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

Yatsen Holding Ltd / Equity Capital Markets

<div><p>Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. </p></div><div><p>I have covered various aspects of the deal in my earlier notes, links to which are below:</p></div><div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-pre-ipo-growing-fast-but-slowing-down" target="_blank" rel="noopener">Yatsen Pre-IPO - Growing Fast but Slowing Down</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/yatsen-ipo-pricey-but-it-comes-with-strong-investor-backing" target="_blank" rel="noopener">Yatsen IPO - Pricey but It Comes with Strong Investor Backing</a></li></ul><p>In this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.</p>

Yatsen Holding raised around US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. I have covered various aspects of the deal in my earlier notes, links to which are below:Yatsen Pre-IPO - Growing Fast but Slowing DownYatsen IPO - Pricey but It Comes with Strong Investor BackingIn this insight, talk about deal dynamics and provide a table with implied valuation at different ADS levels.

Yatsen IPO Trading - A Little More Pricey Now

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/jd-health-international" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (JDH HK)</a> , the largest online healthcare platform and retail pharmacy in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange.</p><p>In our previous two insights on the JD Health, we examined the company’s business model, financials and also compared the company’s financials against its rivals Ping An Healthcare Technology and Alibaba Health Information Technology. Find below an extract from our previous insight on the company’s IPO:</p><div class="content-highlight"><p>Having analysed the company’s business model and its financials, we remain positive on the company’s future growth prospects. The online retail pharmaceutical and healthcare market is undergoing structural changes in China where the market is increasingly shifting towards digitisation. The Covid-19 outbreak has further accelerated this transition towards online channels, and we believe the company’s business is sustainable beyond Covid-19. JD Health launched its telehealth platform in December 2017, and we expect the telehealth business to drive part of the company’s future growth as people have become increasingly reluctant to visit hospitals and out-patient clinics with the outburst of the pandemic.</p></div><p>JD Health released its post-hearing information pack (PHIP) on Sunday (15<sup>th</sup> November) and this insight focuses on the company’s new data points from the PHIP.</p>

JD Health (JDH HK) , the largest online healthcare platform and retail pharmacy in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange.In our previous two insights on the JD Health, we examined the company’s business model, financials and also compared the company’s financials against its rivals Ping An Healthcare Technology and Alibaba Health Information Technology. Find below an extract from our previous insight on the company’s IPO:Having analysed the company’s business model and its financials, we remain positive on the company’s future growth prospects. The online retail pharmaceutical and healthcare market is undergoing structural changes in China where the market is increasingly shifting towards digitisation. The Covid-19 outbreak has further accelerated this transition towards online channels, and we believe the company’s business is sustainable beyond Covid-19. JD Health launched its telehealth platform in December 2017, and we expect the telehealth business to drive part of the company’s future growth as people have become increasingly reluctant to visit hospitals and out-patient clinics with the outburst of the pandemic.JD Health released its post-hearing information pack (PHIP) on Sunday (15th November) and this insight focuses on the company’s new data points from the PHIP.

JD Health IPO: PHIP Data Re-Affirms Our Positive View on the Company

<p><a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 256.0pt;"><p><strong>Yatsen Holding IPO Details</strong></p></td></tr>
<tr>
<td style="width: 165.65pt;"><p>No. of ADSs Issued</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">58,750,000</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Ordinary Shares per ADS</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">4</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Shares Outstanding Post IPO (m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">2,662</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Offer as a % of Outstanding Shares</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">8.83%</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Price per ADS (US$)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">8.50-10.50</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Net Proceeds from IPO (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">521.5</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Market Capitalisation (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">                  6,322.07</p></td>
</tr>
<tr>
<td style="width: 165.65pt;"><p>Enterprise Value (US$m)</p></td>
<td style="width: 90.35pt;"><p style="text-align: right;">                  5,514.20</p></td>
</tr>
</tbody></table><div class="content-caption"><em>Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)</em></div><p>The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.</p><p>In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:</p><div class="content-highlight"><p><em>Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitability</em></p></div><p>In this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.</p>

