In today’s briefing:
- BABA Long Entry Target
- JD Health (6618 HK): 2H20, Faster Than 1H20 and Alibaba Health
- ECM Weekly (5th April 2021) – Nayuki, Peter Warren, Linklogis, Zhaoke Ophthalmic, Macrotech Dev
- We Doctor IPO Initiation: Patient Revolution
- Chinese App Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu
- MINISO’s Impending Lock-Up Expiry: A Chance to Accumulate More Shares
- Trip.com Secondary Listing – Probably Needs to Correct
- Pre-IPO Kindstar Globalgene Technology – A New Start with More Challenges
- Morning Views Asia: KWG Living Group
BABA Long Entry Target
Alibaba Group (BABA US) still has some basing work to complete before a fresh rally cycle can unfold. Current bearish flat sets a heavy tone to press below trendline support (a brief affair) and sets up a long with price and RSI buy levels aligning.
We outline a micro short trade if we tick up to 240 below the 245 pivot resistance.
The directional trade is to get long on a break below trendline support (220) near the 205 price level while aligning the RSI low target.
JD Health (6618 HK): 2H20, Faster Than 1H20 and Alibaba Health
- JD Health (JDH)’s revenue growth rate accelerated to 81% yoy in 2H20, compared to 76% yoy in 1H20.
- JDH’s product revenue grew more rapidly than the two competitors, Alibaba Health (241 HK) and Ping An (1833 HK).
- We conclude an upside of 25%.
Aequitas Research coverage on JD Health:
JD Health (京东健康) Quick Note – Index Inclusions, Weights, and Valuation Update
ECM Weekly (5th April 2021) – Nayuki, Peter Warren, Linklogis, Zhaoke Ophthalmic, Macrotech Dev
Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.
The IPO pipeline in Hong Kong looks even stronger as of last week, after numerous draft prospectuses were filed. Notable deals include WeDoctor (1737089D HK), WM Tech (owner of Wumart Stores in China, and Medlive Tech (online professional physician network in China).
For upcoming debuts, Linklogis (LINK HK) closed a day earlier and priced above the midpoint of its IPO price range. The company is due to trade this coming Friday. We covered the IPO earlier in:
- Linklogis Pre-IPO – The Positives – Fast Growing Blockchain Driven Supply Chain Financier
- Linklogis Pre-IPO – The Negatives – Inconsistent Growth and Margins, Well Funded Competitors
- Linklogis Pre-IPO – Earnings Forecast, Peer Comparison and First Stab at Valuation
- Linklogis IPO – Pricey for a Reason
We initiated coverage on Nayuki Holdings (NYK HK), a popular premium teahouse chain in China, and Zhaoke Ophthalmology Pharmaceutical (ZKO HK), a China-based ophthalmic pharmaceutical company, earlier this week:
Nayuki (奈雪) Pre-IPO – Fast-Growing, Cash Flow Positive Teahouse Chain
Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round
In the US, bookbuild for Smart Share Global (EM US) was short. Books opened Monday, priced on Wednesday, ADS debuted on Thursday. SSG’s share price struggled in early hours of trading and closed flat, even after pricing below their initial price range. We covered the IPO in:
- Smart Share Global (怪兽充电) Pre-IPO – Growing Fast and Is Profitable but Competition Is Picking Up
- Smart Share Global (怪兽充电): Rent A Power Bank on the Ground
- Smart Share Global (怪兽充电) Pre-IPO – Pulling Ahead in a Highly Competitive Landscape
- Smart Share Global (怪兽充电) Pre-IPO – Forecasts, Assumptions, and Valuation
- Smart Share Global (怪兽充电) IPO – Overcharged
- Smart Share Global (怪兽充电) IPO Trading – Cheaper Now but Still May Not Be Enough
In India this week, we initiated coverage on Power Grid Corporation Of India (PWGR IN) and revisited Macrotech Developers (LODHA IN), which was previously known as Lodha Developers. Anchor books are set to open this coming Tuesday:
POWERGRID InvIT Pre-IPO – Always Going to Be Tricky with a Declining Yield
Macrotech (Lodha) Developers Pre-IPO – New Name but up to Some of the Same Old Tricks
Lodha Developers Pre-IPO – Second Time Lucky but Not Really that Much Affordable.
Last, but not least, in Australia, we covered Peter Warren’s IPO which is set to list close to the end of the month.
