APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

<a href="https://www.smartkarma.com/entities/uju-holding" target="_blank" data-smartkarma-citation="entities:34824:1" rel="noopener">Uju Holding (1948 HK)</a> is looking to raise up to US$141m in its Hong Kong IPO.Uju Holding is a one-stop cross media online marketing solutions provider that works with media partners to market its advertiser customer’s products and/or services. Incorporated in 2018, the firm contributed approximately 1.1% of the total marketing gross billing of China’s online marketing market in 2020, as per iResearch. For FY20 and 4M21, the firm had worked with 1,028 and 651 advertiser customers and 32 and 21 media partners, respectively. During its track period, Uju Holding has recorded strong growth in its operating numbers and topline has followed closely as well. Its U-Engine platform, launched in 2020 could change the dynamics with its advertiser customers and improve efficiency. Cornerstones are also noteworthy and could aid sentiment but isn’t a large amount nonetheless. However, margins have been falling and the firm’s business model centers around a small number of participants. Combined with operating in a fragmented market, margins could be further compressed.

Uju Holding (1948 HK) is looking to raise up to US$141m in its Hong Kong IPO.Uju Holding is a one-stop cross media online marketing solutions provider that works with media partners to market its advertiser customer’s products and/or services. Incorporated in 2018, the firm contributed approximately 1.1% of the total marketing gross billing of China’s online marketing market in 2020, as per iResearch. For FY20 and 4M21, the firm had worked with 1,028 and 651 advertiser customers and 32 and 21 media partners, respectively. During its track period, Uju Holding has recorded strong growth in its operating numbers and topline has followed closely as well. Its U-Engine platform, launched in 2020 could change the dynamics with its advertiser customers and improve efficiency. Cornerstones are also noteworthy and could aid sentiment but isn’t a large amount nonetheless. However, margins have been falling and the firm’s business model centers around a small number of participants. Combined with operating in a fragmented market, margins could be further compressed. 

Uju Holding IPO - Margin Compression Looks to Persist

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 22.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 147.5 million worth of buybacks), China Gas Holdings Limited (384 HK) (HKD 75.9 million worth of buybacks), Sihuan Pharmaceutical Holdings Group Ltd. (460 HK) (HKD 70.2 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 22.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 147.5 million worth of buybacks), China Gas Holdings Limited (384 HK) (HKD 75.9 million worth of buybacks), Sihuan Pharmaceutical Holdings Group Ltd. (460 HK) (HKD 70.2 million worth of buybacks).

Hong Kong Buybacks: Xiaomi, China Gas, Sihuan

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>In 3Q21, the whole smartphone market was weak due to the chip shortage.</li>
<li>Apple took back the No. 2 place from Xiaomi in shipment market share.</li>
<li>Samsung is self-supporting in chip supply, but Xiaomi is not.</li>
<li>Both of Apple and Samsung's margins are higher than Xiaomi's.</li>
</ul>


In 3Q21, the whole smartphone market was weak due to the chip shortage.
Apple took back the No. 2 place from Xiaomi in shipment market share.
Samsung is self-supporting in chip supply, but Xiaomi is not.
Both of Apple and Samsung's margins are higher than Xiaomi's.


Xiaomi (1810 HK): Weak Market in 3Q21 and Not Competitive Internationally

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<a href="https://www.smartkarma.com/entities/futu-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FUTU US)</a>  is China’s largest online brokerage, both by revenue and market cap, and 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>. <a href="https://www.smartkarma.com/entities/up-fintech-holding-ltd" target="_blank" data-smartkarma-citation="entities:27957:1" rel="noopener">UP Fintech (TIGR US)</a>, also known as Tiger Brokers, is backed by veteran American investor Jim Rogers, smartphone giant <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, and U.S. brokerage giant Interactive Brokers Group Inc. Both had looked to cash in on the growing amount of Chinese retail investor money pouring into U.S. stocks following a banner year in 2020.
On 14 October 2021, the People's Daily <a href="http://sh.people.com.cn/n2/2021/1014/c139965-34956684.html" target="_blank" rel="noopener">stated</a> that online brokerages, naming Futu and Up Fintech specifically, that operate across borders run the risk of violating data privacy rules and personal information protection laws, the latter taking effect from 1 November 2021. 
On the same day, Futu’s shares plummeted more than 13% to USD73.11, down 62% from the peak in February. UP Fintech fell more than 20% to USD8.19, down 78% from its February high. 
The additional regulatory scrutiny compounds the woes of China's online brokerages following a torrid 2 quarters, where investor appetite and trading volumes slumped, particularly for US ADRs and HK tech stocks, amidst a weak market environment.
In statements issued last Friday (15 Oct), both firms affirmed that they have pro-actively complied with relevant regulations and addressed issues raised by the Special Task Force on the Regulation of Apps since July 2019, seeking to quell investor concerns following the People's Daily Report. 
In this Insight, we discuss the following: 
<ol>
<li>What are the Relevant Data Laws?</li>
<li>What was new in the People's Daily report? </li>
<li>How have the Online Brokerages sought to mitigate Data Regulations?</li>
<li>Can Online Brokerages Allow Mainland Investors to Trade Offshore Assets in the First Place? </li>
</ol>
More details below the fold.