Yatsen Holding (YSG US) , the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO. The company has set an indicative IPO price range of US$8.5-10.5 per ADS, and at the midpoint of the IPO price of US$9.50 per ADS, the company will raise net proceeds of US$521.5m.
Yatsen Holding IPO Details

No. of ADSs Issued
58,750,000


Ordinary Shares per ADS
4


Shares Outstanding Post IPO (m)
2,662


Offer as a % of Outstanding Shares
8.83%


Price per ADS (US$)
8.50-10.50


Net Proceeds from IPO (US$m)
521.5


Market Capitalisation (US$m)
                  6,322.07


Enterprise Value (US$m)
                  5,514.20

Source: Company Disclosures, LSR (Market cap and EV are at the midpoint of the IPO price range, EV is after deducting net cash and net IPO proceeds)The company expects to use the proceeds for pursuing strategic investments and acquisitions, expansion of store network, development of technology and for general corporate purposes.In our previous insight on the company’s IPO, we examined Yatsen’s business model, segments, revenues and margins. Find below an extract from our previous insight:Having analysed the company’s IPO prospectus, we remain concerned about the company’s future prospects. We believe the company’s attempt to improve its top line comes at the expense of its margins. Though the company reported a 4.7% OPM in 2019, we believe the company will have to continue to incur on selling and marketing expenses in order to survive in the heavily competitive Chinese cosmetics market. In order to reach the iconic success of multi-national cosmetic brands, the company and its other domestic competitors will have to consistently innovate and launch new products to capture market share which we believe will eat into the company’s margins. We would not recommend subscribing for Yatsen’s IPO as we don’t see a clear path to profitabilityIn this insight, we examine the company’s valuation and whether it is attractive enough to compensate for the lack of profitability.

Yatsen Holding IPO: Expensive Valuation Does Not Reflect the Fundamentals

<p>Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. </p><p>Yatsen was founded in 2016 and has since then launched three color cosmetics and skincare brands. Together, these brands have served 23.4m customers in 2019. According to the CIC report, Perfect Diary became the top color cosmetics brand in China in terms of online retail sales in 2019.</p><p>Its revenue increased by 4.7x in 2019 and was up 73% YoY over 9M20. The increase in revenue was driven by a 2.4x increase in its customer base in 2019 and another 50% YoY growth over 9M20. Yatsen operates a DTC model and does most of its marketing through its network of 15,000 KOLs. </p><p>On the flip side, growth for its biggest brand slowed down considerably over 9M20. At the same time, its selling and marketing expenses have ballooned leading to the company again reporting losses over 9M20. There is also the case of its founders repeatedly selling shares to the company.</p><p>In terms of valuation, the company hasn’t generated consistent profits, hence, one can only compare it on EV/Sales basis, on which measure it looks alright. However, the timing of future profitability remains uncertain given the turnaround in selling and marketing expenses in FY20, the continued offline expansion and the company’s growing penchant for acquisitions.</p><p>Link to my previous note:</p><p><a href="https://www.smartkarma.com/insights/yatsen-pre-ipo-growing-fast-but-slowing-down" target="_blank" rel="noopener">Yatsen Pre-IPO - Growing Fast but Slowing Down</a></p>

Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global. Yatsen was founded in 2016 and has since then launched three color cosmetics and skincare brands. Together, these brands have served 23.4m customers in 2019. According to the CIC report, Perfect Diary became the top color cosmetics brand in China in terms of online retail sales in 2019.Its revenue increased by 4.7x in 2019 and was up 73% YoY over 9M20. The increase in revenue was driven by a 2.4x increase in its customer base in 2019 and another 50% YoY growth over 9M20. Yatsen operates a DTC model and does most of its marketing through its network of 15,000 KOLs. On the flip side, growth for its biggest brand slowed down considerably over 9M20. At the same time, its selling and marketing expenses have ballooned leading to the company again reporting losses over 9M20. There is also the case of its founders repeatedly selling shares to the company.In terms of valuation, the company hasn’t generated consistent profits, hence, one can only compare it on EV/Sales basis, on which measure it looks alright. However, the timing of future profitability remains uncertain given the turnaround in selling and marketing expenses in FY20, the continued offline expansion and the company’s growing penchant for acquisitions.Link to my previous note:Yatsen Pre-IPO - Growing Fast but Slowing Down

Yatsen IPO - Pricey but It Comes with Strong Investor Backing

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.

