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

Autohome Inc (Adr) / Equity Capital Markets

Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as well
I have covered most aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/autohome-secondary-listing-doesn-t-need-the-cash-at-all" target="_blank" rel="noopener">Autohome Secondary Listing - Doesn’t Need the Cash at All. </a>In this note, I'll only touch upon the updates since my last note.

Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as well
I have covered most aspects of the deal in my earlier note, Autohome Secondary Listing - Doesn’t Need the Cash at All. In this note, I'll only touch upon the updates since my last note.

Autohome Secondary Listing - Going Down a Different Route

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Current investment levels in Macau Gaming stocks are low compared to history across all of our ownership measures.  Declines that started in 2014 were accentuated by the COVID crisis, as EM funds repositioned in to safer corners of the market.  From a positioning perspective, this leaves plenty of upside should a change in sentiment occur.  Active EM exposure is now close to a 10-year low, there are many previous investors sitting on the sidelines and current investors are far from overstretched.At present though, EM investors bullish on the fundamental case for Macau Gaming stocks should be aware that this is largely an anti-consensus view.  74% of EM active funds do not have exposure and neither does the benchmark MSCI Emerging Markets index.  If it does pays off, it will provide valuable outperformance against both the benchmark and the active peer group in the year to come.  The analysis looks at the collective allocations in Macau Gaming stocks from a pool of 243 actively managed Global Emerging Market funds, with combined AUM of $460bn,

Current investment levels in Macau Gaming stocks are low compared to history across all of our ownership measures.  Declines that started in 2014 were accentuated by the COVID crisis, as EM funds repositioned in to safer corners of the market.  From a positioning perspective, this leaves plenty of upside should a change in sentiment occur.  Active EM exposure is now close to a 10-year low, there are many previous investors sitting on the sidelines and current investors are far from overstretched.At present though, EM investors bullish on the fundamental case for Macau Gaming stocks should be aware that this is largely an anti-consensus view.  74% of EM active funds do not have exposure and neither does the benchmark MSCI Emerging Markets index.  If it does pays off, it will provide valuable outperformance against both the benchmark and the active peer group in the year to come.  The analysis looks at the collective allocations in Macau Gaming stocks from a pool of 243 actively managed Global Emerging Market funds, with combined AUM of $460bn,

Macau Gaming:  Beaten up Sector Has Potential to Reverse

Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a> share price dropped nearly 7% on news reports that Impossible Foods would cut the prices of its patties by 20% at grocery stores in the US as they ramp up production. It had earlier announced a 30% price cut in the International markets - Canada, Singapore, and Hong Kong. In an unrelated event, Bloomberg <a href="https://www.bloomberg.com/news/articles/2021-02-01/mcdonald-s-quietly-rolls-out-mcplant-burger-in-test-markets?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link&amp;sref=SVEekGzB" target="_blank" rel="noopener">reported</a> that <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> has begun selling the McPlant burger in Denmark and Sweden on a trial basis; the report added that McPlant, which McDonald’s reportedly co-developed with Beyond Meat is made from pea-based protein, according to McDonald’s <a href="https://www.mcdonalds.com/dk/da-dk/product/mcplant.html#collapseOne" target="_blank" rel="noopener">Danish</a> and Swedish websites. 
Beyond Meat has not provided any details of its collaboration with <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> in Europe. However, we see this as a notable positive given it highlights (1) the expanding market demand for plant-based products and (2) <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)'s</a> competitive advantage over <a href="https://www.smartkarma.com/entities/impossible-foods-inc" target="_blank" data-smartkarma-citation="entities:28361:1" rel="noopener">Impossible Foods Inc</a> in international markets given its different input profile. In the note below we discuss our detailed view on these reported developments.