Futu Holdings Ltd (FUTU US)  is China’s largest online brokerage, both by revenue and market cap, and backed by Tencent (700 HK). UP Fintech (TIGR US), also known as Tiger Brokers, is backed by veteran American investor Jim Rogers, smartphone giant Xiaomi Corp (1810 HK), and U.S. brokerage giant Interactive Brokers Group Inc. Both had looked to cash in on the growing amount of Chinese retail investor money pouring into U.S. stocks following a banner year in 2020.
On 14 October 2021, the People's Daily stated that online brokerages, naming Futu and Up Fintech specifically, that operate across borders run the risk of violating data privacy rules and personal information protection laws, the latter taking effect from 1 November 2021. 
On the same day, Futu’s shares plummeted more than 13% to USD73.11, down 62% from the peak in February. UP Fintech fell more than 20% to USD8.19, down 78% from its February high. 
The additional regulatory scrutiny compounds the woes of China's online brokerages following a torrid 2 quarters, where investor appetite and trading volumes slumped, particularly for US ADRs and HK tech stocks, amidst a weak market environment.
In statements issued last Friday (15 Oct), both firms affirmed that they have pro-actively complied with relevant regulations and addressed issues raised by the Special Task Force on the Regulation of Apps since July 2019, seeking to quell investor concerns following the People's Daily Report. 
In this Insight, we discuss the following: 

What are the Relevant Data Laws?
What was new in the People's Daily report? 
How have the Online Brokerages sought to mitigate Data Regulations?
Can Online Brokerages Allow Mainland Investors to Trade Offshore Assets in the First Place? 

More details below the fold.

China Online Brokerages - "No Critical and Sensitive Personal Data to See Here!"

<a href="https://www.smartkarma.com/entities/nanofilm-technologies-international" target="_blank" data-smartkarma-citation="entities:29700:1" rel="noopener">Nanofilm (NANO SP)</a> is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). Dr Shi, assumed the role of interim CEO, until the <a href="https://www.businesstimes.com.sg/companies-markets/nanofilm-appoints-new-ceo-says-it-continues-to-see-growth-momentum-for-business#:~:text=MAINBOARD%2DLISTED%20Nanofilm%20Technologies%20International,on%20Thursday%20(Oct%2014)." target="_blank" rel="noopener">recent appointment</a> of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: <ol>
<li>High Customer Concentration  </li>
<li>Competition from Alternative Products and Solutions</li>
<li>Significant Management Changes </li>
<li>Management Share Disposals </li>
</ol>Accordingly, we highlight the key areas of concern for investors.

Nanofilm (NANO SP) is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). Dr Shi, assumed the role of interim CEO, until the recent appointment of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: 
High Customer Concentration  
Competition from Alternative Products and Solutions
Significant Management Changes 
Management Share Disposals 
Accordingly, we highlight the key areas of concern for investors. 

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

China

Xiaomi Corporation manufactures communication equipment and parts. The Company produces and sells mobile phones, smart phone software,  set-top boxes, and related accessories. Xiaomi markets its products worldwide.

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Xiaomi (1810 HK)

Uju Holding IPO - Margin Compression Looks to Persist

Uju Holding (1948 HK) is looking to raise up to US$141m in its Hong Kong IPO. The firm is a one-stop cross media online marketing solutions...

Clarence Chu

Hong Kong Buybacks: Xiaomi, China Gas, Sihuan

We highlight the top 3 companies that repurchased the most shares from the market were Xiaomi (1810 HK), China Gas Holdings Limited (384 HK),...

Ke Yan, CFA, FRM

Xiaomi (1810 HK): Weak Market in 3Q21 and Not Competitive Internationally

In 3Q21, the smartphone market was weak due to the chip shortage. Apple took back the No. 2 place from Xiaomi in market share. Xiaomi has tech and...

Ming Lu

China Online Brokerages - "No Critical and Sensitive Personal Data to See Here!"

China's online brokerages risk running afoul of new data privacy rules and personal information protection laws. This is compounded by poor trading...

Jason Yap, CFA

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

In its short listed history, Nanofilm endured significant regulator and investor scrutiny following sub-par results, management share disposals and...

Jason Yap, CFA

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