<div>
<p><a href="https://www.smartkarma.com/entities/yatsen-holding-ltd" target="_blank" data-smartkarma-citation="entities:29719:1" rel="noopener">Yatsen Holding (YSG US)</a> is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. </p>
<p>Yatsen has launched its IPO at a price range of $8.50-10.50 per ADS. Indications of interest have been received for up to $300 million of the offer shares. Existing shareholders, Hillhouse Capital and Tiger Global will subscribe for $120 million and $80 million of the offer shares, respectively. <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 Yunfeng Financial Group will subscribe for $50 million and $50 million of the offer shares, respectively. Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yatsen-ipo-initiation-face-the-facts" target="_blank" data-smartkarma-citation="insights:44817" rel="noopener">Yatsen IPO Initiation: Face the Facts</a>, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. In <a href="https://www.smartkarma.com/insights/yatsen-ipo-comparison-with-leading-domestic-brands" target="_blank" data-smartkarma-citation="insights:45198" rel="noopener">Yatsen IPO: Comparison with Leading Domestic Brands</a> we noted that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. Our valuation analysis suggests that IPO price is unattractive and we would be inclined to give the IPO a pass. </p></div></div></div>


Yatsen Holding (YSG US) is the largest and only domestic company among the top ten beauty companies in China as measured by colour cosmetics retail sales value, according to CIC. 
Yatsen has launched its IPO at a price range of $8.50-10.50 per ADS. Indications of interest have been received for up to $300 million of the offer shares. Existing shareholders, Hillhouse Capital and Tiger Global will subscribe for $120 million and $80 million of the offer shares, respectively. Tencent Holdings (700 HK) and Yunfeng Financial Group will subscribe for $50 million and $50 million of the offer shares, respectively. Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range. 
In Yatsen IPO Initiation: Face the Facts, we stated that while Yasten is seemingly another new economy company with a winning proposition, the fundamentals are less than ideal which suggests that caution is warranted. In Yatsen IPO: Comparison with Leading Domestic Brands we noted that in comparison to peers, Yatsen offers investors a trade-off between high growth and margin/cash generation. Our valuation analysis suggests that IPO price is unattractive and we would be inclined to give the IPO a pass. 

China

Yatsen Holding Limited operates as a holding company. The Company, through its subsidiaries, retails cosmetics, skincare, and other beauty products. Yatsen Holding serves customers worldwide.

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Yatsen Holding Ltd (YSG US)

Yatsen IPO Trading - A Little More Pricey Now

Yatsen Holding raised around US$617m in its US IPO, by pricing its IPO at the top-end of its range. The company is backed by Hillhouse, Tencent and...

Sumeet Singh

JD Health IPO: PHIP Data Re-Affirms Our Positive View on the Company

JD Health released its post-hearing information pack (PHIP) on Sunday (15th November) and this insight focuses on the company’s new data points...

Shifara Samsudeen, FCMA, CGMA

Yatsen Holding IPO: Expensive Valuation Does Not Reflect the Fundamentals

Yatsen Holdings, the owner of the Perfect Diary cosmetic and skin-care brand in China has set the terms for its IPO and will raise net proceeds of...

Shifara Samsudeen, FCMA, CGMA

Yatsen IPO - Pricey but It Comes with Strong Investor Backing

Yatsen Holding aims to raise around upto US$617m in its US IPO. The company is backed by Hillhouse, Tencent and Tiger Global.

Sumeet Singh

Yatsen IPO: Valuation Insights

Yatsen will raise net proceeds of $521.5 million at the mid-point of the IPO price range of $8.50-10.50 per ADS. Our valuation analysis suggests...

Arun George

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