Accuracy Rate:
Our overall accuracy rate is 73.9% for IPOs and 67.1% for Placements
(Performance measurement criteria is explained at the end of the note)
New IPO filings this week
- WM Tech Corporation Limited (Hong Kong, US$1bn)
- We Doctor Holdings Limited (Hong Kong, US$1bn)
- Medlive Technology Co., Ltd. (Hong Kong, US$500m)
- Green Tea Group Limited (Hong Kong, US$200m)
- Transcenta Holding Limited (Hong Kong, >US$100m)
- eBeauty Holdings (Cayman) Limited (Hong Kong, >US$100m)
- Helens International (Hong Kong, >US$100m)
- Edding Group Company Limited (Hong Kong, refiled)
News on Upcoming IPOs
Hong Kong
- WM Tech files for US$1bn HK IPO
- Medlive Tech plans US$500m HK IPO
- China Restaurant Chain Green Tea Group Files for Hong Kong IPO
- Beauty Brand E-commerce Provider Files for Hong Kong IPO
- Hong Kong Logistics Unicorn GogoX Said to Weigh $400 Million IPO
- Chinese Fresh Food Chain Qiandama Weighs Hong Kong IPO
- Jack Ma-backed Brii Bio plans HK IPO filing in Q2
- Trip.com wins approval for HK secondary listing
- Pharmaceutical Group Edding Files for Hong Kong IPO
- HKEx to relax rules on secondary listings
- China Considers New Bourse to Attract Overseas-Listed Firms: Reuters
- GIC-Backed Zhaoke Said to Seek Hong Kong IPO Approval This Week
U.S. China ADRs
- Evergrande Sells Online Unit Stake for $2.1 Billion Ahead of IPO
- ByteDance Is Said Valued at $250 Billion in Private Trades
- ByteDance mulls NY or Hong Kong Listing for short video app Douyin
- India’s First Unicorn Plans US IPO at Value of Up to $15 Billion
- Richard Li’s FWD Leaning Toward U.S. for $3 Billion IPO
- Home Cleaner Swan Revives U.S. IPO at $3 Billion Value
- Korea Cryptocurrency Exchange Operator Seeks Nasdaq IPO
India
- Krsnaa Diagnostics plans Rs12bn IPO
- Macrotech eyes early April launch for Rs25bn IPO
- Chemplast Sanmar eyes listing again through Rs35bn IPO
Philippines
Australia
- Grays Online seeks up to A$250m ASX IPO
- Peter Warren raising $260m at 15x profit for IPO
- $310m-a-year Silk Contract Logistics taps two brokers for IPO
- Latitude to attempt ASX listing again via A$200m IPO
Singapore
Japan
Analysis on Upcoming IPOs
We Doctor IPO Initiation: Patient Revolution
WeDoctor Holdings (1737089D HK) is the largest digital medical service platform in China as measured by both the number of internet hospitals as of 31 December 2020 and the volume of digital medical consultations provided in 2019, according to Frost & Sullivan. We Doctor was filed for an HKEx IPO to raise around $2-3 billion, according to press reports. We Doctor counts Tencent Holdings (700 HK), Hillhouse Capital, AIA Group Ltd (1299 HK), Sequoia Capital, Goldman Sachs Group (GS US) and Qiming Venture Partners as shareholders.
In response to the COVID-19 outbreak, individuals have become increasingly focused on personal health and wellbeing which has driven user acceptance of online healthcare platforms. The proportion of digitalisation in the Chinese health market is expected to increase rapidly from 3.3% in 2019 to 24.0% of total healthcare expenditure in 2030, according to Frost and Sullivan.
Consequently, and despite the choppy markets and waning enthusiasm for Chinese tech, the shares of Ping An Healthcare and Technology Company Limited (1833 HK), Alibaba Health Information Technology (241 HK) and JD Health (6618 HK) are up 10%, 1% and 62% YTD, respectively. Overall, for investors willing to brave the IPO markets, we believe that We Doctor is an attractive play on the accelerating digitalisation of China’s healthcare market.
Chinese App Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu
- Xiaomi plans to produce electric vehicle.
- The court forces Douyu to compensate Huya for broadcaster poaching.
- Tencent Music and Vipshop launch share repurchase programs.
Our coverage on Chinese equities:
E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).
Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).
Others: Xiaomi (1810 HK).
MINISO’s Impending Lock-Up Expiry: A Chance to Accumulate More Shares
MINISO Group Holdings (MNSO US)’s share price has been under pressure over the last two months with the lock-up period for the shares held by directors, executive officers and the pre-IPO investors scheduled to end on 13th April 2021. The dip in share price, leading up to the lock-up expiry has us quite interested on the long side and we would consider accumulating more shares at the current price levels.
Trip.com Secondary Listing – Probably Needs to Correct
Trip.com plans to raise around US$1-2bn in its secondary listing in Hong Kong. The company is said to have won listing approval last week and will look to launch its secondary offering soon.
In our previous notes, along with covering all of the past listings, we have also looked at the overall drivers for the secondary listings in our earlier notes, links to which are below:
- China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020, we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing.
- In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
- In China ADRs Secondary Listing – Holding Foreign Companies Accountable Act – I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
- In China ADRs Secondary Listing – Pipeline looks rich, have three years to move, published in Feb 2021, we looked at the recent updates from the Holding Foreign Companies Accountable Act and Hong Kong Exchanges changes to corporate weighted average voting rights. In this note, we’ll take an early look at the deal and talk about likely timing and impact of the raising.
In this note, we’ll take a look at the deal and talk about the impact of the raising.
Pre-IPO Kindstar Globalgene Technology – A New Start with More Challenges
On February 23, 2021, Kindstar Globalgene Technology (1868874D HK), a leading independent esoteric clinical testing service provider, filed its prospectus with the Hong Kong Stock Exchange to be listed on the main board. The Company, founded in 2003 and once considered one of the top 10 China’s independent clinical laboratories, has finally taken a key step towards the public capital market after experiencing several setbacks. Compared with the IPO plan in the United States about seven years ago, would CEO Huang Shiang be successful this time?
Morning Views Asia: KWG Living Group
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
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