Beyond Meat (BYND US) share price dropped nearly 7% on news reports that Impossible Foods would cut the prices of its patties by 20% at grocery stores in the US as they ramp up production. It had earlier announced a 30% price cut in the International markets - Canada, Singapore, and Hong Kong. In an unrelated event, Bloomberg reported that Mcdonald's Corp (MCD US) has begun selling the McPlant burger in Denmark and Sweden on a trial basis; the report added that McPlant, which McDonald’s reportedly co-developed with Beyond Meat is made from pea-based protein, according to McDonald’s Danish and Swedish websites. 
Beyond Meat has not provided any details of its collaboration with Mcdonald's Corp (MCD US) in Europe. However, we see this as a notable positive given it highlights (1) the expanding market demand for plant-based products and (2) Beyond Meat (BYND US)'s competitive advantage over Impossible Foods Inc in international markets given its different input profile. In the note below we discuss our detailed view on these reported developments.

Beyond Meat: McPlant Trial in Europe Is More Important than Impossible's Price Cut

In this note, we discuss the operational and investment outlook going forward as the stock hits the lower end of historical trading range. <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a>'s share price has been sliding since its weak 3QFY20 results and is nearly 60% below its highs of October 2020; YoY, the stock is up 6%. We also look into its upcoming quarterly results and why the share price of the leading player in Plant-based protein has slipped even as customer interest and demand for alternative protein has been higher than ever. Alternative Protein segment has gained significant traction over the last year as consumers increasingly sought out healthier eating options, including reducing consumption of animal products. However, established players like <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a> and <a href="https://www.smartkarma.com/entities/impossible-foods-inc" target="_blank" data-smartkarma-citation="entities:28361:1" rel="noopener">Impossible Foods Inc (1249597D US)</a>, that have meaningful exposure to Institutional sales were caught in a bind as pandemic-led restrictions hit regular operations of F&amp;B retail players. Efforts to pivot by repackaging and redirecting the products to retail at discounted prices wasn't good enough to make up for the shortfall leading to a weak third quarter. Going forward, expect sales growth to stabilise and normalise across segments.

In this note, we discuss the operational and investment outlook going forward as the stock hits the lower end of historical trading range. Beyond Meat (BYND US)'s share price has been sliding since its weak 3QFY20 results and is nearly 60% below its highs of October 2020; YoY, the stock is up 6%. We also look into its upcoming quarterly results and why the share price of the leading player in Plant-based protein has slipped even as customer interest and demand for alternative protein has been higher than ever. Alternative Protein segment has gained significant traction over the last year as consumers increasingly sought out healthier eating options, including reducing consumption of animal products. However, established players like Beyond Meat (BYND US) and Impossible Foods Inc (1249597D US), that have meaningful exposure to Institutional sales were caught in a bind as pandemic-led restrictions hit regular operations of F&amp;B retail players. Efforts to pivot by repackaging and redirecting the products to retail at discounted prices wasn't good enough to make up for the shortfall leading to a weak third quarter. Going forward, expect sales growth to stabilise and normalise across segments.

Beyond Meat (BYND US): Beaten Down Stock in an Upbeat Segment. What, Now?

RLX Technology Inc / Equity Capital Markets

<div><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </div><div>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</div><div>
Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.
However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.
In my earlier insight, <a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a>, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. 
</div>

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.
Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.
However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.
In my earlier insight, RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. 


RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

China

Yum China Holdings, Inc. operates chain restaurants. The Company offers pizza, entrees, pasta, rice dishes, appetizers, soups, vegetables, beverages, and desserts. Yum China Holding conducts its business worldwide.

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Yum China Holdings (YUMC US)

Autohome Secondary Listing - Going Down a Different Route

Autohome plans to raise around US$864m in its secondary listing in Hong Kong. Unlike the prior secondary listing, this one contains a sell down as...

Sumeet Singh

Macau Gaming: Beaten up Sector Has Potential to Reverse

As sentiment begins to turn in Macau Gaming stocks, Global EM investors are positioned at their lowest levels in a decade.

Steven Holden

Beyond Meat: McPlant Trial in Europe Is More Important than Impossible's Price Cut

Beyond Meat enjoys a competitive advantage over Impossible Foods in International markets. Mcdonald's trial of McPlant in Europe is a significant...

Devi Subhakesan

Beyond Meat (BYND US): Beaten Down Stock in an Upbeat Segment. What, Now?

We discuss Investment outlook - Long and Short term - for Beyond Meat as it trades close to the lower end of the historical valuation range.

Devi Subhakesan

RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

RLX Technology (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

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