Daily BriefsIPOs and Placements

Equity Capital Markets: Trip.com, Linklogis and more

In today’s briefing:

  • Trip.com Secondary Listing: No Heads in the Clouds
  • Linklogis IPO: Singapore Digital Banking Could Fetch Billions of Dollars in Valuation

Trip.com Secondary Listing: No Heads in the Clouds

By Arun George

Trip.com (TCOM US) is a leading one-stop travel platform that currently operates through four leading travel brands which are Ctrip, Qunar, Trip.com and Skyscanner. Trip.com passed its Hong Kong listing committee hearing and could raise up to $1-2 billion through a secondary listing, according to press reports. 

Trip.com is braving choppy markets and waning investor enthusiasm on secondary listings/IPOs. The recent Hong Kong secondary listings of Autohome Inc (Adr) (ATHM US) and Bilibili Inc (BILI US) are trading 3% and 8% above their H-share listing price, respectively. Baidu (BIDU US) is trading -13% below its H-share listing price largely due to the fallout from the fire sale at Archegos Capital.   

Trip.com is a play on the expected reopening and recovery of travel in 2021 due to the global rollout of vaccines. In the post-pandemic world, Trip.com aims to cement its market share gains through strengthening its supply chain (such as short-distance travel), higher conversion via content investment (such as live streaming) and rising penetration in lower-tier cities (>40% of new mobile app users in 2020 were from lower-tier cities). We think that Trip.com is an attractive play on travel recovery at the last close price. 

Linklogis IPO: Singapore Digital Banking Could Fetch Billions of Dollars in Valuation

By Oshadhi Kumarasiri

Linklogis (LINK HK) is an extremely attractive business, with a 63.9% revenue CAGR over the last two years alongside healthy operating margins of 14.3%, 20.0%, and 31.1% in 2018, 2019, and 2020 respectively. The company’s revenue model is predominantly a recurring revenue model, where customers are charged based on transaction value. Furthermore, Linklogis has an extremely high customer retention rate (100%, 91% and 99% in 2018, 2019 and 2020 respectively).

At 15.5-17.4x FY+2 EV/Sales with a 35% revenue CAGR, Linklogis does not appear overly cheap compared to peer multiples (Ming Yuan Cloud: 16.8x FY+2 EV/Sales with 36% revenue CAGR, Weimob: 19.1x with 39% CAGR, Kingdee International: 13.2x with 24% CAGR, Snowflake: 35.3x with 73% CAGR, Cloopen: 12.6x with 36% CAGR, and OneConnect: 5.5x with 43% CAGR).

The above EV/Sales exclude Linklogis’s exposure to Singapore Digital Banking, but once adjusted EV/Sales appear to be on the low side relative to peer multiples.

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