Covid19 outbreaks in several Chinese cities, most of them in Northern China. Until vaccines reach most of the population and prove effective against new variants of the virus, travel demand -- outbound and domestic -- will likely remain depressed. Even a Summer rebound now appears optimistic. 
A combination of hesitant consumers and necessarily aggressive government responses to new outbreaks leaves current travel demand far below normal (2019) levels. The stalled recovery in Chinese travel activity thus lags substantially the return of the Chinese consumer. With few signs of "pent-up" travel demand, it appears Chinese tourists may have altered spending priorities. 
The Chinese travel sector will enjoy easy YoY "comps" in early 2021 as we lap the worst of the Covid19 crisis in H120. However, in the medium-term, we see a "new normal" developing: non-essential travel has become riskier and less attractive, and thus a lower priority for consumers, and this will likely remain the case until Covid19 is put decisively in the rear-view mirror.  

December-January Travel Data Confirm Stalled Domestic Recovery; Weak LNY Unlikely to Help

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/678/original/BANNER-TTOtherDec20_GreyOrange.png?1608575984" class="editor-image img-responsive" data-smartkarma-image-id="179678"></figure></section>We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/973/original/BANNER-TourDec20.png?1608779882" class="editor-image img-responsive" data-smartkarma-image-id="179973"></figure></section>Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like <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>.

Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like Trip.com (TCOM US).

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

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.

<ul class="">
<li>Tencent’s games had disappeared on Huawei’s app store for one day.</li>
<li>The State Administration of Market Regulation fined Alibaba, JD.com, and Vipshop RMB500,000 each for “unfair pricing”.</li>
<li>The Ministry of Culture and Tourism announced that it would continue the suspension of cross-border group tour during the vacations of the New Year’s Day and the Chinese New Year.</li>
</ul>


Tencent’s games had disappeared on Huawei’s app store for one day.
The State Administration of Market Regulation fined Alibaba, JD.com, and Vipshop RMB500,000 each for “unfair pricing”.
The Ministry of Culture and Tourism announced that it would continue the suspension of cross-border group tour during the vacations of the New Year’s Day and the Chinese New Year.


China Internet Weekly (4Jan2021): Tencent’s Conflict with Huawei, Authorities’ Ban on New Year Tour

China

Trip.com Group Ltd. provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services.

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Trip.com (TCOM US)

December-January Travel Data Confirm Stalled Domestic Recovery; Weak LNY Unlikely to Help

The recovery in domestic travel demand stalled again in December, and we believe improvement will be muted in the near-term as officials battle...

Tracking Traffic

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

One month in, our three suggested pair trades have generated returns ranging from "meh" to "You're fired!" In this note we take a look at what went...

Tracking Traffic

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

It appears the nascent recovery in Chinese domestic tourism activity began to stall in November. Outbound travel activity remains dormant, and even...

Tracking Traffic

China Internet Weekly (4Jan2021): Tencent’s Conflict with Huawei, Authorities’ Ban on New Year Tour

Tencent’s games had disappeared on Huawei’s app store for one day. The authorities fined BABA, JD, VIPS for “unfair pricing”. The authorities...

Ming Lu

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Dida IPO Initiation: Sharing a Lift

Dida is seeking listing approval to raise $500 million through an HK listing. Dida is an attractive new economy company that combines high growth...

Arun George

December-January Travel Data Confirm Stalled Domestic Recovery; Weak LNY Unlikely to Help

The recovery in domestic travel demand stalled again in December, and we believe improvement will be muted in the near-term as officials battle...

Tracking Traffic

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

One month in, our three suggested pair trades have generated returns ranging from "meh" to "You're fired!" In this note we take a look at what went...

Tracking Traffic

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

It appears the nascent recovery in Chinese domestic tourism activity began to stall in November. Outbound travel activity remains dormant, and even...

Tracking Traffic

China Internet Weekly (4Jan2021): Tencent’s Conflict with Huawei, Authorities’ Ban on New Year Tour

Tencent’s games had disappeared on Huawei’s app store for one day. The authorities fined BABA, JD, VIPS for “unfair pricing”. The authorities...

Ming Lu